July 25, 2014  
 
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Entrepreneurship in the Philippines

Written by Scott Scheper for Gaebler Ventures

Mark, a Filipino entrepreneur, gives us his perspective on entrepreneurship in the Philippines. For many Filipino entrepreneurs, entrepreneurship is a necessity.

For this article, I interviewed a friend of mine from the Philippines named Mark.
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Mark and I met through a mutual acquaintance. We have been in contact mainly through email ever since.

What helped our friendship to survive has been our interest in entrepreneurship. Mark is a serial entrepreneur. In this article, I conducted an interview with Mark, and, in his own words, he tells of entrepreneurship in his country, the Philippines.

How tough is it to become an entrepreneur in the Philippines?

I won't mince words—it's tough to do business in my country.

It's not as if there is a lack of entrepreneurs, or negosyantes as we call them in the Philippines. A stroll down a side street in Metro Manila will reveal dozens of businesses lining the road: tiny food kiosks, small groceries, vendors, internet cafes, you name it.

From one standpoint, the Philippines is highly entrepreneurial, but there's the rub—all of these businesses are small to medium scale enterprises; in fact, they account for 99% of all business establishments and 60% of all exporting firms in the country. And only a few of them can claim to be a success.

What are the challenges and opportunities entrepreneurs face in the Phillippines?

There are countless reasons for this sort of hardship, but here's the gist of them.

The World Economic Forum recently released the Global Competitiveness Report for 2007-2008, ranking the Philippines as Number 71 out of 131. Far from the bottom, but really bad news considering that neighbors Malaysia, Thailand and Vietnam ranked 21, 28 and 68 respectively.

Even more interesting is what the report states as the country's biggest problematic factor—perceived corruption in the government. To put it bluntly, government money is winding up in official's pockets.

Granted, there are other factors, but this last one feeds the others. The systematic plunder of resources means fewer infrastructures, less budget for education, less access to technology and finally, less access to financing. Add that all up, and the prospect of starting up a business in the Philippines is very bleak, indeed.

And yet, you'll still find negosyantes here, everywhere you go.

The reason behind this drive for entrepreneurship is need itself. With a lack of jobs for unskilled people, coupled with the pressure to providing for one's family, many Filipinos look for income in any way they can.

Thus, you see the proliferation of SMEs all over the country, anything from a small store beside the house to a mobile food stall installed on a bicycle's sidecar.

But grinding poverty isn't the only reason that Filipinos start businesses. Despite all the hardships, Filipinos are a creative, energetic people, filled with innovative ideas and a drive to take care of their own.

Most of all, they have an indomitable optimism that on some distant, secret day, they will finally strike it rich.

And there are some who have.

Can you share with us any successful stories of entrepreneurs from the Philippines?

Yes, absolutely. Henry Sy Sr. began life as a businessman with a simple sundry store. After World War II, he hit upon the idea of importing shoes from the United States.

As his business grew and he started selling items other than shoes, he realized he could import one other thing from the US: the concept of the mall. That's how Henry's brand name for his chain of malls, ShoeMart, came to be. In the early 1980s, Henry built SM North Edsa, at the time when the country's political and economic turmoil under a dictatorship made such a venture ludicrously risky. People scoffed at Henry's investment, but he paid them no heed.

Now, Henry Sy owns three of the ten largest malls in the world, and the SM brand has become a household name all over the country. At age 82, he is one of the richest men in the Philippines with a net worth US$ 1.4 billion, ranking 349 in Forbes magazine's 2007 Annual Billionaire's list.

Another equally astounding success story is that of John L. Gokongwei, Jr. At the age of 13, he would sell thread, candles and soap at a local market, sometimes earning up to 20 pesos a day. But after World War II, he managed to scrape together 50,000 pesos. From there onwards, he and his family moved on to importing, manufacturing, and creating break-out brands.

In his own words, "From one market stall, we are now in nine core businesses-including retail [Robinsons Retail Group], real estate [Robinsons Land Corporation, Robinson Galleria, Manila Midtown Hotels, etc.], publishing, petrochemicals [JG Petrochem], textiles [Litton Mills], banking [Robinsons Savings Bank], food manufacturing [Universal Robina Corporation], Cebu Pacific Air and Sun Cellular [plus Digitel]."

These two gentlemen are prime examples of Filipinos who made it big, but they are by no means the only ones.

In recent years, many successful businessmen began sharing their success stories with the rest of the nation, in hopes of igniting further efforts in entrepreneurship. One of the most prominent movements is Go Negosyo. Beginning from a simple book, "Negosyo: Joey Concepcion's 50 Inspiring Entrepreneurial Stories", it has evolved into a website offering all sorts of entrepreneurial services for Filipinos, including inspiring anecdotes, mentoring, toolkits for start-ups, and a means of connecting with others owning related businesses.

Using the concept of synergy, local entrepreneurs are out to make sure that not only will they find personal success, but that Filipino entrepreneurs as a whole will succeed together.

Have you ever thought of venturing out into a different country?

Good question.

As you can tell, Filipino businessmen are a hardy stock. They have to be, growing up in an environment where more often than not the odds are stacked against you. As a young upstart in the business world, I have to admire the way they can do so much with so little, and the eagerness by which they share how they succeeded.

I know it's easier to find work or do business in some other, more affluent nation, but I can't help but feel there's really something special about my countrymen.

Yeah, it's tough to do business in this country.

That's why our entrepreneurs are among the toughest in the world.

Scott Scheper is a venture finance enthusiast and serial entrepreneur hailing from Orange County, CA. Scott recently graduated from Chapman University where he was a Cheverton Fellow and graduated with honors in Finance, Management and Marketing.

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