'The power of niche'

In tourism, trade and investment, the Philippines barely registers on the radar screens of many countries.

Apart from better marketing and selling fun in the Philippines, what can we do to raise our international profile for tourism and business? We can take a leaf out of the books of other countries similarly situated – smaller or, more accurately in some cases, low-key players on the world stage.   

One of these players is New Zealand, which has existed for some time in the shadow of its larger neighbor Australia.

Yesterday about 120 businessmen from New Zealand, Australia and the Philippines wrapped up a two-day conference in Makati to explore partnerships in several areas.

The government’s public-private partnership program was mentioned, but the Aussies and Kiwis are no different from many other foreign investors in their tepid response to the Philippines’ PPP. The average foreign businessman believes those big-ticket government infrastructure projects – with all the attendant big-ticket headaches – are best left to major players in Asia (notably China), the United States and Europe, although European investors’ interest in the Philippines has also been dampened in the past years by several failed contracts.

What the just-concluded business conference, held at the Makati Shangri-La, aimed to promote were private sector partnerships in smaller projects. For the New Zealand businessmen, the main pitch was for partnerships in niche areas.

Phil O’Reilly, chief executive of New Zealand’s main investment group Business NZ, told me that despite long diplomatic ties between his country and the Philippines, his compatriots are more interested in business prospects in China and India (who isn’t?) and in Indonesia and Vietnam.

He thinks that this is probably because the Philippines is seen as a “middle economy” and businessmen tend to be more attracted to new markets.

“We have a bad habit of not making enough of the relationship. We’re guilty of not considering the Philippines enough,” O’Reilly told me during a chat shortly before he flew back to Wellington yesterday.

He said Philippine interest is also focused on Australia rather than New Zealand, with Aussie investments in mining dwarfing Kiwi business activities in the Philippines.

New Zealand has benefited in many aspects from its close ties with Australia, but the Kiwis have also worked to develop their own brand. And it is a durable global brand – one associated with quality, environmental responsibility and harmony with the international community.

That effort last year to save a penguin (later named Happy Feet) that had strayed too far from Antarctica, and then return it to its natural habitat when it had recovered from surgery, was so New Zealand.

O’Reilly told me – and the participants at the conference – that while New Zealand investors are not likely to provide financing to construct a dam in the Philippines, there are three things they can bring to the table: ideas, contacts, and the New Zealand brand.

For example, they can provide the knowhow to make a dam more efficient and earthquake-resistant. They can provide expertise in areas such as information technology, food processing, movie making, even gaming.

O’Reilly calls it “the power of niche.”

This is something that several Scandinavian companies also decided to focus on many years ago as they realized they could not compete in the low-end mass market with the likes of China and India – countries where labor and many other production inputs are dirt-cheap. The Scandinavians targeted niche markets, for example, in biotechnology. (The Chinese, incidentally, are rushing to catch up.)

Explaining what he meant by contacts, O’Reilly told me that the people of New Zealand “are friends with everybody.”

It’s a good brand to be associated with, for Philippine businessmen.

* * *

For their part, what can Filipino businessmen bring to the table?

O’Reilly has told his compatriots that, among other things, we have skilled workers who are proficient in English, plus a strong business process outsourcing sector.

The two countries share similar democratic ideals and have the same friends. There’s also that shared history that both sides seem to have overlooked, O’Reilly points out.

With partnerships, O’Reilly believes businessmen in his country and the Philippines have a better chance of competing in large markets such as China.

The Kiwis were furious when the impeccable reputation of New Zealand dairy giant Fonterra, one of the world’s largest suppliers of milk and milk products, was tarnished by the melamine scandal in China. But the incident has not dampened New Zealand’s interest in doing business in the world’s second largest economy.

The Filipino businessmen’s reaction to O’Reilly’s pitch for partnerships was “very positive,” he said.

He brushed aside problems often cited by foreigners doing business in the Philippines, saying these were “inevitable.”

“This is not a big issue,” he said.

There could be “proximity issues” because of the distance between the two countries, he said, plus “we’re seen as an add-on to Australia.” But he sees no major roadblocks to business partnerships.

“I really think there are big opportunities in the Philippines,” he told me. “There’s a lot to like about the Philippines, from a New Zealand perspective.”