Jul 21, 2014

Philippines - Filipino brands urged to upgrade amid foreign brand invasion

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MANILA, Philippines – Local businesses are being urged to step up their game as more foreign brands are expected to enter the Philippine market in the coming years.

A number of foreign companies participated at the Franchise Asia Philippines 2014 Expo to look for partners in the Philippines.

Out of 500 exhibitors, around 60 were franchise companies from US, UK, Korea, Japan, Malaysia, Singapore, Taiwan and China.

"In this expo we have an increase of 400 percent in terms of international participation. Next year, I believe there will be another big influx of foreign franchisees," Samie Lim, chairman emeritus of the Philippine Franchise Association (PFA), told ABS-CBNnews.com at the sidelines of Asia’s biggest franchise expo held at the SMX Center in Pasay.

Lim cited the country’s young demographic as one of the reasons why the Philippines is now “at the center of international attention.”

“We have all these young people who are very cosmopolitan in taste, they want something modern, something new, and they’re all English-speaking so it’s very easy to communicate with them,” he said.

To keep up with these foreign brands, Lim encouraged local franchises to enhance their processes and improve their approach to branding.

“If you do not upgrade your concept, if you do not re-do your brand up to international standards, you may have problems in the future with your market share because the foreign brands are really very strong,” said Lim.

“We are very weak in branding, everybody still believes that branding is making a logo or a tagline, that’s not it. Branding is everything that we are, it’s a culture, so it’s a whole gamut of training of not only the top management but every employee from the president down to the people in the frontline,” he added.

Lim also said that the Filipino business community should prepare to upgrade their respective brands for the ASEAN integration in 2015.

“This is the final buzzer for ASEAN integration. As you know, 2015 is it. This is the last two minutes, so we are rallying the Filipino community to upgrade themselves in preparation for all the foreign franchisees that are coming in,” he said.

The event was organized by PFA and is supported by the Department of Trade and Industry (DTI), Philippine Retailers Association (PRA), Philippine Chamber of Commerce and Industry (PCCI), GoNegosyo, the World Franchise Council (WFC) and the Asia Pacific Franchise Confederation (APFC).

Asian brands

Most of the brands that are looking for Philippine partners are from neighboring Asian countries, particularly Singapore, Korea, and Japan.

A Singapore-based franchise consulting company, Astreem Consulting, is bringing in a number of big-named brands from Singapore to look for a master franchisee in the Philippines.

“What we are doing here in the Philippines is finding master franchisees for a lot of Asian as well as American brands. Philippines is a fantastic market, that’s why we are here,” said Astreem’s franchise director Abhishek Date.

Date said among the brands looking for Philippine partners are pizza chain Pezzo, Ramen Champion, and People Impact.

Pezzo, which has a flagship store at ION Orchard in Singapore, is a small pizza chain that operates on a kiosk basis.

“They have a very unique business model, which operates on a kiosk basis but the return on investment is within six months,” said Date.

Japan’s Ramen Champion, on the other hand, is one of the largest ramen operations in Singapore.

“It’s a brilliant market for the Philippines because we bring authentic Japanese ramen from various parts of Japan, so it’s not the ordinary ramen that you get everyday,” said Date.

Hong Kong’s People Impact offers IQ and EQ training for children.

According to Date, Malaysian brand Morganfields is in the final stages of securing a master franchisee in the Philippines.

Morganfields, a restaurant specializing in slow cooked and smoked pork ribs, is looking to open its first Philippine branch in about three to four months. It is planning to open 10 branches in the Philippines.

“Philippines has a very high acceptance of franchisers. For example, Singapore doesn’t have a franchise law yet these brands do phenomenally well. That means in very tough market conditions, these brands have survived and are successful, that’s why we believe in the Philippines, they will even do better,” said Date.

The cost of franchising for these brands average $150,000 to set up.

A number of Korean brands are also searching for a Philippine partner, including Lim’s Chicken, Korea’s first chicken franchise.

Lim’s Chicken’s Nicky Lee said the brand wants to expand in the Philippines for a simple reason: “Filipinos love chicken.”

Lim’s fried chicken comes in original and spicy flavor and is cooked with red ginseng. The master franchise of Lim’s Chicken costs $500,000.

Japanese brands also joined the expo, including Japanese bakery Hattendo.

Ichiro Fujita, president and chief executive of I. Fujita International Inc., said Hattendo has chosen the Philippines as the first country for its expansion outside Japan.

“The president of Hattendo wanted to expand into Asia and we were wondering where to start. We felt that the Philippine franchise show is one of the very successful ones,” he said.

Hattendo, known for its chilled cream bread, has 16 physical locations in Japan, and around 60 kiosks in major department stores and train stations.

If it sets up shop in the Philippines, Fujita said Hattendo will also target LRT and MRT stations in Metro Manila.

Jon Carlos Rodriguez

Business & Investment Opportunities 

Saigon Business Corporation Pte Ltd (SBC) is incorporated in Singapore since 1994. 

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