Business development model innovation is perceived as a way to not just grow profit but also as a way to avert threats from competitors. Business development model innovation is a natural evolution process, recognizing that change is inevitable and is needed once a business model has run its planned course. Therefore, in pursuit of growth, entrepreneurs make major structural changes, collapsing organizational boundaries and leveraging resource procurement from abroad. The article discusses the innovative method of business linkages being developed at medium and small scale level between the Diaspora and the parent country. 

The international business linkage at this level follows a more informal and dispersed model. The main factor which decides this innovative model is the urge of Diaspora for business expansion because of easily available transportation facilities, technology transfers, capital transfers, market accessibility, product development, market intelligence, government regulations and promotions etc. But more important than these are non-business relations like availability of inside information through family relations, techniques of dealing with government and financial institutions, cultural aspects and social networking. These business innovative relations are going to have a significant impact on the growth of business through factors that include cost reduction, strategic flexibility, focus and specialization, advantage of being able to rapidly exploit new markets and product opportunities and shared or reduced risk of capital investment. This is illustrated through a case of a garment manufacturing unit's business model in Surat Apparel Park.

In countries, where the rule of law is uncertain (which includes most emerging markets), it is hard to do business with strangers. When courts cannot be trusted to enforce contracts, people prefer to deal with those they have confidence in. Personal ties make this easier. Similar is the case with Milan Exporters (a unit in Surat Apparel Park) that expanded the business to only those foreign countries where family or diasporic ties were possible.

Diasporic Linkages

India, as an emerging economy, has managed to encash on diasporic linkages because of its large market and skilled manpower. The Indian Diaspora has been successful in certain niche export-oriented global trading networks, a good example being the diamond cutting and retailing network managed by Indian entrepreneurs based in South Africa, Surat (in Gujarat), Amsterdam and New York. Moreover, the development of Surat as a global centre of diamond cutting industry and the emergence of a competitive diamond trading community of Indians across the world did not require SEZs or special government policies. It happened because of the right conditions, i.e. skilled entrepreneurs, feasible low cost and small scale manufacturing base (Surat) and existence of transnational business connections strengthened by diasporic links developed over the years.

Similarly, the case of readymade garment manufacturing unit, Milan Exporters (name changed), is a classic example of diasporic trade linkage development and advantage. Milan Exporters Pvt. Ltd. is an apparel manufacturing unit in Surat Apparel Park. It has been established since the year 2005 and is now exporting readymade garments to United Kingdom with yearly revenue of more than rupees 1.5 crores. The unit was established with an initiative to expand family business that has been into textile trading and manufacturing for more than 20 years. Three brothers are already into the same kind of business. Two of them had settled in UK for many years now and one was taking care of the trading business in India. However, their business model changed with the help of family ties and it converted into a transnational company.

Model of Business

The business model of Milan Exporters has seen a transformation from being a trading unit to being a manufacturing unit, then being a 100% export oriented unit and now it is a transnational company. Mohan (name changed) along with his father (Mr. Patel) ran a family based textile business in Surat for the last 20 years. One of the brothers of the family (Rohan) settled in UK in the year 2003 and started a readymade garment retail outlet in UK. The business was basically promoted and established in UK by Rohan based on knowledge and experience gained from the textile trading business run by his family back home in Surat (India) in the year 2005. Thereafter, looking at the high procurement cost of garments, the owner of the unit in UK decided to promote a manufacturing unit in India (Surat, Gujarat) with the help of Mohan. Due to favourable export policies and government support through SEZ scheme, a readymade garment (RMG) manufacturing unit was established in Surat Apparel Park.

Most importantly, knowledge inputs related to market demand, change in fashion and trend and designs were given by the Rohan in UK to Mohan at Surat. This made work easier for the brother handling Surat unit. Online training and sample from fashion designers of UK was provided to the local staff (designer and tailors) and RMGs were manufactured as per the requirement in UK and exported to UK. This business model was a result of information exchange, entrepreneurial network and Diaspora's investment in Surat Apparel Park unit. The raw material required for manufacturing was either imported from China or procured from local market in case of urgency. Later, after realizing that import of raw material from the international market resulted in high cost of output, both the brothers decided to set up a unit in a country that provides cheapest fabric and other raw material required for RMGs. They identified a family link in China and in 2006 started a new trading unit under the supervision of a cousin brother for selling fabric and threads to RMG manufacturers in Asia. This business model was a result of diasporic entrepreneurial networks and information exchange from India to China. They exchanged information and knowledge about the type of fabric required as per the climate and fashion in Europe and UK. 

To read more, please subscribe our Printed Magazine