Part 2 of ‘Chinese are business steroids’ https://www.manilatimes.net/2019/10/20/opinion/columnists/chinese-are-business-steroids/
How do we benefit from, or manage something, if we do not objectively see what it is useful for and not good for? We can look at what experience has shown, as well as a breakdown of factors, on the experience of enterprise with the Chinese-Filipinos.
The Chinese are catalysts and creators of enterprises, often where they did not exist before.
The Chinese who came to the Philippines, who were not traders or craftsmen, started by taking the jobs that the Spanish and the locals looked down on — low value physical labor and services. Eventually organizing the buying and selling of agricultural products, they came to organize production as well, intermarry, and become part of the Philippine middle class and Spanish elites (part of the famous mestizo families we recognize today).
A new wave of Chinese immigration entered in the early 1900s, and most were smirked at by the local elites as the mambobote-mandyadyaryo (junk bottle and old newspaper collectors), and were also seen as competitors.
These early, migrants eventually went into the manufacturing of textiles, steel, shoes, furniture, liquors, chemicals, garments — we should note that industrial manufacturing was not of interest to most other local families, even the wealthy and well connected ones. These Chinese became citizens and are whom we generally call “Chinoys” today, whose children grew up and studied in the Philippines and are well integrated into the Filipino society and way of life.
A point to note is they were not just creating single enterprises, but they were:
Creators of ecosystems where these were lacking. Financing was lacking for the startup Chinoy entrepreneur as banks were reluctant to lend to a new player, but this was provided initially by the word-of-honor system and the reputational checks provided by the community associations. Later, they set up formal financing institutions and banks that would also help augment the local market and expand the national economy, like China Bank that helped provide initial capital to some of our country’s biggest conglomerates when they were starting out.
Formal education was not needed. You could take a mentor, and all you needed was a transaction with a value proposition.
This robust model of starting up with little education and little capital and few relationships, unlike the Western model which is costly and time consuming although also successful, has allowed many enterprises to start, but it requires certain unwritten codes of conduct, reward and punishment.
We can see the results today of that system all over Asia. In the Philippines, beyond the individual enterprises, multinational enterprises from homegrown brands that have dared to compete, successfully, with multinationals abroad were developed with local Chinoys — Jollibee around the world, Oishi in Asia, Alliance Global’s liquor empire extending to Europe, SM and LT group in China, SGV group now merged with a US group. They not only allow Philippine concepts, branding and professional skills to be exported around the world, but also let us test and learn about markets, management techniques, and technologies — talents from the rest of the world to infuse back home.
Of course, we also have the non-Chinoy groups like Ayala, Razon, Aboitiz carrying our flag proudly elsewhere. Many more enterprises are exporting around the world, and also partnering with international enterprises.
Chinoy enterprises have also created entire municipalities nearly from scratch in the last 25 years (Eastwood City, Mckinley, Resorts World, Mall of Asia Area and others). They have surpassed cities in the country that are over a century old — in population, employment, diversity of enterprise, and volume of economic activity. These all rose from areas that were considered “inactive,” out-of-the-way areas of Metro Manila. They are examples of not just riding on the infrastructure or economic activity trends of an area, but of understanding and creating entirely new centers from new concepts or visions.
From this past experience, it is likely we will benefit from extensive addition of new enterprises, investments, markets, if we manage our relations productively.
What are negatives of the new China wave and how should we look at these?
Crudeness and cultural differences. Many of the new visitors are from the provincial, less refined sectors of China. We had crude behavior also from earlier Americans, Koreans, Arabs and Japanese, including massive prostitution and fights, which have mellowed into good relations today. It is likely that the same will happen over time, although there is stress of large numbers in small areas with the Chinese.
Breaking of rules. Experience has shown that the great majority can be convinced to follow the rules after several tries and rules and penalties are made understandable, which is true of most peoples. Both the Chinese government and people generally accept our rules for implementation here, and penalties for violation.
Orientation of both Chinese and Filipinos on the cultures of both sides from the beginning, on likely situations, and how each can handle and manage the differences, can be done.
Economic growth doesn’t happen in a straight line.
There are reported increases in crimes. These are being managed, but must be continually calibrated, and coordinated with their government, and the beneficiaries of these added incomes — who should contribute to enforcement. Issues are from both sides, but most reports are just of one side. We should be aware and create incentive and penalty systems that will adjust behaviors. Added crime is true for almost all added activities of a large scale, including tourism, high growth of an area, etc… But close management and communication, iterative response help redirect more effectively.
More of managed and initially selected interactions between people to people, and groups that can act as bridges are required. Organize teams to refer issues to for quick advice.
Deeper mutual learnings. The two cultures have much to learn and benefit from each other: the Confucian cultures have been shown to be disciplined, pragmatic, enterprising in various ways, Meanwhile the Chinese can learn from Filipinos a more Western mode of relations i.e., development, humor, service orientation, etc…
Net beneficial. While there are costs and negatives, if we consider how hard it is to create, self-sustaining enterprise as experienced by our NGOs and schools, with more than 90 percent failure.
At over P120 billion a year inflow into the Philippine economy generated by the current China wave in rentals, taxes, expenses, etc., we may look into allocating more of the incomes from these to different schemes to mitigate the negatives and increase the positives.
Nothing is purely beneficial or purely harmful, we should expect to make more effort to have greater gain for our country.
[Part of Series: ‘Chinese are business steroids’ https://www.manilatimes.net/2019/10/20/opinion/columnists/chinese-are-business-steroids/]
George Siy is a Wharton-educated industrialist, international trade practitioner and negotiator, serving as director of IDSI. He has been invited as a resource person on economic and development issues by various business organizations, media and the academe. He has advised the Philippines and various organizations in trade negotiations with Asean, Japan and the United States.
New Worlds by IDSI (Integrated Development Studies Institute) aims to present frameworks based on a balance of economic theory, historical realities, ground success in real business and communities and attempt for common good, culture and spirituality. We welcome logical feedback and possibly working together with compatible frameworks (firstname.lastname@example.org).