Looking for another reason why your small business is better than a corporate behemoth? As Riva Richmond at the Wall Street Journal reports, small businesses have a leg up when it comes to cutting their dependence on U.S. suppliers and tapping directly into international markets, thanks to their size and agility. Richmond makes her case through the story of Sonia Seye, a 30-year-old entrepreneur from Senegal. When Seye wanted to develop Hair Universal, her Los Angeles-based hair salon, into a statewide franchise, she dropped her local middleman and went to India to buy the hair extensions she needed to supply her budding chain.
Companies that sell hair extensions purchase much of their stock from Hindu temples in India where devotees shave their heads as an act of piety at the end of a pilgrimage or as a symbol of gratitude for prayers answered. In fact, India's human hair trade has ballooned into a multi-million dollar industry, according to Zreportage, encompassing "temple hair" prized by wigmakers, "village hair" that women gather from their brushes and sell in exchange for trinkets like bindis or barrettes, and "thuku hair" swept from the floor of barber shops. In 2006, major temples and exporters earned combined revenues of more than $300 million.
As a small business, Seye's operation was nimble enough for her to enter the Indian market without having to jump too many hurdles. "Entrepreneurs and small businesses have a bigger opportunity, and it's easier for them to go global than large corporations," explains Robert D. Hisrich, director of the Thunderbird School's Center for Global Entrepreneurship in Arizona, citing the flexibility that comes without the bureaucratic and legal constraints on deal-making that can hamper big business.
Of course, entrepreneurs have to do their due diligence first. (In April's global issue, we put together a primer on some of the big issues—bribery, intellectual property theft, unfamiliar labor laws—to help get you started.) Seye spent six months developing a shortlist of potential suppliers, including verifying their credentials with the Indian consulate, before flying to Chennai, a city on the southeast coast that serves as a trading hub for most Indian suppliers due to its proximity to the Venkateswara Temple in Tirumala. The temple is one of the world's richest and most frequented, second only to the Vatican, where more than 50,000 pilgrims visit daily.
Last year, The Observer uncovered the dark side of the "temple hair" trade in villages around Chennai. In order to get a foothold in a market monopolized by the Hindu temples, "unscrupulous agents of small-time exporters" pay husbands less than $10 for their wives hair or force women to shave their heads.
Do you think it's easier for small businesses to go global than large corporations? Has sourcing supplies directly from foreign markets given your business a competitive advantage? What can U.S. suppliers do to remain profitable if their clients are cutting them out of the equation?