How home-based products can take off

Entrepreneurs are mainly seen as the driving force to prosperity in a country’s economy.  During the first formal cottage and small industries (CSI) flagship meeting, Prime Minister Dr Lotay Tshering  said effective implementation support for the start-up centers has to given.

PM added that the start-up centers should have systematic impact on the outcomes, as under the flagship program there are more avenues to capitalize on, in terms of financial injection and shorter bureaucratic routes consisting of minimum communication circle.

He also addressed that the number of people trained as entrepreneurs should practically take up entrepreneurship, and advised respective departments to follow up with them, as well as, getting views on the hiccups of successful entrepreneurs to get a clearer and immersive picture to address such issues.

Further on, PM also talked about monitoring the failing businesses and how such areas can be rectified for prevention.

In the lead up to this, The Bhutanese interviewed entrepreneurs who are registered with the Department of Cottage and Small Industries (DCSI).

Currently, most of them are home-based entrepreneurs and feel that the local consumption is not up to the mark to sustain as a thriving player in the home market. Some of them expressed that their product quality and pricing are well in consideration of the local buyers and would want to do more as they move forward.

One of the entrepreneurs said that there is quite a lot of scope for agriculture-based products, reportedly pointed out by the ministry’s survey that agricultural resources are not being optimally utilized. He is hopeful that they can do mass food production and have an impact on the import substitution. He said food-based products are comparatively easier to make.

He also aims to export the products. However, a big concern lies in regard to imported products. “ In case of retailers, they tend to take food products from India, but we are confident that our products are at the least at par in terms of quality and even in terms of pricing. We have very concessional rates, which at times, contradicts with our cost of production.”

They said that noodle manufacturers in the country are doing considerably well and even competing toe-to-toe with the multinational brands.

One of the entrepreneurs selling ice-cream in Samtse stated that imported food products dominate the market. He said that out of the 40 or more shops in Samtse, he supplies ice cream to over 18 shops on a regular basis, with reported customer satisfaction.

However, the other retailers did not want to carry or sell his products mainly because they are used to selling products from India, and since people have a sort of brand loyalty in consuming the products, the retailers do not want to take risks in terms of substituting with home products.

“Consumers are resistant to change”, he added, “Understandably, it is business for them as well, and naturally one would want to resort to the safer raffle.”

Building consumer trust has been one of the struggles for the entrepreneurs. However, they are hopeful of how the government will have policies in place to promote home-based products.

“So far, the government has supported us, in terms of investments, expos, fairs and a lot more, but the main hurdle for us is that there is no market, which can channelize our products and exposure wise, we are having a tough time.”

They stated that during the trade expos, there are hardly any interested retailers who approach them to see if their products are sales worthy.

“Usually, during such times, the consumers just buy stuff and leave- they are mostly one-time customers,” they said.

One of the entrepreneurs pointed out that during a discussion with an entrepreneur from Nepal, she came to know that imported products are levied tax in Nepal, giving a base support for home products instead.

The government also has come up with certain measures to encourage such initiations, and during the CSI flagship meeting,  Lyonchhen did state that the government will look into the existing policy and try to make a better route and feasible market for the home industries.

As entrepreneurs and manufacturer, one mutual stance they shared was about one of the most common problem with retailers, as per their marketing analysis. The problem being that their product prices cannot flexibly compete with international products due to production cost implications especially for Indian or Chinese substitutes for their products.

“The solution is evident- we have to either make our quality and prices at par with those products- which I can quite confidently say in terms of quality, or we will need further assistance from the government in addressing this matter,” one of the entrepreneurs said.

Another entrepreneur added, “People are okay with buying our products as long as the price difference doesn’t exceed Nu 20. For Nu 5 or 10 differences, they are happy to accept the deal.”

In terms of reaching out to the prospective consumers, they claimed that currently they have a hard time making their products known to people. When asked about the use of the social media to advertise their products, a few of them said that, the social media is both an opportunity as well as a threat, as sometimes, their products are reviewed badly, and other prospective consumers might sway away without having tried their product first-hand.

They wish that the national channel BBS could do something, in terms of broadcasting their products, which they recalled from one of the neighboring country tour, where the start-up and such associations were allotted about 15-20 minutes of air-time for free everyday.

They said BBS can help with promotional materials on rotation basis- a system for fair introduction for such CSI products and services at concessional advertisement rates.

The ministries are reportedly working to foster such support system with incubation assistance for start-ups and generous loans and connection with FDIs, particularly the Department of Cottage and Small Industries under the Ministry of Economic Affairs.

Also, the Ministry of Labour and Human Resources has been providing training and support, in terms of human resource upskilling.

Deputy Chief, Entrepreneurship Division, MoLHR, Ram Bahadur Gurung,  said, “To encourage and support creativity and innovation by the aspiring entrepreneurs the RGOB initiated Startup and CSI flagship program for youth. Through this flagship program lead by DCSI, MoEA, we are bringing all the relevant stakeholders together to provide the platform for the entrepreneurs for end-to-end support as it was working in isolation by agencies.”

He said Bhutanese are neither competitive nor risk takers. Majority of the people are rather complacent.

“99 percent of our participants are from agriculture farming background, who do not have any business background. It is also bounded by our education system where we have general education which lack skill when they graduate or when out of the school. Most of our students prefer to be civil servant firstly,” Ram Bahadur Gurung said.

It is observed that the youth preference for entrepreneurship is not opportunity driven. Taking up business is also not encouraged by most parents.

Entrepreneurship Division, MoLHR takes cumbersome time by letting the aspiring entrepreneurs to get all the clearances from community, gewog, dzongkhag, National Land Commission, National Environment Commission, and other agency clearance. By the time, they give up and try to get jobs rather than starting business. RGOB is gearing towards more online support services to reduce time and improve e-service to netizens.

“Through MoLHR, we have designed programs to reduce gap by conducting the Startup Bootcamp and best of the ideas will be offered Startup acceleration program with incubation space, prototype development fund, R&D and access to finance through PSL, Crowdfunding, angel investors, market access and access to land in industrial estate in Samtse, Gelephu, Samdrupjongkhar and Mongar. MoLHR is also providing critical skill training as general and specific to individual participant after completion of entrepreneurship training based on their project,” the Deputy Chief, Entrepreneurship Division, MoLHR said.

He also said there is a need support from government in the area of procurement by government and companies for the local products.

Interest rate for startup must be low until generating positive profit. More needs to be done in funding in R&D, incubation, co-working space by the startups. There is also a need to carry out survey to see what is the actual entrepreneurship nature of Bhutan.

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