Doing Business In The Philippines

Let me walk you through a few examples on how to look opportunities for doing business in the Philippines as a “traveller” (and how not to).

Example One – Restaurant Sauerkraut:

I always work in an internet cafe. It is in a street with a lot of bars. The area is popular.

Across the street there is an Italian restaurant. It is run by a foreign couple. It is a bit of a romantic place. Sometimes you can see love-birds there.

But most of the time it is empty. Even on Friday night when the entire street is filled with people. The owners sit outside smoking and look miserable. It gives the place a very negative character.

I have been here for months now. I am sitting here and observe the changes in body language. They argue with each other. They argue with others on the phone.

The staff tries to make the most of it but looks a bit desperate.

All around them there are restaurants and bars filled with people.

As I write this they are “renovating” the place. Come on. You do not need customers. Not a new paint job.

What do you think they are doing wrong? (the winning answer gets a golden spatula).

They place their own dream or idea on the market.

There are two things to consider when opening a restaurant for Filipinos.

Filipinos have a very collective culture. You rarely see one sitting alone. They are usually with a group. So you need a place where they can sit together talk (loud) and take selfies.

Even though a lot of Filipinos travel abroad to work, the local culture cares focusses on one thing: the Philippines. People who on occasion take a boat to a neighbouring island are “travellers” that are being extensively followed on social media. The television provides a daily stream of variations of the same Filipino culture in other regions.

The result is that everything is looked at through Filipino glasses. They tend to stick to what they know. Eating Filipino food in the way as described above.

If you go against any of these core values as a business, you will have an uphill battle.

There is an example of a successful foreign owned bar. La Parisien.

La Parisien is a “French” restaurant. You are welcomed in a little shop with croissants and fancy cheeses. They even have a wine cellar where you can pick your wine. This gives the place a classy feeling. At the same you can order simple things as a pizza or a local dish. Or order the local beer. The place is huge can entertain big groups AND romantic couples. You can go there before going out, or for a late night drink or snack. There is popular music. And it is very affordable.

And… the place is packed. I was there once on a Saturday night. Of the 100+ tables there was just one left.

Sounds like a successful business, doesn’t it?

Lesson one: if you want to do a business locally (or any business) make sure you know what the market local wants. There are very few “Apple’s” out there. And will likely cater to local basic needs.

Do not go against the desires of the market, capice?

Example 2 – The Self Sustaining Bum

In the Philippines you will see people carve out their niche in very unexpected places. They stand on a bus stand roads and start guiding people to the right Jeepney’s (local buses). Some will stand at parking spaces and help you park and keep your car safe. All in exchange for a few pesos.

It is not much, but in a place where a lot of people are REALLY poor, it does give people a means to feed themselves.

Look, I am not saying that this is such a wonderful business model. Or that these guys have a found a wonderful opportunity. They probably are desperate. But there is a lesson here.

Lesson Two: in a lot of places in the world it is very easy just to start something and see where it goes. There does not have to be a lot of paperwork involved. Nobody really cares what you are doing.

In the Netherlands the same guy would need a license, a medical emergency training, an anger management diploma, a minimum wage and a way to collect VAT.

Needless to say, such jobs do not exist.

Example 3 – Opportunities Everywhere.

I visited a remote island near Ilo Ilo with my friend. On that island we spoke with our guide. His name is Al (Let’s call him Albert). He is the son of a fisherman. He told us about the local prices for dried fish. 80 pesos a kilo.

In Cebu where we live, they LOVE dried fish. My friend knows a family that has gotten wealthy of just one dried fish stall. Wholesale price in Cebu for a kilo of dried fish?

350 pesos per kilo.

Do you see the difference? (it is 270 pesos, for the mathematically impaired).

You might be wondering, how to get the dried fish to Cebu?

The low costs will surprise you (low labour costs are to blame).

First, we need to ship the fish to an island close to Cebu called Bantayan. There is a direct boat. Shipping costs: a whopping 50 pesos per 100 kilo (!).

From this island you can drive a car directly to Cebu (using a ferry). It takes 4-5 hours. So you will have to drive a van up to Bantayan, load up the fish a drive back.

Gasoline: 1.000-1.500 pesos. Ferry costs: 1000 pesos.

After that, you need to start packaging and delivering. Having someone filling 500 bags of 1 kilo and delivering the fish to the stores. Probably a 1.250 pesos.

Total costs: 4.000 pesos.

Now, let’s do the math for a standard shipment of 500 Kilo’s.

500 x 270 = 135.000 pesos.

Minus 4.000 costs = 131.000 pesos (or 2.640 Euro).

Not bad for a few days work, ha?

In fact, it looks like such a good business, why doesn’t Albert do it himself?

It turns out that he used to. But the devastating Hurricane Yolanda ripped his dream apart (it flattened the island of Bantayan, an absolute disaster).

He think needs 5000 capital to start (100 Euro). And he does not have it.
Now the good thing is that my friend has a van, has an empty storage place, knows people that want to buy dried fish, knows people with a packaging business and has a driver. Which instantaneously makes the the idea look viable…
So here are the final 2 lessons.

Lesson Three: Trading can be VERY profitable. You take good from place A to B and collect the profit. In places where there are not a lot of people who do not have the know how, network, money or balls to do it the competition is small. And the profit large.

And if this case seems unrealistic to you. I have a Chinese friend who buys small green marble rings in China for 30 cents and sells them on a market in Oxford for 30 pounds.

Lesson Four: It is all about your network. If you have a good network opportunities just become a matter of executing.

As a traveller you are getting places. If you open your eyes you will come across opportunities to trade. If you focus on building a network, executing these opportunities will become very easy. You will be the spider in the web connecting the dots.

Any Opportunities in the Philippines I Can Think Of?

Sure!

Since I got here, this is the first thing I noticed: it was difficult online to find a place to live. Strange real estate agents. Poor marketing.

Later I discovered that there is actually a real estate boom going on. They are building new condos everywhere. They try to sell them by having people in the malls cling onto everybody that looks he has money or is stupid enough to take out their loans.

This means that there is a HUGE opportunity for those that understand how to do a bit of online marketing to start selling real estate.

Or start a marketing company that helps the local (clueless) businesses how to present themselves online.

But what about the real estate themselves? My friend told me that some of the building material is hugely expensive because it has to be imported. Go to China and look for what they need here.

Become an expert and start guiding foreign investment into the Philippines. I know a company in Manila that went from a one man show to a 25 man powerhouse in two years.

Another thing is that in Asia an entire middle class is getting into existence. And they want to have products that we in our every day lives take for granted.

Anyway, just walking around here will give you ideas.

I do know a couple of people that went from being digital nomads to local “business owners”.

Doing Business In The Philippines – Conclusion.

If you want to make money as a traveller, try to look further than online businesses and selling yourself on Elance (guilty!).

There are opportunities EVERYWHERE. And especially a country that is developing as rapidly as the Philippines.

If you do, remember these 4 lessons:

1. Respect the local market.
2. Know that it can often be easier to start something and see where it ends.
3. Trading can be a VERY simple and profitable business.
4. You need a good network and team up with a local.

I hope that by now the radars in the grey mass of your have started to produce ideas to make money abroad.

If not, don’t worry.

You can always get a job with someone who does.

Have a nice day,

Julius
Mathematically Impaired