Driving down an unentrepreneurial road

Written on Friday, October 31st, 2008 at 11:24 pm | by Jon Limjap

In a few hours I shall be setting off and driving north towards my wife’s home province of Pangasinan, my adopted province since an unfortunate idiosyncrasy of my life is that I could trace seven generations back to Manila-dwellers beyond which I’ll have to go to China. But I digress — the two hundred kilometer journey will bring us to central Pangasinan, near Manaoag, home of a popular cathedral and Catholic pilgrimage site. Now I didn’t realize it until the first time I drove that trip, that there is a very big difference in seeing things when you ride a bus and when you drive. The primary difference is your keenness on landmarks. Because you need to know how much more lower back pain and leg strain you have to endure (it’s a four hour drive in light traffic, six hours in bad), as well as remember where you can stop to eat or pee, you notice the structures along the road, especially on McArthur Highway once you get off of the North Luzon Expressway.

One thing I immediately noticed are the various stores that line McArthur Highway. You wouldn’t really notice one store when you see it, however: you would notice it when a huge number of them are all selling the same thing, side by side. Around Bamban and Capas, both in Tarlac, it’s the stores that sell pastillas de leche and other milk-based sweets. By the time you hit Paniqui and Moncada, for around 10 kilometers it’s watermelons that line the road: there’s even a 250 meter stretch of watermelon stores. Reaching Urdaneta City in Pangasinan, a similar 300 meter stretch is lined, this time, with bottles upon bottles of bagoong. Once you reach Binalonan town, it becomes native corn, although with much fewer sellers. Leaving McArthur highway to head to Manaoag, near the church itself it’s not only religious icons and trinkets, but tupig (sticky rice and coconut meat roasted within banana leaves) is likewise peddled.

Copy this, copy that, copy cat

It’s no different from many places in the country, for that matter. Los Baños has its ubiquitous buko pie, and at one point all buko pie stores in Pansol, each one less than a hundred meters from the other were named “Colette’s”. Manila has had different “food fads” in its history; it has shifted from burgers, to shawarma, to lechon manok, to pearl shakes. But it has to be Cebu’s dried mango producers who are most guilty of gaya-gaya mentality, so much so that not only were the products the same, but even the branding was compromised.

The number of dried mango producers have skyrocketed from the 80s through the 90s due to the popularity of the delicacy as an export product, but they have some serious identity crisis. The pioneer dried mango had chosen a green package in white lettering, with a clear “window” at the lower part of the package to make the mango slices visible. Soon everyone packaged their dried mangoes in a green package in white lettering, with a window. Only one or two departed from the usual scheme (one of them went blue and green, the other changed to orange-brown).

Apparently, if the Filipino entrepreneur is efficient at anything, they are efficient in copying product offerings of seemingly-thriving businesses, down to the packaging.

A nauseating business proposition

The GEM Philippines 2006-2007 Report reveals that four out of ten Filipinos are entrepreneurs, and of those, 19% belong to the Class C segment, 54% belong to the Class D segment, and 20% belong to the Class E segment. While some people contend that these 54% are “following in the footsteps of the taipans”, it doesn’t present reveal the extent of planning, research, and marketing that these business owners apply into their business — in fact, one could assume that these businesses do not have any such activities in their enterprises.

The findings also affirm the observations I made above:

Survey results tend to affirm the common notion that the typical Filipino business person is risk-averse (segurista) and lacking in originality and innovation (gaya-gaya). Such attitude can be a hindrance to being able to exploit new opportunities and growth potentials, which is important in building dynamism in the enterprise sector. [GEM Philippines 2006-2007 Report]

The irony in this statement is that while the Filipino is, apparently, willing to go into business, they remain to be inherently risk-averse and lacking in innovation. The Report expounds:

There is a common observation (and lament) that most Filipino business owners are content with imitating other established firms rather than innovating with new and unique products and services, the so-called gaya-gaya (copycat) syndrome. This appears borne out by the finding that surveyed business owners predominantly believe that their products and services are not perceived to be unique or distinct from others. A dominant 71% of business owners indicated that they would not be seen by customers as offering something new or unfamiliar.[GEM Philippines 2006-2007 Report]

Unfortunately the effects are adverse, profit-wise. Put copycat syndrome and cutthroat competition together with a lack of marketing, and what you end up with is a bunch of palengkeras ready to kill each other off. Without the prosperity brought about by high profit margins, it seems that poor Filipino entrepreneurs will remain poor, in spite of the fact that they have chosen to put up a business.

They aren’t following the footsteps of the taipans, after all.

Taking a road less travelled

According to the Principles of Entrepreneurship publication of the US State Department, the concepts and ideas that make or break the business can be categorized into four:

An existing good or service for an existing market. This is a difficult approach for a start-up operation. It means winning over consumers through merchandising appeal, advertising, etc. Entry costs are high, and profit is uncertain.
A new good or service for a new market. This is the riskiest strategy for a new firm because both the product and the market are unknown. It requires the most research and planning. If successful, however, it has the most potential for new business and can be extremely profitable.
A new good or service for an existing market. (Often this is expanded to include modified goods/services.) For example, entrepreneurial greeting-card makers use edgy humor and types of messages not produced by Hallmark or American Greetings – the major greeting-card makers – to compete in an existing market.
An existing good or service for a new market. The new market could be a different country, region, or market niche. Entrepreneurs who provide goods/services at customers’ homes or offices, or who sell them on the Internet, are also targeting a new market – people who don’t like shopping or are too busy to do so.

Emphasis mine.

Note that while the ordinary Filipino would-be entrepreneur thinks that the safest route to go is to offer products and services that has an existing market, they do not realize that going up against existing competition makes the business less viable. Unfortunately the illusion of safety — and perhaps, the misconception that it is easier to mimic an existing operation — leads them to the cutthroat, opportunity-devoid copycat market that typifies the business environment of the unsuccessful Filipino entrepreneur.

Blast-freezing one’s way to success

That being said, local taipan wannabes must learn to focus their efforts on the more fruitful ventures of offering a new or modified good or service to an existing market, or offering an existing good or service to a new market.

There are some businesses that are becoming big this way. Lety’s Buko Pie in Los Baños is a good example of a business that was able to find ways to offer a new or modified product to an existing market, and at the same time offer an existing product to a new market.

Deluged with numerous buko (coconut) pie competition, Lety’s turned its attention to an unsolved problem with buko pies: microwaving them would turn the pies soggy. With the help of the Department of Science and Technology, Lety’s was able to find a solution: blast-freeze the pies to prevent ice globules, which form during conventional freezing, from coming up. A nice side-effect: their buko pies can be frozen up to 12 months, which allowed Lety’s to export their products abroad.

Going off-road to genuine entrepreneurship

It is clear that while the Filipino is not bereft of technical skills and capability, they have much to learn with regards to business savvy, risk-taking, and innovation. If Filipinos (beyond the usual Filipino-Chinese) are going to achieve success, much effort should be taken to be able to help them think out-of-the-box, reduce risk-aversity, and evangelize the virtue of innovation (or more specifically product-development), which in turn would lead to a much productive and high-profit business environment.

The lessons of the current state of entrepreneurship in the country should not be ignored, or worse dismissed — further education in entrepreneurship should be nurtured for the lackluster nation to be able to catch up with its more prosperous (and under the hood, more adventurous) neighbors. It’s high time the Filipino entrepreneur should learn to drive off of the unentrepreneurial, risk-averse, copycat road.

Tags: business, entrepreneurship

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About The Author: Jon Limjap is a software developer and co-owns a travel agency business. He started writing about political issues in the Filipino-language Ang Pahayagang Plaridel of DLSU-Manila, and has been blogging on and off at http://blog.kapenilattex.com since 2005

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Comments

46 Responses to “Driving down an unentrepreneurial road”

PhilMan on November 1st, 2008 12:12 am

Based on your observations, DTI seems to be encouraging gaya-gaya, puto-maya entrpreneurship with their OTOP = One Town One Product program.

It is possible that there could only one producer; then the produce are sold by many vendors/sellers.

Kung baga sa jueteng at shabu, iisa lang ang -lord for that area. Marami lang mga kubrador at pusher.
Jon Limjap on November 1st, 2008 3:28 am

PhilMan,

I dunno what’s up with the OTOP program, but it appears that it was meant to jumpstart entrepreneurship per se, but didn’t follow through on encouraging existing businesses to differentiate, or for new businesses to merely complement the existing businesses.

Nonetheless the point becomes that the ordinary Filipino “negosyante” is utterly unimaginative. And that’s very, very sad.
cvj on November 1st, 2008 4:12 am

Jon, thanks for your response which i believe is generally headed in the right direction. Some things though…

In Silicon Valley (among other such enclaves), they also sell the same things side by side. Such geographic clustering by similar enterprises is a phenomenon that was observed by Paul Krugman (for which, together with his work on International Trade, he was awarded the Nobel Prize). So it is not surprising that you find stores selling the same thing clustered together.

In any case, i happen to agree that it is just right for you to emphasize and encourage differentiation and innovation as factors factor for successful businesses. I don’t know if you noticed but this is the very reason why i posted this comment to your earlier post on the same topic (”Filipinos and entrepreneurship: What’s the real score?”):

Jon, you might be interested in going through one of the earlier reports of GEM, this one from 2003 in particular.

In that report (the Philippines was not yet included), there was a distinction made between ‘entrepreneurial’ firms, ’startups’ and ‘existing’ businesses and a ratio called ‘FEA’. However, in the 2006 edition which Habito participated in by preparing the Philippine report, those distinctions (and the FEA metric) was no longer there. It might resolve some of the aspects of the report which you find baffling. - cvj July 20th, 2008 1:14 pm

In that report, you would have come across this definition …

…the entrepreneurially oriented established businesses, those having an innovative
impact on their market and expect to grow…

…which would have been to your liking.

To clarify, my phrase “following in the footsteps of the Taipans” was meant to point out that large chunks of the Economic Classes C-, D & E chose to engage in business activities, as opposed to becoming employees or bums, which were the prevailing stereotypes.

Finally, i believe that it is inaccurate to conclude that the Taipans business success are largely a result of…

>”offering a new or modified good or service to an existing market, or offering an existing good or service to a new market.”

.

Many of them built up their businesses through selling volume items at low profit margins and squeezing suppliers. While a number of them may have succeeded through sheer business acumen, some Taipans accumulated their wealth by being Cronies, which makes them little different from the Melamine-entrepreneurs of Mainland China.
cocoy on November 1st, 2008 5:43 am

good post.
leytenian on November 1st, 2008 6:46 am

supply chain / distribution concept. nothing wrong with that, as long as employment are generated.
baycas on November 1st, 2008 6:48 am

the gaya-gayas rely on the uto-utos…

especially when it comes to product packaging (as in the dried-mango reality). the goodwill attached to a particular popularly-sold product is being exploited (the beer-na-beer phenomenon), hoping to get a slice of the market.

(another good example is the creamline ice cream copying the oval-shaped brand of magnolia ice cream. subtle and yet it’s there.)

some are copycats but a lot of them are originals of the same product…

notice da original specially added in their labels?

seriously, i like the post. cvj has a point too.
leytenian on November 1st, 2008 9:22 am

Rural entrepreneur success is driven by internal and external factors. In the Philippines, internal factors such as available resources, skills, motivation and attitude are already present among those side by side stores. Those people are not only motivated but driven to feed their families. I will not be worried about their positive thinking skills.

The failure lies in the external factors such as counseling, economic support, marketing ( demand), governmental rules and policies ( business quotas for a particular product, limitations of agencies-middleman) and access to different financial resources.

There are psychological characteristics to become a successful entrepreneur. The government’s role is to recognize that potential. Small business administration with local offices are necessary and highly recommended.

In every failure and success we have in our country - are also dependent on government policies and available resources. Positive Thinking requires effort. Effort is less when government resources are available.
Patricio Mangubat on November 1st, 2008 9:44 am

jon,

thanks for the article. at least, we discussed a topic away from the usual politico-economic ones.

how did you addressed the problem of startup funds and capital?
Blackshama on November 1st, 2008 2:13 pm

I just wonder how all these beauty parlors and barbershops make money? Even in small towns I find more than 5 on the highway.

BTW on the road to Iloilo’s Cabatuan airport, you see baye-baye sellers every 50 meters or so. Before we Tagalophones found out what baye-baye was, we thought the Ilonggos really lived up to their superfriendliness.Imagine saying goodbye every 50 meters or so.

Since I keep fish as pets 10 years back we had this pet shop boom. Pet shops sprouted in every street corner. Since each shop required at least 300K capital, you can count with the fingers which are still there in 2008.

Seriously, perhaps some principles of enterepreneurship should be included in basic education and even in college.
benign0 on November 1st, 2008 2:43 pm

Great one Jon! Maybe we can call this phenomenon of marketing in price-crushing volumes shawarma entrepeneurship.
benign0 on November 1st, 2008 6:30 pm

Many of them built up their businesses through selling volume items at low profit margins and squeezing suppliers. While a number of them may have succeeded through sheer business acumen, some Taipans accumulated their wealth by being Cronies, which makes them little different from the Melamine-entrepreneurs of Mainland China.

This is outside of but relevant to the frame of assertions that is being made here.

Jon refers to what I call the shawarma effect:

Proliferation in such undifferentiated volumes as to devalue.

I make word it in a generic manner so that this principle can be applied to lots of other stuff as I have in a previous blog post.

In this case, it is applied to entrepreneurship.

What you cite cvj, is a collective business network synergy that Chinese entrepreneurs seem to be particularly good at.

Chinese entrepreneurs are so synergistic that they can even proliferate in volumes but do so in a way that is just short of hitting the shawarma barrier and burying themselves in their own numbers the way Pinoys are so good at doing.

Apples-to-orange, dude.
The Ca t on November 1st, 2008 7:30 pm

perhaps some principles of enterepreneurship should be included in basic education and even in college.

the principles alone will not make students entrepreneurs.

If you will just look at government agencies other than the Executive Department , you will discover that you have a TRC (Technology Resource Center) which teaches not only principles but also the how-tos of putting up a business, from the start-up, raw materials, costing to marketing in any kind of business a person may be interested in.

My friend just came back from attending a seminar on t-shirt business. He was pinkslipped and was finding a business which he can engage in. There are seminars in SF but are very expensive and only a few information is given out so that the attendees will consult with the organizers.

He sent me some literature about catering and food services,pinoy merienda favorites, direct selling and network marketing and homebakeshops. My sister was asking me what kind of business she could do in the Philippines.

There are some people who cry I THIRST not knowing that there is a fountain of water near them because they won’t look around.
The Ca t on November 1st, 2008 7:47 pm

Jon,
I am also an adopted daughter of Manaoag Pangasinan.

Sometimes we drove all the way or take the airconditioned bus going to Baguio, get off at Urdaneta and take a pedicab going to the barrio.

The roadside vendors tell you what province you are in your travel.

When you hear TUPIG, you know that you are already in Carmen, Pangasinan.

Along the way, when you see the tinapa, you know that you are in Tarlac.

SOme provinces are known for their specialties like uraro in Quezon and pili nuts in Bicol.

There are backyard industries that proliferate in the regions. Take them away from the place and it would never be the same.

And these are practically the reasons why I have been insisting that the GDP is not overstated because these industries are mostly underground economies.

But just to inform you, these products are already being exported in countries where there are Filipinos.

YOu can find them in Filipino and Asian Stores…including the tinapa and the toyo.

I like the bangus from Sarangani.

Alam ba ninyo na ginaya ng Vietnamese ang mga producto natin and labelled them just like they were made in the Philippines?

The Filipinos in California have been buying MILAGROSA brand rice not knowing that it is from Thailand.

Copycats entrepreneurship had been rampant in all Asian countries. The only difference is they copy from foreign patented products. As I have been saying espionage is not only about world domination but also stealing trade secrets that can be copied.
leytenian on November 1st, 2008 9:42 pm

The best copy cat/duplication type of business is Jollibee. The system works so well. Hint:

1. product differentiation ( product line and individual products)
2. then begin with a solid foundation ( short term)
3. expand thru franchise concept( long term goal )

Labor is cheap and google searching is open 24/7 for advice.
Bencard on November 1st, 2008 11:31 pm

internationally speaking, it’s a cruel world out there. we cannot afford to be cry-babies all the time. it’s time we learn how to really compete in the world market, not just rely on the taste (or arguably, patriotism) of the overseas filipino. neither can we rely forever on “most favored nation” tariff treatment or export/import quotas. this is a global economy. we must learn how to compete or be forever gnashing our teeth.
Abe N. Margallo on November 2nd, 2008 9:54 am

“If Filipinos (beyond the usual Filipino-Chinese) are going to achieve success, much effort should be taken to be able to help them think out-of-the-box, reduce risk-aversity (sic), and evangelize the virtue of innovation (or more specifically product-development), which in turn would lead to a much productive and high-profit business environment.” - Jon Limjap

Why not . . .

If the usual Filipino-Chinese (who have ready access to capital markets and other institutional resources as well as formal education/training from the best business schools) are going to achieve success (against regional and global competitors), much effort should be taken to be able to help them think out-of-the-box, reduce risk-(averseness), and evangelize the virtue of innovation (or more specifically product-development), which in turn would lead to a much productive and high-profit business environment.

btw, evidence from so-called late-industrializing countries (e.g., South Korea or Taiwan) show that they are catching up or have actually caught up with “advanced countries” because their “power elites” have progressed from rent-seeking to vigorous entrepreneuship although they have basically industrialized as copycats through learning and imitation from borrowed technology.
cvj on November 2nd, 2008 4:00 pm

Abe, thanks for that. That’s a point i’ve also tried to highlight in this and other forums. The locally-based Taipans are actually lackluster compared to their counterparts in the region. (Why Benign0 puts the onus on industrialization on those who have less access to capital, instead of the Taipans and other Oligarchs is the part that does not make sense.) To be fair to Jon, in an earlier thread, he agreed that that Oligarchs have to do their part.

My concern right now re “oligarchs” is how to convince them to wean away from, or at least diversify into, industry. While I trust their business acumen, I have a feeling that there are some untapped/unfound industrial markets out there that they should be able to exploit but are too lazy too look for and/or it’s not lucrative enough for them. Ayala does have its own IT segment, however, as well as PLDT. - Jon Limjap

Benign0, for his part, is just a racist who judge’s people’s worth on the basis of their personal wealth.
Karl Garcia on November 2nd, 2008 5:36 pm

The lemonade stand effect:
nagsimula sa hot pandesal,litson manok,shawarma,pearl shake,creppes, etc.

they just mushroomed and disappeared one by one,with only the fittest and the luckiest survive.

yung sinasabi kong hot pandesal yung do it yourself,na nauso dati.

===========
I think when it comes to franchising,di mo na ito matatawag na copy cat, although technically it is.
cvj on November 2nd, 2008 5:39 pm

Karl, why not?
benign0 on November 2nd, 2008 5:53 pm

cvj, the taipans already made their furtunes and employed the masses. So on top of that you expect them to spoonfeed the masses as well?

As Bill Gates said, money is the best scorekeeper.

I saw a feature on Sydney Morning Herald about how ASEAN “which includes Singapore, Malaysia, Thailand, Indonesia, and Vietnam” is a big market for Australian goods.

Note the absence of a 90-million strong country and how a formerly war-torn communist basketcase has now taken its place in the Starting Five.

Certainly we are judged and given importance based on our economic output and not by our numbers.

Tough luck!
cvj on November 2nd, 2008 11:02 pm

cvj, the taipans already made their fortunes and employed the masses. So on top of that you expect them to spoonfeed the masses as well? - Benign0

As JFK said, “For of those to whom much is given, much is required.”

Despite their relative achievements, the Taipans still compare poorly when benchmarked against their counterparts in Japan, Korea, Taiwan and China, which is why we haven’t yet achieved NIC status. As business leaders, they haven’t done nearly enough so it is premature for them to rest on their laurels. From the point of view of Society, making personal fortunes is not what counts. What matters is their contribution to building up our local industrial production capabilities.

As a practical matter, don’t you think that those who possess the Capital are the ones who are better able to invest in industrial ventures? I’m all for the poor becoming self-reliant and as the GEM statistics bear out, large numbers of them have indeed gone into business for themselves. Jon’s observations and suggestions for improvement above are well taken, but is it reasonable to expect from the poor (who will have a hard time borrowing from a bank) what even the Philippine Taipans are unable to achieve?
leytenian on November 2nd, 2008 11:30 pm

Capital? no problem

“A bigger chunk of household incomes (specially incomes sustained by OFW dollars — remitted by whatever is left of the overseas labour force) will remain parked in bank accounts.” benigno on protectionist trade… “fasten your seatbelt ”

this is a good source of capital for small business.
Why is it most OFW are buying real estate instead? Look at how real estate developer market their products? Real estate investment will not make good return and will not employ the many. It’s a wrong policy for government. There should be impact fees and qoutas among developer. The government’s role is to spread capital that will create employment. Real estate investment should coincide with economic development- (local income) in the area. This is where the rich will become greedy by targeting the cash flow of OFW, FW.
Karl Garcia on November 3rd, 2008 6:30 am

OK franchising is being a copycat.
What I wanted to say is the master franchisee gives its consent to use its brand,its models,etc.with royalties as payment. rather than just allowing itself to be copied with nothing to gain.
Was that the question,Chuck?
cvj on November 3rd, 2008 8:13 am

Karl, yes that was my question, thanks.
Karl Garcia on November 3rd, 2008 9:24 am

no problem, chuck
as a private citizen on November 3rd, 2008 10:50 am

well leytenian, its in the Filipino psyche, when confronted with so much wealth, he expresses it first with material possessions, then with a house; how beautiful it is, where it is located and what are the things in it. with more and more middle and lower middle class going abroad, hence the real estate and car sales boom.

only after that shall he explore other options that could possibly enrich him further
Jon Limjap on November 3rd, 2008 10:51 am

cvj,

Points taken, and taken well. Again, in any sector there will be good eggs, and there will be bad (melamine laden?) eggs. I’m just hoping that Filipinos would both learn to be good-egg businessmen and become big at the same time.
Jon Limjap on November 3rd, 2008 10:55 am

baycas,

“Da Original” is a particularly pathetic response to what happens with those products, but sometimes it is more about ignorance and lack of business education that anything else. Seriously, if you are “da original” and you have nothing to show for being “da original” other than brown-paper packaging and a pseudo-brand name printed on via a rubber stamp, it doesn’t matter if you’re “da original”, it tells me that you’re a really, really bad salesperson.

As for them dried mangoes, the problem with the branding copy cats is that they relegate themselves to an inferior dead-end when they deceive people like that. Granted they could use the imitated branding to try and get big, but if you get big without an identity you’ll have to go through the whole sales and branding cycle again.

One’s branding HAS to be unique from the start.
Jon Limjap on November 3rd, 2008 11:04 am

Pat,

Thanks! Hopefully I am able to help “balance” FV in my own way.

Startup funds and capital is a whole other topic, in general. Are you asking about our business, or are you asking about startup funds and capital in Filipino businesses in general? I’ll have to do more research on that, for the latter. Maybe another article later on
Jon Limjap on November 3rd, 2008 11:10 am

blackshama,

Maybe I should see that “baye-baye” thing for myself

benign0,

I *did* mention shawarma in my post, but only in passing.

I do have to agree with your comment to cvj. It’s really all about economies of scale. Unfortunately Pinoys *abhor* economies of scale, for some reason or perhaps out of sheer ignorance of economics. That’s why the system here is all tingi-tingi.

Even in that 300 meter bagoong stretch (which I saw again last night, on the drive home) I would argue that if all that bagoong inventory were sold and marketed by one person, that person would be exponentially bigger than all of them stall owners combined.
Jon Limjap on November 3rd, 2008 11:24 am

Ca T,

The Philippine Trade Training Center (PTTC) actually has a LOT of cheap seminars on how to put up a business. Its business registration (DTI -> BIR) seminar is actually only FIFTY PESOS last time I looked (2005). Not sure how much na ngayon.

It’s not that there’s a fountain of water nearby. I would argue there’s a well. Kelangan lang tiyagain mong ibaba yung balde para sumalok ng tubig at iangat ulit.
Jon Limjap on November 3rd, 2008 11:35 am

leytenian, Karl,

A franchise is NOT a copycat business. A franchise is to establish a business system, branding, and marketing, and then employ the help of other businessmen wannabes to invest in your system/branding/marketing so that you would expand rapidly.

Note that there are no two Jollibee stores that ever go up side by side, although there are places that there are two Jollibee stores that are within 200 meters of each other, but if and only if that place is so densely populated that both Jollibee branches would be full during mealtime.

That’s not copycatting, that’s great business!
Jon Limjap on November 3rd, 2008 11:41 am

Abe,

While in a sense late industrializers did copy products, they arguably made poorer quality products targeted to a different market (that is, their own local markets) and/or offered a cheaper offering for the original markets.

The problem with Pinoy copycat industries is that “da original” would usually stagnate in terms of quality and the copycats would be able to follow up with the same quality but at a lower price point. Low quality + low prices + no high quality offerings = no innovation. Business disaster at its finest.
leytenian on November 3rd, 2008 11:43 am

If there’s PTTC , the smaller communities can also avail. the cheapest way is to duplicate PTTC among municipal offices or at college campuses throughout the country. there’s many ways to attract potential talents. A TV show maybe? it is the government’s role to recognize and search for talents. Pinoy are so good at following trends. It is a matter of how is it going to be introduced consistently for everyone.
cvj on November 3rd, 2008 11:49 am

Jon, technically it’s still copycatting (at 11:35 am and 11:41 am), albeit done smartly, since franchising as an approach is essentially one of imitation, not innovation. (The term ‘franchising’ though does not have the pejorative connotations of the former, i.e. pag-’franchising’ sosyal, pag-’copycatting’ jologs.) Nevertheless, the historical fact is that the late industrializers became good copycatters first (inferior quality, low price) before they became innovators in their own right. I believe that whether it be imitation or innovation, the lesson is that our business should pursue a strategy of continuous improvement.
Jon Limjap on November 3rd, 2008 11:56 am

cvj,

I still have to disagree with that. Assuming you are correct franchising is copycat-by-contract, which means that you have to follow certain rules. There is a system you cannot deviate from. You have a production method that you have to follow to the letter. You have a branding that you cannot mutilate or modify. You cannot compete with other people with the same franchise.

This is as opposed to outright copycats who usually copy systems out of perception (e.g., they copy what they perceive the system to be without knowing what the actual system is), copy perceived production methods (based on hear-say, or espionage), and copy branding (slightly modified of course, or have no branding at all!).

If it is copycatting — it’s copycatting done right.

Unfortunately, I acknowledge recent developments in the franchise sector have started putting up pathetic franchise offerings (certain squidball and cheap pizza stands, for instance) wherein they are franchising a business without a system that is actually proven effective. In essence, hinahatak lang nila ang pera ng mga nagpapa-uto.

That in turn, is franchising done wrong, or franchisers who are copy-catting the franchise strategies of distributors like Jollibee.
Jon Limjap on November 3rd, 2008 12:06 pm

cvj,

Just to underscore the point, however, the lamentations regarding product innovation and development do include the Filipino Chinese.

I’ll give you a list of (far as I heard, Chinese owned) retail businesses that are doing a TERRIBLE job in their respective businesses:

* Ever Gotesco
* Isetan
* Liana’s Supermarket
* Masagana Supermaket
* Fairmart/Plaza Fair

All of these retailers have horrendous facilities and services. Far, far cry from spotlight-hog and oft-maligned SM.

The list is much, much longer of course.
Jon Limjap on November 3rd, 2008 12:08 pm

leytenian,

Agreed with real estate re OFWs. There is an outdated myth about real estate vis-a-vis passive income that preaches that rent-seeking is the best way to get rich.

The reality is that the richest men in the world (Carlos Slim, Bill Gates, Warren Buffet) are actually active-income earners who work very, very hard monitoring their ventures.
cvj on November 3rd, 2008 12:08 pm

Jon, agree (@11:56 am) and agree (@12:06 pm).
leytenian on November 3rd, 2008 12:10 pm

Duplication of skills is also a copy cat. A self employed person cannot grow his/her business unless he/she will duplicate and hire people to move on the next. One cannot manage two stores at the same time. The concept of franchise is a formal way of copy cat. Rules and Regulations, Skills of personnels , products and services are copied from top to bottom.
A mix of goodies can be named Goodies, INC. Jon the owner wanted to expand to Cebu. The difficulty of managing the stores from two different location can be best manage by :
1. creating or applying for a franchise. Jon can either do all the work or Jon can sell its franchise and enjoy the rest of his life thru franchise fees.

2. Jon can easily hire a manager, making sure that Jon’s talent can be duplicated by the manager. If Jon fails to see the copy cat concept, the business can fail.

just kidding Jon. great blog.
leytenian on November 3rd, 2008 12:20 pm

there’s so much business opportunities in the Philippines. There’s plenty of money to be made in an emerging market. Any concept from the modern world can be copied to emergencing countries. let’s think for a bit. Jollibee is a copy cat of Macdonald’s with pinoy taste in it.

Real estate is not a good investment in the Philippines. It is only good to buy unless you will live in it as your home. Inflation rate in the Philippines is higher than real estate growth. The best approach is to buy a land from the poor, build your home and open a store. The poor who receives the cash may venture into business like another sari sari store. It’s a win win situation for an OFW and a poor pinoy. the copy cat concept is here. hehehe.
Jon Limjap on November 3rd, 2008 12:30 pm

leytenian,

There actually have been a LOT of livelihood TV shows out there. Right now I think the most popular one is ABS-CBN’s Kumikitang Kabuhayan.

Unfortunately these shows focus more on topics like production and set-up than marketing and innovation — and I can see some of the same flaws in magazines like Entrepreneur Philippines. More emphasis on marketing skills and blue ocean strategies will probably balance these things better.

I agree that there are a lot of opportunities in the Philippines, and it is unfortunate that too many of them remain untapped.
Jon Limjap on November 3rd, 2008 12:31 pm

And yes leytenian, I would love to be able to expand to Cebu, but my current aim is to expand worldwide instead, using the internet.
Marlon Ribunal on November 3rd, 2008 3:16 pm

Well commented article. Nice work Jon!
Paulyn on November 4th, 2008 10:55 am

i am benefitting a lot from the discussions following the post, thanks guys!
Driving down an unentrepreneurial road on November 9th, 2008 11:09 pm

[…] is a crosspost from Filipinovoices.com, last October 31, 2008, before setting off for All Saint’s Day […]