How Multinational Companies Can Help in the "Buy Local, Go Lokal" Campaign
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| Getaway.PH |
I remembered the time when I had to go to SM City Cebu to renew my driver's license for the new 10-years validity. I could see the signs to buy local, go lokal (the Filipinization of the word local). The campaign to buy local is to support the local businesses and produce jobs. However, the big question is where are we going to get a big amount of customers. People are still in need of recovery. I ended up thinking about international marketing as the solution to help get customers for the ongoing buy local campaign.
The Philippines in a glocalized setting
In international marketing, there's the term called glocalization which combines the words global and local. It was a term I heard in my international marketing class at the University of San Carlos-Main Campus. Now, I want to write about it as part of an economic recovery plan.
The definition of glocalization according to Investopedia is as follows:
Glocalization is a combination of the words "globalization" and "localization." The term is used to describe a product or service that is developed and distributed globally but is also adjusted to accommodate the user or consumer in a local market.
A common example would be cars that are sold worldwide but adjusted to meet local criteria such as emissions standards or what side the steering wheel is located. It could also focus on more cultural aspects, such as a global fast-food chain offering geographically-specific menu items that cater to local tastes.
Often, glocalization campaigns involve culturally friendly media and ad campaigns to encourage the acceptance of foreign products among a local audience.
There is the concept of adaptation through localization. I remembered going to China and Hong Kong as a tourist. I remembered how McDonald's was different there than in the Philippines. I remembered a retired business administration teacher of mine who talked about how McDonald's adjusted and survived. Jollibee apparently uses the same strategy where it goes--adjusting for the locals. Both McDonald's and Jollibee are competitors in the glocal market. Multinational companies (MNCs) are going to end up having a glocal approach one way or another.
MNCs themselves will enter the country and be under the country's government. They will be required to register as a business, provide jobs to locals, pay their rents to respective Filipino landowners (since they won't be allowed to own land), report their monthly income to Philippine-based accountants, pay Value Added Tax (VAT), pay the quarterly taxes, and pay the annual Income Tax Return (ITR) just like the local companies. If they must bring foreign employees--work permits are required. It's like how OFWs need necessary work permits to work abroad. Foreign employees who may be brought in might be involved in training the Filipino workforce on how to work for the MNC before a Filipino gets qualified to be in a supervisory or managerial position.
This was the very concept that Deng Xiaoping understood when he opened China to the world. This is the very concept that Deng learned from the late Lee Kuan Yew in regards to inviting MNCs over to Singapore. Vietnam also learned this concept through the Doi Moi. The book Third World to First had revealed that MNCs indeed had become a vital part of local economic development. MNCs got registered, they earned their income, and now they've become taxable. The taxes paid by the MNCs all became part of the national economy.
The Philippines was long overdue for easing excessive restrictions regarding foreign investments. The 1935 Constitution under Carlos P. Garcia and the 1973 Constitution under Ferdinand E. Marcos Sr. were highly protectionist. Unfortunately, the Foreign Investment Act of 1991 only allowed 40% of shares ownership for MNCs. The idea that MNCs were only allowed to own 40% of their net profits is nothing more than overcharged rent. Can you imagine renting a space and your landowner demands that he gets 60% of the net income? Meanwhile, MNCs will only invest if they can keep 100% of their net profits which is a result of deduction from all operating expenses, rental fees, and taxes. The landowner gets the monthly rentals. The government gets the required taxes. Both rentals and taxes are expenses that will deduct from the net income. The MNCs are free to keep their 100% net income only after taxes and everything else is paid. The government gets to count its money from the taxes. The landlord gets to laugh his way to the bank with the monthly rentals. The MNCs will continue to do business in the Philippines under the right conditions. It's like tenants will continue renting and renewing contracts if the landowner is a just person and the commercial space is pretty profitable. The result is that even if they keep all their net income--they can only continue enriching themselves if they pay rent, pay taxes, and every related fee to continue doing business in the Philippines.
How local businesses can benefit from glocalization
After several years of disheartening trial and error, we concluded that Singapore's best hope lay with the American multinational corporations (MNCs). When the Taiwanese and Hong Kong entrepreneurs came in the 1960s, they brought low technology such as textile and toy manufacturing, labor-intensive but not large-scale. American MNCs brought higher technology in large-scale operations, creating many jobs. They had weight and confidence. They believed that their government was going to stay in Southeast Asia and their businesses were safe from confiscation or war loss.I gradually crystallized my thoughts and settled on a two-pronged strategy to overcome our disadvantages. The first was to leapfrog the region, as the Israelis had done. This idea sprang from a discussion I had with a UNDP expert who visited Singapore in 1962. In 1964, while on a tour of Africa, I met him again in Malawi. He described to me how the Israelis, faced with a more hostile environment than ours, had found a way around their difficulties by leaping over their Arab neighbors who boycotted them, to trade with Europe and America. Since our neighbors were out to reduce their ties with us, we had to link up with the developed world-America, Europe, and Japan-and attract their manufacturers to produce in Singapore and export their products to the developed countries.The accepted wisdom of development economists at the time was that MNCs were exploiters of cheap land, labor, and raw materials. This "dependency school" of economists argued that MNCs continued the colonial pattern of exploitation that left the developing countries selling raw materials to and buying consumer goods from the advanced countries. MNCs controlled technology and consumer preferences and formed alliances with their host governments to exploit the people and keep them down. Third World leaders believed this theory of neocolonialist exploitation, but Keng Swee and I were not impressed. We had a real-life problem to solve and could not afford to be conscribed by any theory or dogma. Anyway, Singapore had no natural resources for MNCs to exploit. All it had were hard-working people, good basic infrastructure, and a government that was determined to be honest and competent. Our duty was to create a livelihood for 2 million Singaporeans. If MNCs could give our workers employment and teach them technical and engineering skills and management know-how, we should bring in the MNCs.
Just reading Lee Kuan Yew's statement makes me think it's best to listen to a man who truly brought progress than those who didn't. I'm reading idiotic posts on Facebook that has the typical excuses that it's once again "imperialism", especially in regards to the Public Service Act of 2022.
Besides, the Philippines may have long not listened to this advice found on Page 66 in Third World to First to disprove the claims of groups like Bayan Muna, League of Filipino Students, IBON Foundation, and Kabataan Partylist, as well as some people who still call it "foreign invasion" regarding MNCs:
Our job was to plan the broad economic objectives and the target periods within which to achieve them. We reviewed these plans regularly and adjusted them as new realities changed the outlook. Infrastructure and the training and education of workers to meet the needs of employers had to be planned years in advance. We did not have a group of readymade entrepreneurs such as Hong Kong gained in the Chinese industrialists and bankers who came fleeing from Shanghai, Canton, and other cities when the communists took over. Had we waited for our traders to learn to be industrialists we would have starved. It is absurd for critics to suggest in the 1990s that had we grown our own entrepreneurs, we would have been less at the mercy of the rootless MNCs. Even with the experienced talent Hong Kong received in Chinese refugees, its manufacturing technology level is not in the same class as that of the MNCs in Singapore.
Instead, what Lee Kuan Yew saw was more than threats--they were opportunities. In business administration, we have the SWOT analysis. We can't have SWOT unless there are threats. We can't have threats unless there are opportunities. Jollibee didn't whine about McDonald's--instead the Tan brothers faced the company with their own creativity. Now, Jollibee is now a glocal company in the international market. Lee Kuan Yew saw the MNCs that had helped them get outside the starvation zone. Jobs were created. More jobs mean more purchases. Instead, Singapore ended up giving opportunities for the local Singaporean businesses to grow because of the MNCs. Every opportunity is given especially if there are more service providers, more suppliers, and more customers. It's because MNCs can become valuable customers to the local businessmen.
