Dire US economy is golden opportunity for strong Philippine brands
Rising unemployment. Waning consumer confidence. Falling real estate prices. Volatile stock market. Weak dollar.
These indicators paint a bleak picture of the state of the world’s biggest economy, yet the dire situation likewise presents a golden opportunity for strong brands in the Philippines to make some serious headway into the United States.
According to Robert Trota, chair of the Max’s group of companies, the barriers to entry into the still-lucrative US market are coming down.
Weak real estate prices, for example, have made retail space cheaper. Even rent in malls has come down as the US fights to ward off the lingering effects of the global financial crisis that peaked in 2009.
Trota adds that in some places, the budget that used to go to renting prime space with significant foot and vehicular traffic is now enough to purchase the property outright, thus boosting the asset column of Filipino firms daring to make it big in a foreign market.
The cost of supplies has likewise gone down in the US, as weak consumer confidence is forcing retailers and suppliers to bring down their prices to entice American buyers to dip into their precious savings and make a purchase.
He says banks in the US are also more open these days to extending loans at low single-digit rates to new entrants, such as Filipino companies looking to establish a foothold abroad.
“The time for strong local brands to expand to the United States is now,” Trota says.
The 66-year-old Max’s, for its part, has expanded its North American branch network to nine—five in California, two in Hawaii, one in New Jersey and one in Toronto, Canada that opened in January this year.
He stresses, however, that franchising abroad is not for everyone.
Rather it’s for local brands that have already proven the success of their concept in the Philippines, with the organization and the operational and financial systems ready to take on the stress of competing in a bigger and more competitive marketplace.
Going abroad is likewise the logical step to take for companies such as Max’s, which can no longer expand as fast in the Philippines since it has already reached a critical mass of branches. Room for domestic growth has thus shrunk.
“If you’re already saturated here, then you really have to think about going abroad,” says Trota, adding that Max’s is closing in on that saturation point, considering that it has 120 branches all over the country, of which 55 are under franchise agreements.
“The prospects for growth are outside the Philippines,” adds Trota.
To put itself in a position to take advantage of these growth opportunities, Max’s, which started operations in 1945, is preparing to expand aggressively in the Middle East.
The first Max’s in Dubai, United Arab Emirates opened last Sept. 1 with the second to follow in October. A third branch in the Middle East will later open in Saudi Arabia.
At the same time, plans are under way to open up branches in Australia, where there is also a considerable Filipino community, and increase its foothold in the United States and Canada.
Trota, who also chairs the Philippine Franchise Association, believes that there are other brands in the Philippines that can become truly global brands, and these will be showcased during Franchise Asia 2011 to be held on Sept. 19 to 25 at the SMX Convention Center.
“We just have to build that confidence that we can do it, that Filipino brands can make it in the international market,” says Trota, who counts Jollibee, HBC, Bench, Goldilocks and Potato Corner among the local brands that are making it big abroad.
Trota says the PFA, through the Franchise Asia 2011 that will bring in global franchise leaders from 43 member countries of the World Franchise Council and the Asia Pacific Franchise Confederation, hopes to add more names to the growing list of brands planting the Philippine flag on foreign shores.
“It is time to showcase what we have here to the rest of the world,” says Trota.
