By William Barnett, Peter Lorentzen
2006 | Case No. SM91 | Length 19 pgs.
In 1999, Bo Shao, a Chinese national with a U.S. BA and MBA, returned to China to set up an online auction firm. While initial venture capital funding came easily, China’s low level of development created many other challenges that would not have arisen in a more-developed economy. Delivery and payment systems were unreliable. Legal systems for contract enforcement were weak, making buyers and sellers reluctant to trust one another online. Few potential employees were familiar with western management practices. At the same time, other startups in the same market created an intensely competitive environment.

Learning Objective

To understand the challenges of entrepreneurship in emerging markets, in particular the lack of complementary businesses and weak institutions that make adapting existing developed-country business models difficult.
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