Jenny Lao-Phillips
According to entrepreneurship studies, innovation is considered a significant factor to the successful growth and sustainability of enterprises. However, we often hear complaints of the lack of innovation among SMEs in Macao.
A local entrepreneur once commented that there is a need for more young entrepreneurs to bring in new ideas to local SMEs. But is nurturing more and younger entrepreneurs the solution to the lack of innovative business in Macao?
According to a research by a local MBA student, there has been an increasing number of freshly graduated business students starting their own ventures thanks to the government’s MOP300,000 young entrepreneurship aid scheme opening up opportunities to fresh graduates. Though not that many of these young entrepreneurs actually applied for the grant, it did cause more young people to think about entrepreneurship as a career. As a result, we have more and more coffee shops. Ok, that is not exactly fair, there are more organic product shops too. But how much more innovative are Macao’s SMEs, in general, now that there is an increasing number of young businesses being set up? There are more new shops everywhere for sure, but the differences between these new shops, specifically coffee shops, may be a bit hard to identify.
So, are entrepreneurs in Macao really lacking creativity? Or are there obstacles to innovative actions?
According to some SME owners who have been in business for around 10 years, showing a certain level of success even in terms of survival rather than flourishing expansion, innovation is not really an important factor for their business. One main reason is that most SMEs in Macao are service businesses, and customers are comfortable with services they are familiar with. Sometimes, it is the entrepreneurs who got bored and want to try new things, but this does not always appeal to their clients who are reluctant to try things they haven’t heard of, or tried before.
We may think that things are different with events planning or marketing related firms, whose customers should be demanding more creativity in their service. But this doesn’t seem to be the case in Macao. SME entrepreneurs in this industry expressed that clients tend to choose their service because of good experience from previous purchase or recommendation from acquaintances, and therefore demand things to be exactly the same as before, or as were told to by word-of-mouth. These entrepreneurs seem to be stuck in a culture of – better be safe than innovative, creating one of the major obstacles to even an attempt of innovativeness.
But what do these all tell us? That innovation is not applicable for entrepreneurship in Macao? Probably not true. I think innovation happens within local SMEs from time to time, but they are internal actions which are not seen easily. From the outside, SMEs in Macao seem to look quite alike, and there do not seem to be any new products created in Macao or new services being introduced. However, entrepreneurs of local SMEs may be engaged in process innovation. In order to provide the same products or service packages for years, they may have to come out with new ways of doing things for cost or time reduction in order to catch up with the increasing demand for lower cost and more efficient service.
So, Macao’s SMEs are not uninnovative. They just seem to be traditional, and even considered old fashioned by some, because they do not invest much in product or service innovation. And most of them have stayed that way by popular demand. In fact, of the many new coffee shops opened in the last few years by young entrepreneurs, one of the most successful ones is a traditional Chinese style café.
I guess local customers prefer to buy what they can expect rather than trying new things. That’s why, the innovation challenge faced by local entrepreneurs is not coming out with new products, but providing the same things more efficiently and cost-effectively.
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