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Did South Korea Conquer Taiwan When Gong Cha Korea Got 70% Shares Ownership?

 

Last time, I wrote about Jollibee purchasing 70% shares ownership of Compose Coffee. It's easy to shout, "Pinoy Pride! The Philippines has conquered South Korea." I mentioned in that same article about one of my favorite tea franchises--Gong Cha. Gong Cha Korea currently owns 70% of the shares while Gong Cha Global owns only 30%. The big question is did South Korea just "conquer" Taiwan in what it did? 

Pinoy Pride Economics (read about its socio-economic costs here) might say yes to that. They might use Gong Cha as an example saying, "Are you crazy? Look at what happened to Taiwan! South Korea just checkmated it as Gong Cha Korea now owns 70%!" A good question to ask is, "If that's so why does Taiwan still remain a sovereign state and not bought by South Korea?" 

Pinoy Pride Economics would rejoice with Jollibee growing worldwide but not in MNCs investing in the Philippines. Did they really think the Philippines checkmated South Korea with Jollibee's (and take note that Jollibee's owner is a Chinese Filipino) transaction with Compose Coffee? Take note that Jollibee is now an MNC--proof that Filipinos can withstand FDIs in their country. Jollibee didn't grow through protectionism but by facing competitors like Wendy's and McDonald's. 

Company share ownership is different from foreigners owning the country. Foreigners aren't buying the country. Instead, share ownership focuses on the shares of stock and nothing more, nothing less. I could go ahead and own more than 40% shares while I invest in another country. However, that's where the ownership ends. Even if I own 100% of my shares in another country--I'm still bound by that country's rules. It would always be better if foreigners could own up to 100% of their company shares--that is not requiring them to find a partner. Nobody in their right mind would rent a space and only own 40% of their business in that branch (read here). 

Gong Cha has outlets around the world now--with Gong Cha Korea having 70% of the shares. If South Korea didn't conquer Taiwan by owning 70% of the shares--did it even conquer the United Kingdom where Gong Cha Global has its London headquarters? The answer is the United Kingdom still remains a sovereign state. Gong Cha isn't conquering countries for South Korea by opening branches around the world. Jollibee isn't conquering countries for the Philippines either.

The idea that FDIs are automatically bad is a third-world mentality. FDIs don't always work and they can also fail where they invest. Gong Cha has a hard time performing in South Korea. However, it's doing well outside South Korea. It's all about knowing the target market before selling anything. It's not a game of conquest but a game of cash. In the game of cash, knowing your target market is essential to profitability. 

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