WE often hear of certain traits or values that define us as Filipinos, from our hospitality and congeniality to our grit and resilience when faced with hard times. As we navigate uncertain global political and economic landscapes, I'd like to highlight one of the Filipino values closest to my heart: "bayanihan," or communal unity and cooperation.
The spirit of bayanihan — rooted in our tradition of helping each other during crises — might seem inapplicable to business, especially on an international scale. But I beg to differ.
I recently attended Grant Thornton International's APAC regional meeting in Hong Kong as chairman and managing partner of Punongbayan & Araullo/P&A Grant Thornton, its Philippine member firm, along with other APAC leaders. In it, the spirit of bayanihan was exemplified as GT leaders from across the Asia-Pacific region viewed international collaboration as the biggest growth opportunity moving forward.
As the global market looks to expand internationally, Philippine businesses are no exception. In fact, Grant Thornton's International Business Report for Q1 2024 shows that 67 percent of Filipino mid-market firms see international expansion as their greatest opportunity, with 70 percent of them expecting growth in this area over the next 12 months. This optimism, combined with our inherent collaborative spirit, positions Filipino businesses for exciting growth on the global stage.
During these uncertain times, Filipino mid-sized businesses are driven by three key factors to venture abroad: access to customers (51 percent), quality (50 percent) and speed of delivery (45 percent). Unlike the global and Asean focus on quality and APAC's emphasis on brand recognition, Filipino firms prioritize customer acquisition. This indicates a strong domestic market saturation for Filipino businesses. With a limited local customer base, Filipino firms are prompted to seek new markets with larger, more diverse customer pools. This focus on customer acquisition reflects the ambition and growth-oriented mindset of Filipino businesses.
Quality also remains a significant driver, as access to a wider range of resources and technology abroad can lead to higher-quality products and services. This gives Filipino firms a competitive edge in both the global and domestic markets.
Speed of delivery is another motivating factor, especially for industries that rely on the timely delivery of materials and products. Efficient logistics networks and strategic partnerships can allow Filipino firms to deliver products and services faster, especially in geographically dispersed markets. Efficient logistics and strategic partnerships are essential for success in geographically dispersed markets.
While expansion to international markets offers great opportunities, it also presents challenges and risks. These can include:
– Foreign market dynamics. Understanding competitor landscapes, cultural nuances and different consumer preferences is crucial for success. Firms must adapt their products, services and marketing strategies to resonate with local audiences in new markets.
– Regulatory landscape. Navigating the regulations, legal requirements, standards and taxation abroad is a significant hurdle for firms looking to expand abroad. Ensuring compliance is essential for a successful market entry.
– Sustainability. Environmental regulations, resource scarcity and the growing importance of ESG (environmental, social and governance) factors can all impact international business operations. Filipino firms need to be mindful of their environmental footprint and develop sustainable practices that meet international market expectations.
– Political and economic stability. Political instability and economic downturns can disrupt international business activities. Firms looking to expand internationally must conduct thorough market research to assess political and economic risks in potential target markets.
The bayanihan of Filipino businesses extends beyond traditional partnerships, as they collaborate with government agencies, industry associations and other organizations in their target market. These collaborations provide insights into local regulations, business practices and consumer trends. The entry of Filipino firms into international markets is not solely for their benefit; rather, it represents a step toward mutual growth and shared success.
At Punongbayan & Araullo, we embody bayanihan through our membership with Grant Thornton International. This network not only allows us to connect our clients with partners worldwide, facilitating smoother market entry and growth but also allows us to share expertise with other GT member firms.
For example, we are involved in a global delivery services initiative with GT Ireland, GT UK, GT Australia and other GT member firms to support their manpower requirements. These collaborations demonstrate the power of shared knowledge and collaboration between a network. By working together, firms can overcome challenges, adopt best practices and ultimately achieve greater heights in the global landscape.
Collaboration and connectedness are necessary for success in today's global economy, and we should strive to uphold these values in all our endeavors.
The IBR data is encouraging — most Filipino mid-size firms are prepared to face challenges. When asked about their readiness to tackle future unforeseen circumstances, 40 percent of respondents said they were adequately prepared, and 34 percent said they were very prepared. This indicates that Filipino mid-market firms aren't just blindly optimistic; they've experienced past geopolitical and economic uncertainty and remain cautious but hopeful about their prospects.
Moving forward, Filipino mid-market firms should leverage their uniquely Filipino values and identity as they embrace a global mindset. Building strong, collaborative partnerships is key to navigating the opportunities and challenges of expanding internationally. Let us take bayanihan to the global stage and turn our optimistic outlook into reality.
Romualdo V. Murcia III is the chairman and managing partner of Punongbayan & Araullo/P&A Grant Thornton. One of the leading audit, tax, advisory, and outsourcing firms in the Philippines, P&A Grant Thornton is composed of 29 partners and 1,500 staff members. We'd like to hear from you! Tweet us as @GrantThorntonPH, like us on Facebook at P&A Grant Thornton and email your comments to pagrantthornton@ph.gt.com. For more information, visit our website at www.grantthornton.com.ph.
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