Don’t come to China to discover western business ideas
Wagas is a very nice cafe chain in Shanghai. The fact that its a chain would support that it is, well, nice. A friend and I were lounging in Wagas this afternoon after finishing our lunch dinner lunner discussing the finer intricacies of life such as the sheer inanity of what strikes us as hilarious and how one could justify the purchase an expensive (but nifty) gadget if one could only sacrifice a few nights out drinking in Shanghai (which is just as expensive).
We begin talking about why Wagas makes us happy and what makes it successful. My friend, ever impressed with and a consistent patron of Wagas, then suggests that opening a Wagas back home (in the UK) would probably do really well. I disagreed. You see, Wagas is really nice…but it’s only “really nice” relative to the more ubiqutous local options that are, as you can surmise, usually “not as nice.”
That wouldn’t be the case were you to transplant Wagas back to the “more developed” West. Wagas fills a certain niche market in Shanghai: Expats. Wagas provides something they need and came at a time where there wasn’t any competition for that market. Hell, Wagas is particularly a haven for foreigners disinclined to adapt or integrate into China as it is. Wagas provides its niche market (and more international-minded and affluent Chinese who want to be more like that niche market) something familiar as they survive in a city and country that is still very different from what they likely took for granted.
The success it enjoys is a product of it is particular circumstances and I highly doubt it would be as successful or as well-known were the brand and formula to be applied “back home in the West.” There, Wagas would be run-of-the-mill. It would blend into the norm and dismissed as nice but “just another cafe.” Wagas’ success wholly depends on being different and unique within China that it so freshly sticks out to the foreigner who is tired or fearful of the endless dirty, dingy, crowded, noisy, uncomfortable Chinese eateries complete with service from someone who often appears to be completely uninterested in being there to serve you.
Wagas is not revolutionary. It merely found a need and filled it with a pre-existing solution before others did it. No doubt, continuing management and development play a big role in its continued growth and success, but there is nothing inherently magical or special about the Wagas fomula that would guarantee its success wherever one decided to plant one.
Many people looking for business ideas in foreign lands to bring back home often fail to see the bigger picture. We cannot judge an opportunity on the merits of the idea or business itself or how seemingly successful it is where we found it. We must evaluate the context, the environment, and the circumstances in which it is found to be viable or successful in to determine the requisites for a chance of success. I love Wagas and I love their profit margins even more…but I know it wouldn’t be a smash hit in the developed West. Why again? Because there are tons of Wagas, just by different names.
Wagas was a great idea for Shanghai at a great time. There are plenty of expats here and increasing internationalization that results in wonderful cultural cross-pollination. It is small wonder that Wagas earned its place as a beloved mainstay for expats and foreigners here for the long-haul, just like other trendy “Western” chains such as Element Fresh or Zentral (which, interestingly, is opening a restaurant in Luxembourg).
But to replicate its success, we shouldn’t be thinking of importing it back to the West. Why? It wouldn’t be a unique concept, the costs are that much higher, your target customers have infinitely more alternatives, and your prices wouldn’t have the cachet of being exorbitantly more expensive (and thus more aspirational) than the cart and cook that could blaze up some fried rice or noodles that would also fill you up but for a price that is 10x cheaper.
When in China in search of great business ideas to bring back to the West, avoid trying to bring back a Western idea, regardless of how impressed you are. How impressed you are is often proportionally related to how long you’ve been in China and how often you’ve been disappointed by the native offerings, so much so that a place like Wagas makes you glow with unbridled joy. A good business idea begins with identifying a problem of unmet needs, not being dazzled by a shiny potential solution.
Tags: business idea, cafe, dining, element fresh, expats, Foreigners, quality, restaurant, service, trendy, wagas, zentral