Jollibee's Worldwide Franchise is Proof That the Philippines is More Than Ready for More FDI Inflows

Arguments against foreign direct investments (FDI) are often just lame excuses. It's said that if the Philippines lets FDI enter into it--it will directly crush the local businesses. However, that's proven to be false as only businesses (whether local or foreign) that don't innovate will be crushed. If an FDI invests and doesn't innovate--it can expect to be crushed by the local competition. If a local business doesn't innovate--it can be crushed by foreign investors and local investors alike. At this point, I decided that writing about Jollibee would be a good thing. It's because it turns out that Jollibee has opened its 150th branch in Vietnam which is now a developed communist country. 

Just reading this excerpt from Good News Pilipinas makes me say that the Philippines is more than ready for more FDI inflows:

Jollibee’s opened its first store in the country 15 years ago, one of the first international markets entered by the successful Filipino restaurant chain. The Filipino brand is the only QSR brand to have built and operated its own commissary in the country.

“Vietnam is one of the most important markets for us as it is among the fastest-growing economies in Asia and has a huge young and vibrant population. It is also one of the first international markets we entered in the earlier years of Jollibee. Even if the pandemic sparked many challenges, Jollibee Vietnam has managed to sustainably grow and exceed our expectations. The opening of our 150th Jollibee store is a testament to the special place this country holds in Jollibee’s history and heart,” said Ernesto Tanmantiong, Chief Executive Officer of Jollibee Group.

Jollibee has successfully captured the local market in Vietnam over the years, with 100% of its customers being Vietnamese. Alongside its bestselling crispylicious juicylicious Chickenjoy, Jollibee’s Sweet Chili Chicken has become a hit among the Vietnamese people, with its savory, sweet and mildly spicy Chili Glaze. Another fan-favorite is Jolly Spaghetti, served with its signature sweet-style sauce and beef sausage topped with generous cheese.

Going back to Jollibee's humble beginnings

The history of Jollibee will tell you a lot. To say Jollibee grew through economic protectionism is just a dumb idea. In fact, the story of Jollibee will tell you that Jollibee faced off against its known competition, McDonald's. 

CNBC tells us this story of Jollibee facing off against McDonald's as its competitor:

In business, there’s nothing like a little healthy competition to keep you motivated. 

Only, for brothers Tony Tan Caktiong and Ernesto Tanmantiong, that healthy competition came early on — in the sizable form of fast food icon McDonald’s. 

It was then 1981 and the brothers were just setting out on the ambitious dream of creating a fast food empire in their native Philippines when McDonald’s arrived in town and threatened to consume the market with its vast appetite for international expansion. 

Jollibee had already grown substantially from what started in 1975 as an ice cream parlor in Quezon City, just outside of the capital Manila. But, with just a couple dozen fast food outlets scattered across the fractured archipelago, it was a small fry next to McDonald’s thousands of branches in the U.S. and international markets.

Jollibee had to face the threat (McDonald's). However, rather than whine, they decided to face McDonald's head-on.

Indeed, friends told the pair as much, and advised them to retreat from the challenge, Tanmantiong revealed in a recent episode of CNBC’s “Managing Asia.”

“When we learned that McDonald’s was coming into the country, friends were telling us to shy away from the competition — do (like) other businesses and to not try confronting the global giant,” Tanmantiong, Jollibee’s president and CEO, told CNBC’s Christine Tan.

But Tan Caktiong refused to hear it, Tanmantiong explained. Instead, the then-28-year-old founder called the business together to form a plan of attack. 

“What we did was to have a strategic planning internally,” said Tanmantiong. 

“We did a SWOT analysis on our strengths, our weaknesses and what the gaps were,” he continued, referring to a common analysis technique which aims to assess a business’ strengths, weaknesses, opportunities and threats. 

While McDonald’s benefited from economies of scale and decades’ more experience, Tanmantiong said they identified one major area in which the U.S. giant could not compete: Taste. Filipinos tend to favor sweeter and spicier flavors, he said, and it would be difficult for McDonald’s to adapt to that without hurting the iconic American taste for which they had become famed. 

Rather than beg for protectionism (a common thing due to the "Filipino First" policy in effect and the 1973 Constitution)--they faced it head-on. I just laughed at the brilliant pun when they said, "We didn't chicken out, we served Chickenjoy instead." Tancaktiong loved the challenge and decided to face it. Instead of saying, "Jollibee is doomed!" Instead, it showed that any business that innovates is destined to succeed. Going head-to-head against McDonald's made Jollibee see how competition works. If it wasn't for competition--Jollibee would've probably remained in its humble beginnings. Instead, McDonald's was an inspiration in 1981 when it entered the Philippines during a protectionist era. 

Jollibee's founders were ready for a challenge and were willing to take it. They developed their own abilities as they faced competition. Without competition, there's no reason to develop one's own abilities. Would athletes train if they didn't have a competition? Would contestants train if there was no contest? Would you want to develop your abilities if there was no healthy competition? Jollibee had a winner, not whiner mindset. Any move to protect the local industry from foreign competition is but cowardice. The only local industries that will die away are those that refuse to improve. Those who will improve themselves can expect to be like Jollibee--the tiny bee that's now serving its delicious food worldwide.  

References

"Filipino restaurant Jollibee opens 150th store in Vietnam" by Good News Pilipinas Team (March 21, 2022)

https://www.goodnewspilipinas.com/filipino-restaurant-jollibee-opens-150th-store-in-vietnam/

"How two Filipino brothers staved off competition from McDonald’s to build global fast food chain Jollibee" by Karen Gilchrist (April 30, 2019)

https://www.cnbc.com/2019/05/01/how-jollibee-beat-competition-from-mcdonalds-to-build-a-global-brand.html