Barriers to technology commercialisation to emerging markets

The path to commercialising technology in emerging markets presents unique challenges, particularly for companies from developed nations. These barriers often stem from a combination of mismatched expectations, regulatory hurdles, and structural issues that inhibit successful market entry and growth. Understanding and overcoming these obstacles is crucial for technology companies aiming to expand into emerging markets and harness their vast potential.

Three Major Barriers Exist

1. Technology is not emerging markets ready A significant challenge for technology companies seeking to enter emerging markets is the mismatch between their commercial offerings and the economic realities of these markets. Many companies from developed nations struggle to adapt their products and services to the unique conditions prevalent in emerging markets like India. Several key factors contribute to this issue: A. Failure to Adapt to Local Standards, Policies, and Regulations:  Technologies developed in one country may not always meet the regulatory requirements or standards of another. Emerging markets often have distinct standards and regulations that must be navigated carefully. Companies that fail to adjust their technologies to comply with these local requirements face significant barriers to market entry.   B. Over-reliance on Importing Capital Equipment and Machinery: Many technology solutions require capital equipment and machinery that are often imported from developed countries. This reliance on imports can lead to increased costs, making the technology less competitive in emerging markets where cost sensitivity is high.   C. Neglecting or Disregard Local Market Economics: Technologies that are successful in developed markets may not align with the economic conditions of emerging markets. Factors such as purchasing power, cost of living, and local economic conditions need to be considered when adapting technologies to ensure they are affordable and relevant. Pushing for getting the same price one gets in their home market, can be very detrimental to the prospects of the technology in the emerging market nation.   D. Failure to Develop Local Talent and Delivery Mechanisms: A lack of local talent and delivery mechanisms can impede the successful deployment of technology. Companies often overlook the importance of building local teams and partnerships that understand the market dynamics and can support the effective delivery and maintenance of their technologies.
   

How often does one hear the words "show me its working in Bangalore" and not Berlin.

2. No reference site in-country

Another critical barrier to technology commercialisation in emerging markets is the absence of reference sites. A reference site serves as a showcase of the technology in use and helps build confidence among potential clients, investors, and lenders. It also aids technology companies in understanding in-country costs and setting appropriate commercial prices. The challenges related to establishing a reference site include:

A. Public Procurement, Government Clients, and Tender Processes: In many emerging markets, government clients cannot simply nominate a reference site. Instead, companies must navigate complex project-tender processes to secure a commercial site. This can be a lengthy and competitive process, especially for companies without prior local presence or relationships.

B. Lack of Local Presence: Companies that do not have a physical presence or established partnerships in the target market may struggle to qualify for tenders or secure projects. Local presence is crucial for building relationships, understanding market needs, and participating in tenders effectively.

C. Absence of Local Delivery Setup: Without a local delivery setup or partners, technology companies face difficulties in implementing their solutions and providing ongoing support. Establishing a local delivery mechanism is essential for successful project execution and client satisfaction.

"What is the cost of the solution?", first words said by prospective clients after technology presentation.

3. Lack of planning for scale

The inability to scale technology solutions effectively is a significant barrier to commercialisation in emerging markets. Several factors contribute to this issue:

A. Separation of Technology Engineering and Deployment: The engineering and innovation processes involved in developing technology often differ from the deployment and project management processes required for implementation. Companies need to establish distinct structures and skill sets for each phase to ensure successful scaling.

B. Balance-Sheet Heavy Project Entities: Technology projects that often require significant equity investment, can put a strain balance sheets. Companies may struggle to secure the necessary funding to scale their projects, especially in emerging markets where financial resources may be limited or expensive.

C. Capital Investment for Performance Guarantees: Engineering processes typically require capital investment to provide performance guarantees and meet the expectations of clients. Ensuring that these investments are in place is crucial for building trust and demonstrating the viability of the technology.

D. Centralised Critical Decisions: If the decision making process remains centralised, and local teams aren't empowered then achieving scale will remain challenging.

Many more factors

• From the technology owners standpoint, markets can be daunting and unfamiliar. The perception of high levels of risk can deter faster acceleration. Fear of intellectual property leakage is the second most common reason for slow introduction of technology.
  

• The challenges are not unique to just technology proponents from developed nations. Those from the same or similar other emerging market economies may also face many of the challenges described above.

Conclusion

In conclusion, technology commercialisation in emerging markets involves navigating a complex landscape of challenges. By addressing issues related to market readiness, establishing reference sites, and scaling effectively, technology companies can enhance their chances of success. Understanding and adapting to the unique conditions of emerging markets, investing in local talent and infrastructure, and securing the necessary financial support are critical steps in overcoming these barriers and achieving successful market entry and growth.

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