The Frustrations of Doing Business with Filipinos
This is a guest post by Dagnasty, a US expat living and working in Manila since 2013, doing business alongside local Filipinos.
Makati Avenue, Manila
The bar is set very low when it comes to doing good business in the Philippines. If you can answer a phone, list your business hours, provide a map to your shop, and listen to your customers, you’ll beat out most of your competitors here.
The other day I walked into a motorcycle shop with 100,000 pesos in hand to buy a motorcycle. I asked the saleswoman to show me a used bike. She took me over to the nearest one. Looked great! I told her I’d take it. Right after that, she told me that I couldn’t buy it!
- “Why not?”
- “It’s for installment payment only ser, and foreigners are not eligible for financing.”
- “No problem, I’ll pay 100% cash.”
- “You cannot pay cash.”
- (What the fuck do you mean I can’t pay cash?)
- “So you’re saying, if I paid one million pesos for this scooter, you couldn’t make this sale?”
- “Sorry, I can’t ser…”
- “Two million?”
- “No, I can’t ser.”
I turned to my wife and said, “I gotta get the fuck out of here or someone is going to have to take me to a doctor. I can’t talk to this woman anymore or I’m going to call her an idiot.” My wife turned and said that if she was in charge of the shop, she’d jump off the roof.
Ayala Triangle Gardens, Makati
I walked to the next shop and asked them the same question. One woman said that they do NOT have any second hand bikes for sale. I lied to the woman next to her and said I had a Filipino wife and that everything was ok. The woman next to her said that they DID HAVE bikes for sale and that her coworker would happily show me. One told the other that since I had a local wife, they could make the sale.
At this point, I’m pretty frustrated and I said to the first woman, “Wait, you just told me to my face that you don’t have any motorcycles, how are you going to be able to show me one?” She said that she only had one available. After that, she took me to a beat up piece of garbage in a row of otherwise acceptable second hand bikes and insisted that it was the only one available to me.
I walked away, called an Uber, and agreed with my wife that we’d buy directly from an individual incentivized with getting a sale – and not a store.
Before we left, she also suggested that we push the motorcycle over and break it. So that maybe the clerk would say that we had to pay for it. (When in all honesty, all that would happen is that the cops would show up, demand that we pay a small amount to avoid getting thrown in jail, and the bike would be sat upright and probably sold for the same price or a few dollars less, but not to a foreigner – fuck off and go home!)
Regarding this issue, my friend RealGuy once said, “Often Filipino employees are given zero leeway on what they can do, and are penalized if they go outside their bounds.” This is very true, and managers of Pinoys must be careful to realize that if one step is impossible, everything stops – no matter how obvious the fix.
A high school math teacher once told me, that you need to know 10 different ways to solve any problem or else one day, you’ll be stuck at the top of a steep hill in a car with a dead battery, no jumper cables, nobody to help you, and no idea how to fix your problem.
This is very true – because if you’re a manager here, every day you’re probably going to want to shove one of your employees down a hill.
Working with Filipinos
At my day job, if I told a client who wanted to spend two grand that I couldn’t make a “no questions asked” sale, I’d be dismissed in a matter of seconds. But here, most staff doesn’t give a damn whether the business succeeds or fails.
They have zero incentive to work hard because of their low salaries, poor education, poorer management, and a law that makes them fairly difficult to fire if they’re tenured employees. The Philippines isn’t a poor country, but it is poorly managed.
I once had a professor teach in a class that the amount of trust in any interaction is directly related to the amount of future interactions you’ll have with the other party. After my time in South East Asia, I have to disagree. I’ve seen vendors that could have a customer for life – decide to make a quick buck due to lack of foresight. Some people here really believe that a dollar today is better than five dollars tomorrow.
It’s frustrating to watch this kind of incompetence, but that’s where outside business owners can otherwise crush their competition. RealGuy also said, “the problem is, once someone has your money here, they have no incentive to deliver on promises or honor agreements.”
You might ask yourself, what could you possibly sell in the Philippines that they don’t already have? My answer – customer service. In a country filled with customer service call centers for almost anything, there’s surprisingly little customer service actually happening on the ground here. There’s lots of lip service (bullshit), but very few promises are actually kept.
Filipino Fast Food chain
If something gets promised and doesn’t get done right away, that’s definitely a promise that’s not getting kept. I once had a long coffee meet with one of the richest businesswomen in the Philippines and her stock trader. Her trader said to both of us, “If you want to make any money in this city, sell coffee, convenience food, candy, or condoms.”
We all started cracking up when she said condoms (Really? Who uses those here?) – but her point stands, cheap stuff sells at a high volume in Manila.
The problem with selling cheap stuff is that you’ll need to sell a lot of it. Most used to a western salary will find it faster and smarter to fly home to make a quick buck than a quick peso. The good news is, there’s no shortage of buyers with a few pesos in their pockets.
If you’re an outsider and you can treat your customers better than everyone else, you might stand to come out ahead for a short while (until local elites notice and want their cuts).
Realistically, the Philippines is one of the most difficult countries in Asia to do legal business in. “It takes 161 days of starting a business, among the worst in the world, compared to only a day in New Zealand, 2 days in Australia, 3 days in Canada, and 4 days in Singapore.”
Ayala Avenue, Makati
There are plenty of hoops and red tape to jump through, and many “fixers” who would happily take piles of your money to help you navigate the bureaucracy of working in the Philippines.
The Pinoy economy is fairly protectionist mandating that local citizens own the majority share of most any business.
Some expats use the assistance of a Filipino business partner or spouse, but any long-timer here will tell you a dozen sad stories about foreigners having their legally capped 40% stake in a business stolen from them (despite financing 100% of the business).
Trust doesn’t go very far here, and the most successful foreign business owners have local owners (in name only) while the real boss handles his/her business from a distance.
If you ever get frustrated by doing business with Filipinos here, consider doing things yourself. I’ll always go the extra mile and pay the extra dollar to someone who knows how to get things done in the Philippines.
This is my first time writing on this blog, if you’d like to read more, I’ve got more – let me know your thoughts in the comments below.