Globalizing Corporate Philippines

For the longest time, the Philippines has been stereotyped as a principal source of cheap labor. Indeed, we have exported many of our people to greener pastures abroad.

But as the country shed its 'sick man of Asia' status in recent years, the Philippines is now much better appreciated as a vibrant consumer market given a steadily growing economy and a sizeable population of more than 100 million, mostly young people.

It's the same economy that has nurtured enterprises that have grown big enough, and confident enough, to compete in a regional, if not global, marketplace. Over the last three decades, we have seen more of these Filipino conglomerates and companies spread their wings. Thus, we are becoming an exporter of capital as well.

Gone are the colonial days of the East. These days, it's not surprising to hear about an Asian company taking over long-standing companies in the West. Or building a new business from scratch. Or bagging a much-sought big-ticket contract. Sure, most of them are Chinese, but some may just involve Philippine companies.

It's not exactly like landing on the moon for the first time but it's a big deal because in an increasingly borderless world-even as protectionism is on the rise in some places at this time-these local companies have set the bar higher. They gain valuable experience in running businesses across multiple markets, in dealing with regulators in various jurisdictions and collaborating with their foreign counterparts. So while they are fiercely guarding their home turf in emerging markets, they are also expanding their overseas footprint and blazing the trail for other local companies who aspire to go global.

Based on a 2017 survey conducted by PwC/Isla Lipana for the Management Association of the Philippines, 45 percent of chief executive officers in the Philippines said they were keen on expanding to overseas markets, particularly in Southeast Asia. Most tend to expand to neighboring emerging markets first but some have gained a foothold even in the most challenging places.

As we celebrate the Inquirer's 33rd anniversary, we feature 33 Philippine companies that are making inroads into the global stage.

1. SM PRIME HOLDINGS

   It was in the Philippines that tycoon Henry Sy found his fortune, but he never forgot about the land of his birth. Perhaps it's both for sentimental and practical reasons, but after building a shopping mall empire in the Philippines, SM Prime found an opportunity to set up shops in mainland China as well.

   When the SM group started investing in mainland China at the turn of the millennium, the strategy was to be there for the long haul. If China is 10 times bigger than the Philippines in terms of consumer base, then there's big room to set up new malls, but the group's strategy has been to target third-tier cities rather than slug it out in the biggest ones.

   The first SM mall in China opened in Xiamen in 2001, then privately owned by the Sy family, with a gross floor area of 128,000 square meters, almost similar in size to SM City Sta. Mesa. By 2007, there were three malls in China-Xiamen, Jinjiang and Chengdu-and the China business has become mature enough for the Sy family to fold the business into SM Prime.

   These days, SM Prime has 72 shopping malls in the Philippines and seven shopping malls in China. The malls in China are located in the cities of Xiamen, Jinjiang, Chengdu, Zibo, Chongqing, Tianjin and Suzhou.

   SM pioneered shopping mall development in Jinjiang. Not coincidentally, the home city of the founder of SM or Shoemart group has become a major global supplier of shoes-sometimes referred to as the 'shoe capital' due to a yearly international shoe expo that has successfully attracted a lot of international attention.

   'We don't do things six months, one year ahead. We always look at where will be and what can we be five years from now,' SM Prime chair Jose Sio said.

2. EMPERADOR INC.

   When real estate tycoon Andrew Tan goes to Europe for shopping, he shops for companies and assets. He has a special affinity for Spain, whose Fundador brandy inspired him to set up his own brandy business, Emperador. Decades later, Emperador would end up buying Fundador to become the biggest brandy maker in the world.

   Emperador debuted in Europe in 2013 with the acquisition of Bodega San Bruno S.A., a brandy company based in Jerez, Spain, from González Byass S.A., one of the largest and oldest liquor and wine conglomerates in Spain. The deal includes the acquisition of the San Bruno trademark, which has been registered since 1942, as well as vineyards, alongside a sizeable inventory of high-quality and well-matured brandy, now being stored and aged in sherry casks in the bodegas, or wineries. Afterwards, Emperador acquired 409 hectares of additional vineyard land in Madrid, then bringing close to 1,000 ha its vineyard land bank in Spain.

   Emperador also invested P3.7 billion in acquiring a 50-percent stake in integrated brandy producer Bodega Las Copas S.L., a unit of Spain's popular sherry bodega González Byass (same group that sold San Bruno) in early 2014. Las Copas' operations in brandy-making run the full scale with its vineyard near Toledo, its distillery plant in Tomelloso, Ciudad Real, and its Las Copas brandy production premises all in Jerez. The 275-ha specialized vineyard project of Bodega Las Copas near Toledo is the first of its kind in Spain to grow the finest grapes dedicated exclusively for brandy distillation and production.

   These initial deals boosted Emperador's profile and prepared it for even bigger deals in the beverage space. In 2014, it outbid a number of global consumer powerhouses to bag a 430-million pound deal to take over iconic Scottish whisky-maker Whyte andMackay, the fifth largest maker of Scotch whisky in the world with a history of more than 160 years. It owns some of the most iconic Scotch brands in the industry, including the British luxury brand The Dalmore Single Highland Malt, Jura Premium Single Malt and Whyte and Mackay Blended Scotch whiskies. It holds one of the world's largest stock of aged whisky.

   But Emperador's purchase of Bodegas Fundador, Spain's most iconic, largest and oldest Spanish brandy maker, was the one most memorable to Tan. With Fundador now under its wings, Emperador controls almost 1,500 ha of vineyard land, around 1 million sqm of cellar and bottling facilities and four distilleries in Spain.

   Emperador portfolio of beverages can now be found in over a hundred countries around the world.

3. JOLLIBEE FOODS CORP.

   The joy of eating is something that Tony Tan Caktiong and his siblings enjoyed growing up as their father was a chef. Together with Grace, the classmate who became his better half, he started two Magnolia ice cream houses after they graduated in 1975 and founded Jollibee in 1978. Capturing the Filipino preference for tasty meat and sweet spaghetti, Jollibee Foods Corp. (JFC) has become a multibrand multinational company.

   Jollibee is now the most valuable Asian restaurant chain. Tony Tan Caktiong's dream is to become one of the five most valuable restaurant chains in the world. Before, Jollibee's offshore expansion followed where the overseas Filipinos were, but these days, Jollibee is a company that can go local by acquiring homegrown chains-as what it did in China, Vietnam and the United States.

   As of end-September 2018, Jollibee operates the biggest food service network in the Philippines with 3,003 restaurant outlets, close to a third of which are Jollibee stores while the rest are Chowking, Greenwich, Red Ribbon, Mang Inasal, Burger King and Pho24.

   Overseas, it was operating 1,350 stores. Its largest markets are mainland China, Vietnam and the United States.

   In China, it has 314 stores of Yonghe King and 42 stores of Hong Zhuang Yuan and 14 Dunkin Donut branches. In Vietnam, it operates 253 Highlands Coffee shops, 107 Jollibee restaurants, two Hard Rock Cafes and 17 Pho24. In the United States, it has 347 stores under the Smashburger brand plus 37 Jollibee stores, 32 Red Ribbon stores and 15 Chowking outlets.

   The Jollibee brand is also present in Brunei (with 16 stores), Hong Kong (8), Singapore (6), Macau (1), Canada (4), Saudi Arabia (13), UAE (14), Qatar (7), Kuwait (6), Bahrain (1), Oman (1) and Italy (1).

   Jollibee entered Macau and Italy earlier this year and likewise debuted in London in October. It plans to enter Malaysia and Guam. Jollibee has a total of 222 stores overseas. The JFC group's worldwide store network reached 4,353 stores. To date, Jollibee is one of the most recognizable Filipino brands.

   Most recently, Jollibee entered the Mexican restaurant space in the United States by investing in the Tortas Frontera business founded by Chef Rick Bayless. This partnership was formalized through an investment by JFC of $12.4 million in Tortas Frontera LLC, in exchange for a 47-percent stake. The remaining 53 percent will be held by Bayless and other shareholders.

   Mexican food is a rapidly growing and very popular segment in the US restaurant industry with estimated sales of as much as $45 billion in 2017.

4. LIWAYWAY MARKETING CORP.

   Business tycoon Carlos Chan, who leads the company that produces the 'Oishi' snack food brand, anticipated the opening of China to the global economy decades ago. Being an early mover, Liwayway has thus become one of the most successful Philippine companies to do business in China, where it has 15 factories. It is among the top five snackfood producers in China in the sweet and savory category.

   Currently, Liwayway operates a total of 19 production facilities across nine countries: the Philippines, China, Vietnam, Indonesia, Thailand, Myanmar, Cambodia, India and South Africa.

   Next to China, Liwayway's large...