When people ask me which sector to invest in, I start by scanning the sector for gaps and opportunities. This analysis often results in two reactions: some are deterred by the potential challenges, while others approach the sector with the foresight to navigate its future. My process involves providing both a short-term and long-term overview, which is essential for making informed decisions. However, a crucial principle in business is often revealed—when a sector becomes saturated, meaning too many businesses are competing in the same space, those without innovation or additional services tend to be swallowed up by larger, more established companies.
Big businesses, with their extensive resources, have a natural advantage in these situations. They can set up barriers so high that new entrants find it almost impossible to break through. This ability to stifle competition is a tactic rarely discussed openly but is essential for survival. The secret to thriving in such a competitive environment lies in staying a step ahead of your competitors. In business, complacency is not an option—competition cannot be taken for granted.
This is precisely what we're witnessing with the rise of Chinatown in Kampala. As a new establishment, Chinatown is poised to reshape the local business landscape. In the long run, it will "employ" many businesses, but it will also lead to the collapse of others and possibly take over some. This shift will create new opportunities for those innovative enough to adapt, but it will also disempower local businessmen, reducing their earnings. On the other hand, it will empower consumers by allowing them to spend less.
The emergence of Chinatown raises another critical question: Why are local businesses in Africa often found lacking in competitiveness, leaving gaps for foreign businesses to fill? This challenge is a recurring issue across the continent. While client needs remain consistent and predictable, local businesses struggle to meet these demands effectively, opening the door for foreign entities to step in.
As entrepreneurs, we must reflect on this situation. What is the best approach to strengthen our local businesses so they can compete effectively? Perhaps by understanding the underlying issues and developing strategies to enhance competitiveness, we can prevent the erosion of local enterprise and build a more resilient business environment. Let’s think about this together—maybe we can find some answers.
About the author
Dr. Jjuuko Derrick, is a pharmacist with a keen business acumen. Having dedicated much of his career to engaging with business owners and employees, he brings a unique blend of pharmaceutical expertise and business insight to the table. As an entrepreneur himself, he is passionately committed to leveraging his technical skills and entrepreneurial experience to foster the growth and development of multiple businesses. Driven by a mission to make a meaningful contribution to the business landscape, he stands ready to empower entrepreneurs with the knowledge and tools they need to thrive.
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