Should the Philippines care about Hyundai?

(New York Times: “Hyundai outshines global rivals”)

American auto executives have a lot on their plate – beyond Germans and Japanese. And we do too – yet our mindset (i.e., hierarchical and local bias) can undermine our efforts, rob us of our competitive potential.

In Metro-Manila and the provinces we see Koreans engaged in small home industries. Some of them admit to the Philippines being a better option given the high costs of living and doing business in South Korea. If the Americans have to contend and compete with Koreans, sooner rather than later our businesses would similarly go through the experience.

The writer is not advocating kicking out the Koreans; he is posing a challenge. Competition ought to pump up our adrenalin, not drive us behind the mantel of protectionism – or the world will indeed leave us behind in competitiveness. Net, we want them around to train us to compete and win.

Driving recently around northern California and over mountainous terrains, the writer was all praise for the Hyundai Sonata he picked up at the San Francisco airport. He had driven GM, Ford and Chrysler rental cars before. And so when he checked out afterward the prices of Hyundais, he was amazed at how relatively low-priced they were: a classic value for money proposition. Ergo: “Hyundai outshines global rivals” – predictable and expected! See: http://www.nytimes.com/2009/07/24/business/global/24hyundai.html?_r=1&scp=1&sq=hyundai%20outshines%20global%20rivals&st=cse

In earlier articles the writer talked about value-added products being key to make us competitive in the export or global market. We are competing against the rest of the world, not just the largest economies. In short, we ought to respect the businessperson from Korea who has set up shop in our neighborhood. We have seen how the roster of top businesses in the Philippines has evolved over the years with the most recent composed mostly of our taipans – the phenomenon is not unique to the Philippines; migrants do take the extra mile.

The Koreans are doing business not just in our small country but in the biggest markets of the world, primarily. But what was a Hyundai compared to a Lincoln or a Corvette or a Cadillac? (They are not . . . but we have . . . allowed our mind to be cowed by anything big like multinationals and the US – and thus ceded so much ground. What we need is to learn Chinese checkers – create our own path to glory!)

It takes no respect for: (a) hierarchy or (b) local bias to be able to do a Hyundai. It is what small businesses (in fast emerging markets) live by as they compete with much bigger and established economies. And they have developed the confidence to take on big players even outside their home market.

In the Philippines, our tycoons are aggressively investing and that is good for the economy. But they are fighting for the same handful of high-profile local businesses. Changing ownership: (a) reinforces our inward-looking bias – as opposed to competing in the global market, (b) is a wash from a multiplier (effect of investment) standpoint, (c) perpetuates our monopolist attitudes and (d) feeds our hierarchical structure and culture. (But they do generate incremental benefit through internal synergies? We need quantum . . . beyond incremental! We have stark poverty staring us in the eye!)

It is understandable that we’re cheerleading and celebrating every investment effort. But as we know – even in the best of times – OFW remittances and our focus on the local economy put our GDP only at a fraction of our neighbors . . . making us the least competitive. Unwittingly, our structure has: (a) a monopolist orientation at one end and (b) protectionist and socialist proponents at the other. Predictably and unfortunately, we find ourselves between a rock and a hard place!