Read a very interesting article around the study of Haier model in China and using its learning for overseas growth. It suggests the concept of ‘Going out by going in’.
In a paper by Marshall Meyer, emeritus management professor at Wharton, it is suggested that firms in emerging markets that have found ways to successfully sell into the country’s vast and inaccessible rural market seem to develop the capability to expand in overseas markets.
According to Meyer, firms like Haier in China can “draw revenues from overseas by penetrating previously inaccessible domestic markets and then renting their distribution and service channels to foreign competitors.”
In a discussion with Knowledge@Wharton, Meyer explains his argument. “You are capturing distribution and services revenues and profits, which can actually be much greater than manufacturing profits. And, in this sense, you are taking money away from your foreign competitors. It’s not acquiring revenue abroad, but it’s acquiring revenue domestically that might otherwise go to foreign competitors.”
A unique perspective indeed of looking at things. And, indeed a unique business model of leveraging high entry barrier differentiators to earn additional revenues from adjacent industries.