The age of the Filipino entrepreneur

The age of the Filipino entrepreneur

By Tony Lopez

With its very high literacy rate, skilled workers, a large pool of managers, and a growing consumer market with western tastes, the Philippines should be a natural haven for entrepreneurs. It is not.
One reason is the lack of an entrepreneurial mindset. College graduates leave school thinking of a 9 to 5 job.
Another reason is lack of capital. There has not been much money to spare for small, struggling firms with little track record in the market and management with even smaller track records. And the scarce money that is available comes at a stiff price, higher than the 9 to 12% per year money that big companies are able to borrow.
What to do then?
Develop the entrepreneurial mindset, suggests Jose Concepcion III, CEO of the food company RFM Corp.
“We need to rally behind a national advocacy to push entrepreneurship,” he contends. Moreover, we want our countrymen to take their entrepreneurial drive to the next level. This means seeing that they grow from “survival” micro-entrepreneurs into “opportunity and innovation-driven” SME owners, the young Concepcion suggests.
A group of entrepreneurs have put up the non-profit Philippine Center for Entrepreneurship (PCE) together, Concepcion, with Tony Tan Caktiong (Jollibee Foods Corp.), Joselito Campos (Southeast Asia Foods/Heinz-UFC), Dr. Rolando Hortaleza (Splash Group of Companies), Atty. Felipe Gozon (GMA Network), Socorro Ramos (National Bookstore), Harley Sy (SM Investments), and Vivienne Tan (Entrepreneurs School of Asia, formerly Thames International Business School).
PCE’s concrete goal, says Concepcion, is to spawn the creation of so-called “Go Negosyo Communities” everywhere. These are communities where the academe, business and government sectors are drawn into a triangle of almost seamless collaboration.
“In such an ecosystem,” he explains, “there will be constant networking, mentoring and cooperation among professors, entrepreneurs, industry experts and venture capitalists, with the government providing support through a viable policy infrastructure. Every “Go Negosyo” community will be distinguished by its ability to produce a continuous stream of startup ventures.
PCE would also like to embed strong entrepreneurship lessons into the school curriculum. It is never too early, even for children in grade school, to be exposed to a real enterprise. If the goal is to develop a culture of enterprise and cultivate tomorrow’s competitive entrepreneurs, we must start them young, emphasizes Concepcion.
“Our primary and secondary schools can teach the values and develop the mindsets of an entrepreneur. At the college level, we are looking at how we can assist in the area of curriculum enhancement, providing manuals, training the teachers, and involving real entrepreneurs in the learning process.”
As for the lack of capital, Socorro Ramos, the founder and general manager of National Bookstore, has a very old-fashioned advice: be thrifty, save money, cut costs, buy less jewelry. Especially now, she frets, “when consumers seem to be holding back. They don’t want to spend because they seem worried about something. The trend became apparent second half of last year.”
So what does an entrepreneur do if he has little capital? “Start small,” Mrs. Ramos suggests.
“Most businesses start small,” adds Ben Chan, of the now legendary Bench garments chain. “And don’t be afraid to make mistakes. Just keep of trying new businesses until you succeed,” he advises. He recalls that before Bench, he tried Dimensione furniture and later rattan furniture, which at one point, was the craze in the United States.
Basic to entrepreneurship is taking risk. “You must be willing to take risks,” says banker, industrialist and philanthropist George S. K. Ty, chairman of Metrobank, the nation’s largest lender, and of Toyota Motor Philippines, the country’s biggest car manufacturer.
There is a secret to taking risk. “It must be disciplined,” points out Arthur Ty, 39, vice chairman of Metrobank. “You have to know when you are taking too much risk,” adds Alfred Ty, Arthur’s younger brother who heads the Metrobank group’s property and hotel operations as well as the Toyota franchise. In that sense, explains Arthur, “my dad is very good. He has a way of looking forward into the future which usually is right.” (See Buffett on taking risks, Page 39).
How do you train entrepreneurs? “Start them early,” says Arthur Ty. At ten, he was a messenger boy at Metrobank. This was the time when child labor laws were not yet in effect. Arthur rose through the ranks, becoming eventually, Metrobank’s vice chairman. When he takes over as president in April, he will be the country’s youngest bank CEO.
One way to minimize risk is to work hard. At Metrobank, says Arthur, 12 hours is a typical work day. He notes that current bank president, Antonio Abacan, reports for work at 7 in the morning and usually goes home at way past 7 p.m. Unlike many bankers, Abacan hardly plays golf because he has to spend time with clients.
That’s another secret of entrepreneurship. Service. Give what the customer wants.
Tony Tan Caktiong recalls that the ice cream house that preceded Jollibee in Cubao became successful “because customers were excited by the cleanliness made possible with white glove inspection on the underside of the table, super efficient service shown by serving a glass of cold water even before the customer sat down, and over-portioning of ice cream to the point were actually losing our profit in every scoop we served!”
Tony found out customers were craving for something hot. So he offered hamburgers which soon outsold ice cream. And even when McDonald’s entered the market, Tony was unfazed. “I knew our customers liked our hamburgers. They liked Jollibee’s taste and they kept coming back.” Today, Jollibee outsells McDo by two to one.
For their part, the Ayalas do not believe that just because you are members of the family you must be forced to join the business. “My father wanted to make sure that we were interested, qualified and would be passionate about the business,” says Fernando Zobel de Ayala, co-vice chairman of Ayala Corp., the banking, property and industrial conglomerate.
“When we came in, we were trained as managers and professionals, not as owners,” recalls Jaime Augusto Zobel de Ayala, the president and CEO of Ayala Corp. “We did summer jobs from an early age. I was with the Dept. of Trade and Industry when I was quite young, just before entering college, with a group put up to encourage and help small businesses.”
Fernando and Jaime both worked in a plantation in Davao.
Fernando worked outside Ayala, joining Shell in Brazil. At that time, Ayala owned part of Pilipinas Shell. For his part, Jaime did a summer job with Royal Orion, a London-based merchant bank, before entering college and also did some work at JP Morgan in Paris.
JAZA defines entrepreneurship as the capacity to see an idea, an opportunity, and bring the capital, knowledge, partners and the managerial skills needed to develop and then make it sustainable.”
He adds: “It is also about taking risks, and about failure. The stories of great entrepreneurs, people who have achieved great things show that failure is very much part of their lives.”
“I believe,” Jaime declares, “that an entrepreneurial culture, rather than a purely managerial one, is important particularly in this day and age when change is an important part of our lives.”
Entrepreneurship is often associated with starting small, and is very important at that level, Jaime observes. “But at the same time, you need entrepreneurial spirit at the level of medium-sized industries and on a larger scale, people who are willing to put capital to work and who use their balance sheets and reputation to help build the infrastructure needs of a country.”
To build infrastructure, such as rail, ports, and telecom, “you need not just the multinationals that come in and build,” Jaime Augusto points out, “but also large Filipino companies that have the capacities.”

Email tonylopez@biznewsasia.com

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