In great company

JIKYEONG Kang

THE PHILIPPINES’ hosting of the Asia-Pacific Economic Cooperation (Apec) in 2015 placed the spotlight on a key advocacy that is expected to benefit millions of people, not just across the country, but throughout the region—the globalization of micro, small, and medium enterprises (MSMEs). MSMEs make up 94-98 percent of enterprises in the Apec region, but account for only 35 percent of cross-border trade.

This advocacy was captured in the theme of the Apec Business Advisory Council (Abac) for 2015, “Inclusive Growth: A Fair Deal for All,” pushing for more MSMEs to participate in and benefit from global trade as a key path to realize Apec’s vision of shared prosperity. As Abac highlighted, it makes business sense for bigger businesses to help unlock the potential of MSMEs, either as suppliers of goods and services or as sources of innovation. This, in turn, allows MSMEs to raise their standards.

Abac partnered with the Asian Institute of Management (AIM) to identify examples of MSMEs that have successfully integrated in global value chains—“value” being the key word, with the enhancement of logistics management, information and communication networks, and access to new markets and partners. Competitiveness is no longer dependent on a single company’s performance, but on the performance of the entire ecosystem.

The stories of these MSMEs were captured in a book entitled, “Going Global Together,” which was co-authored by AIM Professors Maria Elena Baltazar Herrera and Federico Macaranas. The book details how large companies on both sides of the Pacific have engaged MSMEs. Among the examples illustrated in the book were how larger companies have engaged smaller entities to form part of their respective value chains.

Sustainable ecotourism

El Nido Resorts in Palawan has been a leader in sustainable ecotourism. The company espouses a quadruple bottom line: financial growth, environmental stewardship, community engagement, and organizational leadership, with the last two focusing on skills training and hiring of local employees.

The increase in guests at the resort have translated to increase in businesses for small community businesses offering complementary activities, such as island-hopping, snorkeling, diving, paddling and kayaking, hiking and trekking, mountain biking, rock climbing, bird watching, sailing, and fishing.

These partnerships offering unique experiences to guests have encouraged MSMEs to adhere to environmental rules and regulations, discontinue unsustainable practices, and collaborate with El Nido Resorts in times of calamity. In turn, the resort was able to leverage its partnerships with the local community to promote genuine sustainable ecotourism.

Indigenous peoples

Filip+Inna, the clothing brand launched in 2011 via a New York online distributor, has been showcasing the craftsmanship of indigenous peoples in the Philippines in its unique pieces. The company’s business model is one where it creates a limited number of high-quality handcrafted pieces, reflecting inputs from both international retailers and partner artisans.

Each team of artisans working on the pieces belongs to a single tribe. Filip+Inna founder Len Cabili provides the artisans with prototypes, materials and forms, while the artisans create embellishments to the pieces, which are either sold commercially or showcased in trunk shows.

Three years after the brand’s launch, Filip+Inna opened its first store in the Philippines, at the same time distributing to Bahamas, India, and Greece. The collaboration with indigenous peoples has allowed the company to help preserve indigenous culture, create social impact, and maintain profitability.

Farming communities

Large companies like Jollibee Foods Corp., Nestle, and VMV Hypoallergenics all engage farmers and farmer cooperatives for their different needs.

Fast food giant Jollibee Foods Corp. has been helping local agricultural communities through its Farmer Entrepreneur Program (FEP), which it established in partnership with Catholic Relief Services and the National Livelihood Development Corp. Jollibee’s engagement with farmers began in 2008, when 30 farmers from Kaliwanagan and San Agustin in San Jose, Nueva Ecija began supplying white onions for Jollibee’s burgers.

FEP enabled farmers to be organized and trained on new production technologies and elevated standards. The program also provided farmers with access to microfinance and post-harvest facilities. The program currently covers 900 farmers from 15 provinces, supplying onions, tomatoes, bell peppers, chili, and calamansi to Jollibee.

Nestle Philippines Inc. has also been supporting farmers across the country. Nestle’s global initiative to make coffee farming a sustainable livelihood, the Nescafe Plan, was launched in 2011, with the Philippines identified as a pilot area. Under the Nescafe Plan, small coffee farmers are offered a guaranteed buying price at par with prevailing global market prices.

The Nescafe Plan put up three integrated coffee centers in Bukidnon, Quirino, and Batangas, as well as a plantlet production and training center in Davao del Sur. These centers served as a Robusta seedling production nursery, a local research and development center, a training center, a buying station, and a composting facility. A direct buying program was also put in place for small farmers and intermediaries.

The high demand for coffee in the Philippines makes sustainable coffee farming an attractive investment option. Even prior to the introduction of the Nescafe Plan, Nestle has been training for coffee farming, training close to 60,000 farmers, coffee specialists, technicians, and students since 1996. For Nestle, the company not only helps coffee farmers improve their harvests, but is also reviving the Philippines’ coffee industry.

Meanwhile, cosmetics company VMV Hypoallergenics sources its virgin coconut oil (VCO) from farmers in FRV Organic Homestead, a family-run estate in Leyte. VMV Hypoallergenics provided the technology and training, and in return, guaranteed itself a sustainable supply of VCO for its high-quality cosmetic products.

Part of ensuring sustainability was for VMV Hypoallergenics to establish a school within FRV Organic Homestead. The company partnered with Leyte State University in training farmers on organic farming methods.

Shared value

These are just a few examples of how big and small businesses are working together to create shared value, illustrating multiple ways on creating remarkable products, processes and services, ultimately contributing to realize inclusive growth across the Apec region.