Is the Philippines About to Checkmate South Korea as Jollibee is About to Get 70% of Compose Coffee's Equity?
JFC’s wholly owned subsidiary Jollibee Worldwide Pte. Ltd. (JWPL) is set to acquire majority shareholding of 70 percent in Compose Coffee Co. Ltd. and JMCF Co. Ltd., collectively called Compose Coffee, for approximately $340 million.Titan Dining II LP and Elevation Equity Partners Korea Limited will hold the remaining shareholdings in Compose Coffee with effective interest of five percent and 25 percent, respectively.Through JWPL, JFC has a 90 percent participating interest in Titan Fund II, which is focused on strategic investments in food and beverage concepts with the objective to further grow in Asia Pacific food service brands and bring strong global food service brands to the region.
It's effortless to start the cheer and dance when a Filipino company opens abroad. This is a meme by the CoRRECT Movement on Facebook. The meme says, "There's a Jollibee in UK!" and the person rejoices. However, the person frowns when they hear that there will be foreign investors in the Philippines." I'd assume some ignorant people are thinking that Jollibee's act of buying 70% of Compose Coffee is an "act of conquest". It reminds me of people who think that the Philippines is conquering other nations through OFWs (read here). However, the contrary is true as OFWs are required to follow the rules of the country they work in. The same goes for FDIs.
Jollibee's scenario of buying 70% of the shares is no different than what happened with Gong Cha. Gong Cha's Korean partner bought 70% of the shares, prior to Unison Capital selling Gong Cha to US PEF. Currently, after all the purchases, Gong Cha now has its headquarters in London, United Kingdom. With Taiwan's lack of ridiculous equity restrictions with FDIs--it became possible for Gong Cha's founder Wu Zhenhua to allow Kim Yeo-Jin to buy 70% shares in Taiwan. Jollibee could buy 70% shares ownership from Compose Coffee, because the company is in South Korea, not a state-owned in North Korea. If South Korea didn't own Taiwan by buying the 70% of the Taiwanese shares--the same goes for Jollibee in its plan to buy 70% of Compose Coffee.
What one must note is that even if Jollibee owns 70% of Compose Coffee--it will still be subject to Korean economic laws. There are certain restrictions such as the inflow and outflow of money (such as what makes Israel's economy restrictive in some way), labor laws, and environmental laws. Singapore still continues to operate with strict environmental laws--making it one of the cleanest cities ever. FDI can be a bad thing without certain restrictions. It's one thing to allow FDIs to invest without the need for a local partner to get most of the shares. It's another thing to let businesses do what they want without restraint.
I'd like to stress Jollibee is my favorite example to slam on people's face. I slam on people's face who say that allowing FDIs to enter the Philippines will destroy all the local businesses. The only local business that will die are those that refuse to innovate. For a bit of a trivia, Gong Cha also has its struggles with the South Korean market. Some FDIs will find out they entered the wrong country. For example, letting a non-halal food company open in the United Arab Emirates (UAE) is plain stupid. Meanwhile, I still advocate for Tealive to open a Bangsamoro outlet ASAP (read here). MNCs may either gain a profit or be forced to leave, depending on the circumstances of the country. Jollibee stands as an example that Filipino businesses can evolve.
FDIs that operate with more shares or without a local parter are still subject to Filipino laws. The Philippines can learn how other countries regulate FDIs. Environmental laws, labor laws, and financial laws can still be used to control all economic activities in the Philippines.