Does Nepal Need Big Corporations?

Image Credit: Zachary XU

According to academicians, entrepreneurship refers to some kind of economic undertaking amidst uncertainty in the form of new business by bringing together resources and means of production, mainly labour and capital. The concept of entrepreneurship is not new in Nepal. Entrepreneurship in the form of cottage or home business has been extensively studied to empower women. However, political instability curbed entrepreneurial development, even for the women who were targeted in many government policies. Meanwhile, the world progressed and we lagged behind. When the political environment started to normalize, many other socio-economic aspects of society had already changed by far. Remittance income substituted occupational income for many families. Even for those who held a job, their pay didn't increase to meet their aspirations. Consequently, people developed a sentiment that entrepreneurship is the key to amass wealth.

Nevertheless, the knack to crack the knot of entrepreneurship is very hard. Entrepreneurship in itself is a complex activity that involves conceiving a business plan, seeking out for finances, hiring employees and establishing teams, abiding to legal requirements, and so forth. People usually have skills on some of these areas. For example, I have heard many people say that, "I have a solid business idea, but I don't have enough money to finance it." In contrast, some people have money but lack a clear cut business idea that they can pursue. People who have income or wealth often have hard time finding the right investment opportunity. Some people pool their resources to start a partnership business. However, tensions among the partners provide a tough time managing the business affairs.

In addition to the above challenges, there is another quite common phenomenon of copying the successful businesses. About more than a decade ago, entrepreneurs in Chitwan saw business opportunity in poultry. Soon enough many people started poultry farms, nearly made Nepal self sufficient, and did a great job until an outbreak of bird-flu virus swept away most businesses. Today only a handful survive and Nepal imports poultry from India. Another unfortunate incident happened with aloe vera and stevia farming. A cunning businessmen incorporated Palm Agrotech Private Limited and convinced many farmers to plant Aloe Vera and Stevia. However, when harvest was ready, the company which promised to purchase the produce shut down, causing total loss to hundreds of farmers. Apiculture (fish farming), cow farming, bee-keeping, and so forth have been hot cakes time and again.

My proposition is that Nepalese entrepreneurs should start thinking big. With bigger companies comes bigger investment, enabling them to have their own specialised departments like finance, marketing, research & development, and so forth that can work highly effectively and efficiently. Bigger companies have more resources to overcome their weaknesses and challenges, capitalise on any opportunities and turn their strengths into core competencies. They benefit shareholders through economies of scale. Moreover, they can withstand competition, generate more employment opportunities, pay higher tax to the government and have the potential to enhance the goodwill of "Made in Nepal" products in the international market. Above all, they cannot be easily replicated.

In my observation, the richer economies have a portfolio of giant corporations conduct business worldwide. For example, the US has Wal-Mart, Coca Cola, Proctor and Gamble, but more popularly tech giants like Apple, Microsoft, Alphabet (Google), IBM, and so forth. Japan has Toyota, Mitsubishi, Honda, Softbank, etc. China has Sinopec Group, China National Petrolium, Ali Baba, many big banks and business groups which aren't very popular among us yet are HUGE in size. Likewise, South Korea is a small country that has been progressing rapidly and it has Samsung, Hyundai, LG, and so on. Even India has Reliance Industries, Tata Motors, State Bank of India, etc that have massive business.

In the context of Nepal, Chaudhary Group, Golchha, Khetan Group, etc are some reputed business houses which cater for the domestic markets through their subsidiaries. Chaudhary Group is the most successful business family, which engages in international trade. Nevertheless, their businesses are diversified into many smaller companies and only a few conduct international trade. Nepal's brand as a producing country is almost non-existent. Thus, based upon these observations, Nepalese entrepreneurs should consider establishing big ventures instead of spending their time, resources and energy on the small businesses. Since, starting corporations isn't easy and needs vision, courage, as well as collaboration of large number of stakeholders, it should be incentivised by the government. I can confidently conclude, that the government's current vision of 'economic prosperity' can only be realised through entrepreneurship in massive scale.

Acknowledgement: I am sincerely thankful to Shiva Bhusal, Prakash Subedi, Himal Shrestha, and Biplav Acharya for their candid comments and suggestions to this article.