Thursday, September 26, 2013

Preparing for 2015 – APEC integration

First of all, like a lazy student (that I once was) we are – if it isn’t obvious yet – cramming for the exams? We must not then expect manna from heaven? We ought to appreciate, understand and accept that Singapore, Malaysia and Thailand dominate inter-ASEAN trade to the extent of 70 percent. That is what we’re up against. In other words, they have the requisite ecosystem that makes them dominant, and 2015 will mean gravy given what they’ve established over the years. They will reap what they’ve sown and lower/no tariffs will ensure that.
But tariffs (or even currency) are not the first imperative in trade especially in the 21st century. It is the products and services that we are peddling. And why this blog (while about the economy) talks – beyond the imperatives of a transparent culture and prioritizing infrastructure – about marketing or its fundamentals: product, pricing, placement (e.g., distribution and presentation) and promotion; and also the imperatives of global competition: investment, technology and innovation as well as talent development, and product and market development. For example, our biggest exports are electronics but we are into chips, not finished consumer products. [And Warren Buffett comes to mind; beyond being a value investor, he recognizes the value of strong brands and would invest in the latter as opposed to technology which he admits he doesn’t understand. But in PHL, we’re in electronic chips but don’t truly understand technology – or why Ayala is limited to chips?] We are at the mercy of countless variables, and thus our fatalism would continue to be preeminent in our psyche?
If we want to leverage “bukayo”, for instance, the question [and we must do a similar exercise for other products that would differentiate us and, as importantly, have value-added] to ask is: how do we introduce value-addition to what, first and foremost, we must consider a basic product – “bukayo.” For example, what flavors are universal that would find a market beyond our shores? What different packaging variants would make it appealing and stand out when put on the shelf side-by-side with competing sweet products? [Imagine Ferrero Rocher chocolates which chances are we would have seen traveling in the region. Note chocolates and potato chips are the largest selling snack foods.] Then we have to test whether our hypothesis will hold true in the global marketplace. That is what we ought to be talking about? And to get to our desired outcomes (i.e., increasing revenues with healthy margins to ensure a sustainable economic activity) we then must test the product ideas against the imperatives of pricing, placement and promotion. Which means we have to do an honest-to-goodness assessment of where we are from (a) an investment standpoint and, as importantly, innovation as well as (b) in talent development, and product and market development?
Every industry wants a road map where government would offer incentives tax-wise? Clearly, government must prioritize infrastructure if we are to even have a prayer in global competitiveness. Yet industry (as in oligopoly?) has undermined the very foundation of our economy, i.e., lopsided and skewed for the benefit of the 50 wealthiest Filipinos – while leaving us uncompetitive regionally or globally? In short, we are worse than a lazy student. Are we a disaster waiting to happen?
Our neighbors are doing better than us – they must be doing something right? But because of our “bida” culture we see their faults instead? For example, there is a new incentives bill the administration is pushing. How much benchmarking did we do to arrive at the administration’s proposal? Are we focusing on and prioritizing the 7 industry winners from the JFC? Or do we believe we have a universal template that will benefit over 50 industries? We’ve been playing the holistic, inclusive and comprehensive mantra for decades, yet we are the economic laggards? Prioritize. Prioritize. Prioritize.
A recent news about the Harvard Business School [Harvard Business School Case Study: Gender Equity, The New York Times, 7th Sept 2013] highlighted the seeming imbalance in its faculty make-up favoring male professors; while women professors are finding reasons to leave Harvard. And one explanation is students would give stellar marks to male finance professors, for instance, that come from the real world – and could discuss the realities of the marketplace like the back of their hand. While the women professors would talk about their research; and when students that also have real world experience ask questions, the women professors would seem intimidated.
That is not meant to devalue the academe, the key in crafting programs and plans like an incentives bill is to benchmark against countries that are doing well – they have the real world experience.

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