Sunday, September 4, 2011

‘Medieval European feudalism’

You would think this is 21st century Europe, but the down trade is still reminiscent of medieval European feudalism. And so the modern trade accounts for 80% of our business. My goal is to bring that down to 60%, and eventually 50%, and that means I have to invest in the down trade and make my products accessible to those feudal villages.” The writer is reviewing the newest business of his Eastern European friends – and very impressed with the 360-degree approach to marketing, including the power of the concept behind the product – which jumps out from the communication materials, and even when benchmarked against other categories of products. As importantly, the assessment is confirmed by those outside the organization, and consumers that were grabbed by the campaign.

But ‘feudal’ resurfaced when the discussions moved to the market conditions obtaining in the different countries. Some countries in the region are still run by lords! And it is especially true of those outside the EU and not subject to EU oversight. (Of course, not even EU could preempt the supposedly more sophisticated PIIGS from shooting themselves in the foot.) That said, just like China, despite being bedeviled by human-rights issues, Western businesses continue to chase their potentials. (Their average income, for example, makes them more attractive than the Philippines.) And clearly, being once communist-run, these countries could use 21st century ‘goodies’. Unfortunately, many people have been burned like Western Europeans who thought they found an alternative investment to the Spanish or Portuguese seaside, when their cherished second home by the Black Sea declined in value just like everywhere else.

For Philippine businesses, Asia or even the ASEAN region would be a good market and thus don’t have to follow the lead of global enterprises – who have but saturated the world and thus emerging economies irrespective of location are ‘must-target markets’. And the key in venturing into emerging markets is the wherewithal of a business to handle the ‘curve balls’. Yet in one country the change has been positive: The Prime Minister cleaned the police force by ridding the Interior Department of all political appointees. And to ensure efficient tax collection every ‘point-of-sale’ had to be online; and when a Russian oil company failed to comply with their gas pumps, he shut the company down. And at the Customs, he simplified the process: documents are simply submitted and in 4 days are back via courier – no room to negotiate ‘expediting fees’; people queuing with documents in hand only hear one word, ‘next’. And learning from the malfeasance of the prior administration when road-building funds were withheld by the EU, he would announce the precise timeline of a project which everyone thought was a joke – until they saw work going on 24/7. “We thought it was a dream, not in this country did we ever see people do work 24/7.”

Being confined and dealing with local issues could mean lesser stress for Philippine enterprises. But it is a double-edged sword: it can discourage Philippine companies from venturing outside the country? And it would be unfortunate? We won’t move up the learning curve – and accumulate wealth and gain the means to be ourselves foreign investors – if we remain inward-looking? Sadly, the Filipino mindset has yet to evolve – i.e., we’re still about ‘thinking global but acting local’? The problem with that is when ‘acting local’ means tamping down or limiting our worldview and turning it into a parochial bias? Simply put, we really don’t want to “run the country like hell” – i.e., that’s great sound bite but translates to turning back the clock, reminiscent of medieval European feudalism?

There are people whose heritage, while characterized by feudalism and socialism-communism, are consciously marching forward with time – like the writer’s Eastern European friends! He would still break into a grin whenever they remind him they’ve become capitalists. The imperative of investments, for instance, has become second nature – because they’ve realized that no one could define the future for them! And since they’re still learning the ropes, they could not let their guard down! Unsurprisingly, a business unit while presenting their updated 3-year plan exuded so much confidence that was not lost to the writer!

The world is moving ahead, with or without us? And to be left by the train means more, not less, poverty? But, of course, for the few, it would be heavenly – which was how Catherine the Great saw it?

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