Business Models at the BOP in China

Abstract

Taking an innovation approach to the field of the Base of the Pyramid (BoP), we apply the concept of business model (BM) to analyze sixteen BoP initiatives in China. We show that BMs offer a useful lens for the study of BoP initiatives, by helping identify their innovative elements. A significant number of cases fit the patterns observed in other countries: they target the BoP as consumers via low cost, low-margin/high-volume models; or rely on the BoP as a low-cost source; they focus on rural BoP populations; and most involve domestic companies rather than multinationals. But as many as half of the cases displayed innovative features in their BMs: catering to other firms rather than to consumers; offering products to the BoP that incorporate advanced technologies and features; working with the BoP as source of valuable, even unique products; the successful application of the platform concept to provide technologically advanced products to the BoP; and process innovation through new forms of collaboration with BoP suppliers that offer an alternative to simply relying on the BoP as a low-cost source and may point to new forms of value creation and value sharing between companies and BoP communities.