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Factfulness

msufan

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Just finished an interesting book called Factfulness (https://amzn.to/2N94PEe) that I think has a lot of application to entrepreneurs everywhere.

The general premise of the book is that the world is improving in a number of ways: incomes are rising, disease is down, deaths due to war are down, etc. The author breaks people down into 4 separate economic groups, with level 1 being extreme poverty and level 4 being well-off.

One critical part describes how entrepreneurs are not realizing the number of people in developing countries who are moving up the ladder, especially from level 1 to level 2 or from level 2 to level 3. He uses the example of someone who is marketing feminine hygiene products: "Almost everyone in the world is becoming a consumer. If you suffer from the misconception that most of the world is still too poor to buy anything at all, you risk missing out on the biggest economic opportunity in world history while you use your marketing spend to push special "yoga" pads to wealthy hipsters in the biggest cities in Europe."

This is an interesting thought, so I was wondering: is anyone on here having success selling things outside the "developed" world?
 

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Late Bloomer

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I have a response to the first part of your post, but not to your specific question at the end. Yesterday I heard a radio news report about tariffs and ice cream. There was an interview with the president of the oldest ice cream making company in the U.S. They export a lot of ice cream to China. The interviewer asked about shipping costs, and was told that it costs less to send the ice cream from the company in Philadelphia to China, than to Chicago. In China, the Made in USA ice cream is sold as a luxurious product to the middle market. A lot of people can't afford giant luxuries, but they can afford to indulge on dessert that's expensive by ice cream standards. The interviewer asked why not deliver the recipe to a manufacturer in China. The president explained that being Made in USA is taken by the Chinese market as a high quality standard. They wouldn't impress aspirational luxurious Chinese buyers with a "locally made" ice cream. It looks like the interview isn't up on the web site yet, when I see it there I'll add the link here.
 
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msufan

msufan

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I have a response to the first part of your post, but not to your specific question at the end. Yesterday I heard a radio news report about tariffs and ice cream. There was an interview with the president of the oldest ice cream making company in the U.S. They export a lot of ice cream to China. The interviewer asked about shipping costs, and was told that it costs less to send the ice cream from the company in Philadelphia to China, than to Chicago. In China, the Made in USA ice cream is sold as a luxurious product to the middle market. A lot of people can't afford giant luxuries, but they can afford to indulge on dessert that's expensive by ice cream standards. The interviewer asked why not deliver the recipe to a manufacturer in China. The president explained that being Made in USA is taken by the Chinese market as a high quality standard. They wouldn't impress aspirational luxurious Chinese buyers with a "locally made" ice cream. It looks like the interview isn't up on the web site yet, when I see it there I'll add the link here.
This is EXACTLY it. And how many American ice cream manufacturers would never DREAM of selling their product in China? I'm guessing almost all of them.
 

rollerskates

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That is really interesting. I've stopped selling to Europe for several reasons, but I hadn't thought about China, although I ship there and just about everywhere upon special request. Hmmm....
 
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msufan

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visiomari

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"Almost everyone in the world is becoming a consumer. If you suffer from the misconception that most of the world is still too poor to buy anything at all, you risk missing out on the biggest economic opportunity in world history while you use your marketing spend to push special "yoga" pads to wealthy hipsters in the biggest cities in Europe."
?
Holy crap, this is amazing, and so true. As someone who is from a third world country and is living in the U.S right now, you just gave me SO many ideas that I could actually take action on.
THANK YOU for posting this! +repped
 
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msufan

msufan

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Thank you very much! Being from a third-world country could be a huge asset -- you may already know the needs and wants in that area better than most, and living here in the U.S., you could be poised to take action on it. Love it!!
 

Late Bloomer

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Awesome story! We need a whole lot more of that happening in this country IMO. As a country, we wouldn't need to worry about tariffs and trade deficits if we just took advantage of opportunities like these.
I think the real lesson is that if you can sustain premium prices and profit margins, you can survive a lot of problems. Suppose that the company said, "We offer the world's least expensive ice cream," with a profit margin of a half percent. If tariffs go up a percent or two, the company's dead. But this ice cream is sold at a premium price. Even with new tariffs, there's enough margin so manufacturer and distributor can still make a profit.
 

Mattie

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This is EXACTLY it. And how many American ice cream manufacturers would never DREAM of selling their product in China? I'm guessing almost all of them.
Instead of Made in China, Made in America :)
 

smark

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The idea that locally made goods can be sold overseas with high margins while simultaneously maintaining - or even improving on - the company's image is something large luxury groups have been doing a lot with their brands the last few decades.

For anyone looking to expand into emerging country markets, many nations of the former Soviet Union, as well as most South America countries are great places to start. https://www.bloomberg.com/news/photo-essays/2013-01-31/the-top-20-emerging-markets
 

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Late Bloomer

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The idea that locally made goods can be sold overseas with high margins while simultaneously maintaining - or even improving on - the company's image is something large luxury groups have been doing a lot with their brands the last few decades.
I think Rolls-Royce is a great example of this. If they were to say, "The cars used to be hand-made in Britain, but now there's a factory down the street from you, wherever you are in the world"... that would take away a lot of the mystique, wouldn't it?
 
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msufan

msufan

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I think Rolls-Royce is a great example of this. If they were to say, "The cars used to be hand-made in Britain, but now there's a factory down the street from you, wherever you are in the world"... that would take away a lot of the mystique, wouldn't it?
And I think the USA has that mystique in certain parts of the world for certain items, which is something from which we can benefit.
 

smark

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I think Rolls-Royce is a great example of this. If they were to say, "The cars used to be hand-made in Britain, but now there's a factory down the street from you, wherever you are in the world"... that would take away a lot of the mystique, wouldn't it?
@Late Bloomer you are absolutely right! I'm in the process of starting a company in the luxury goods sector and production relocation is a definite no-no in this industry.
 

Late Bloomer

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I'm in the process of starting a company in the luxury goods sector and production relocation is a definite no-no in this industry.
Without giving away your business secrets, I hope you might be up for sharing some of your journey and what you've learned about specifically targeting the luxury sector.
 

smark

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Without giving away your business secrets, I hope you might be up for sharing some of your journey and what you've learned about specifically targeting the luxury sector.
I would love to do that in the near future, but I'm in the early stages at the moment.

I am following a business strategy developed by European luxury brands in the late 20th century which allowed them to go from local businesses to multi-billion dollar global enterprises. The next few years should be a great ride.

The only "problem" at the moment is that I am running low on funds, so I'll need to give up some equity for capital later this year. I was actually hoping to find some people on this forum who may be interested, or who have prior experience with this particular luxury strategy.
 

Late Bloomer

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I am following a business strategy developed by European luxury brands in the late 20th century which allowed them to go from local businesses to multi-billion dollar global enterprises.
This is extremely intriguing to me! Good luck!
 

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