PH rank in Innovation 2019

Philippines break into the ranks of innovation achievers - report

Dennis Valdez

BusinessWorld

26 July 2019

THE PHILIPPINES has moved up 19 spots to 54^th out of 129 economies from last year on an annual list that tracks their performance in terms of innovation, with the country breaking into the ranks of 17 others that “outperform” in this regard relative to gross domestic product.

The Global Innovation Index 2019 (GII) — prepared by Cornell University, INSEAD and the World Intellectual Property Organization — said the Philippines improved in almost all the metrics which the report used, namely: in Institutions, Human Capital and Research, Infrastructure, Business Sophistication, Knowledge and Technology Outputs and Creative Outputs.

“In the Business sophistication (32^nd) pillar, the Philippines improves in almost all the indicators related to Innovation linkages and gains top ranks in High-tech imports (5^th) and Research talent (6^th),” the report read.

“In Knowledge and technology outputs (31^st), the data for indicator High-tech net exports became available this year and the country ranks 1^st,” it added.

“Four other indicators rank in the top 10: Firms offering formal training (9^th), productivity growth (10^th), ICT services exports (8^th), and Creative goods exports (8^th).”

At the same time, the Philippines was found weak in terms of ease of starting a business, ease of getting credit, expenditure on education, global R&D companies, scientific and technical articles and new businesses.

“While some changes to the GII model explain a small part of this leap, newly available metrics give a more thorough assessment of the country’s innovation performance, which itself shows some signs of progress,” the report said of the Philippines’ performance this year.

Compared to its regional peers, the report said the Philippines showed “relatively good scores” particularly in trademarks, females employed with advanced degrees, high-tech imports and creative goods exports.

The report noted that, on the whole, the country was one of the most improved on this year’s list, propelling it to break into the “innovation achievers” cluster.

“The Philippines appears for the first time in the group of innovation achievers. It scores above average in all innovation dimensions, with the exception of Market sophistication, relative to its lower middle-income peers,” the report said.

“It has remarkable performance in Knowledge diffusion and Knowledge absorption, not only relative to its income group and geographic region, but also relative to all other economies assessed in the GII.”

Reacting to the report, Trade Secretary Ramon M. Lopez said in a statement: “This is great news for our nation and our innovation ecosystem as a whole. It recognizes the efforts of the various government agencies… in advancing innovation among our people and MSMEs (micro, small, medium enterprises), creating an innovative culture, as well as in building linkages with academe and industry.”

He added that he expects further improvement in the country’s rank after the recent signing of Republic Act (RA) No. 11293 or the Philippine Innovation Act and RA No. 11337 or the Innovative Startup Act.

Malacañang also welcomed results of the latest report, saying in a statement that it commends the departments and agencies that helped achieve the improvement in the country’s global rank. “May this good news further motivate them in creating an environment that nurtures innovation and creates business opportunities as we become one of the fastest growing economies in the globe,” Presidential Spokesperson Salvador S. Panelo was quoted as saying.

The global top 10 consist of, in descending order: Switzerland (also top last year), Sweden (from 3^rd), the United States (from 6^th), the Netherlands (from 2^nd), the United Kingdom (from 4^th), Finland (from 7^th), Denmark (from 8^th), Singapore (8^th from 5^th), Germany (flat from 9^th last year) and Israel (from 11^th).

Seven of the 15 economies in the South East Asia, East Asia and Oceania group rank in the top 25, namely: Singapore, South Korea (11^th), Hong Kong (13^th), China (14^th), Japan (15^th), Australia (22^nd) and New Zealand (25^th).

Besides Singapore (8^th) and the Philippines (54^th), the other Southeast Asian countries on the list performed as follows: Malaysia (35^th), Vietnam (42^nd), Thailand (43^rd), Brunei (71^st), Indonesia (85^th) and Cambodia (98^th).

India, to which the Philippines is frequently compared when it comes to business process outsourcing, placed 52^nd in this year’s report. — Denise A. Valdez

The Jollibee Story

The story of Jollibee: how a Philippine fast food franchise took on the world

Richard Lord

South China Morning Post

21 July 2019

• Philippine brand Jollibee has grown from two outlets in Manila in the 1970s to more than 1,300 restaurants in its home country and overseas
• The chain adapts its menus for different cultures, but its Chickenjoy fried chicken is a favourite everywhere.

You only need to spend about 20 minutes in the Philippines to realise that Filipinos really love to eat.

The country has a dazzling profusion of dining outlets, in particular at the casual end of the market, but one brand is seen more than others. And it’s a brand that also seems to induce warm, fuzzy feelings in more or less everyone in the country: Jollibee.

Philippine franchise Jollibee has become one of the world’s biggest fast food chains. Photo: Jansen Romero

The fast food company has 1,150 outlets in the Philippines, and a bigger share of the Philippine market than its two biggest competitors combined, as well as 234 overseas outlets in 15 territories. It is the 24th largest fast food chain globally (including coffee chains) by number of branches, and fifth among companies not from the United States.

It refers to itself in promotional posters displayed in its offices in the Manila business district Ortigas Centre as the largest Asian restaurant company in the world.

This food and beverage empire was born in 1975 – and at the time served only ice cream. It was the brainchild of company founder and chairman Tony Tan Caktiong (generally referred to by his staff as Sir Tony in a sign of respect), the third child of seven in an impoverished family who moved to the Philippines from Fujian province in China. His father opened a small Buddhist restaurant in the southern Philippine city of Davao when Tan was a child.

Tan himself studied for a degree in chemical engineering, but aged just 22, he was inspired by a trip to an ice cream plant to spend his family’s savings on the franchises for two Magnolia Dairy Ice Cream outlets, Cubao Ice Cream House in Quezon City, Metro Manila, and Quiapo Ice Cream House in central Manila.

Cubao Ice Cream House in Quezon City was one of the first two franchises Tan bought before founding Jollibee. Photo: courtesy of Jollibee

People started asking for hot food, so he began providing hamburgers and sandwiches, and soon they were more popular than the ice cream. Neither of the original branches is still operating – but several of the original employees still work for the company.

The Jollibee name was introduced in 1978, first as Jolibe; it was changed to the current spelling so that it could be more easily associated with the words “jolly” and “bee” – and so that, thanks to the non-standard spelling, it could be easily trademarked.

“It compares the employees of the company to busy workers in a hive: hard working, industrious and providing the sweet things in life,” says Dennis Flores, president and head of international business, EMEAA, for parent company Jollibee Foods. “And Sir Tony thought it was not enough that the employees worked hard, but they should also be enjoying their work.”

The first Jollibee store opened in Manila in 1978. Photo: courtesy of Jollibee

In its early years Jollibee faced perhaps the biggest challenge in its corporate history: both McDonald’s and KFC entered the Philippine market in the early 1980s. Instead of having their usual effect of sweeping aside local competition, in Jollibee they found a competitor more attuned to the local market, and one with a particularly determined founder.

“As early as [owning] five stores, Sir Tony was already dreaming of being the best in the country and the world,” says Flores. “He was advised to sell the business and ride on the success of the multinationals. But he believed he had knowledge of the market and great-tasting products.”

The line-up of products that Jollibee is best known for today, all of them tailored to meet local tastes, were pretty much in place by the early ’80s. Its menu items include the Yumburger and the uniquely sweet Jolly Spaghetti, but the star of the show is the

Chickenjoy fried chicken

, introduced in 1980.

“Fried chicken is a very popular product in the Philippines,” says Flores. “Chickenjoy is delicately breaded to produce a crisp, delicious feel, and there’s a secret marinade.”

It’s also the key product in Jollibee’s international expansion, because most cultures tend to appreciate it. “Chickenjoy is our number one product – the bestseller in every market in the world. It appeals to a diverse set of customers and nationalities,” Flores says.

The company started offering franchise opportunities in 1979, had 10 stores by 1981 and became the local market leader in 1985. It really started moving from the late ’80s, however, doubling its sales between 1987 and 1989, and then again by 1991, and further tripling them by 1996.

It opened its 100th outlet in 1991, then reached 200 in 1996, 300 in 1998, 400 in 2001, 500 in 2004, 600 in 2007, 700 in 2010, 800 in 2013 and 1,000 in 2015. The company was listed on the Philippine Stock Exchange in 1993, with its share price rising 135 per cent in the first three months.

Tony Tan Caktiong, chairman of Jollibee Foods, started his empire by buying two ice cream franchises in the 1970s. Photo: Jerome Favre/Bloomberg

It started to expand outside the Philippines in 1987, initially in Brunei, and then in a big way from 1995, when it moved into Guam, Dubai, Kuwait and Saudi Arabia. The US followed in 1998, and the likes of Qatar, Singapore, Bahrain, Italy and the UK more recently. Its fastest period of overseas expansion, though, has been the past three years.

The company has two different strategies when moving into or expanding in a particular country, because the customer mix varies quite widely from market to market. In the Middle East, for example, the clientele is overwhelmingly expat Filipinos; in Vietnam, by contrast, where the company has 118 outlets, more than half of its total outside the Philippines, it’s almost exclusively local.

In London and Milan local custom stands at about 20 per cent, but it’s rising fast. And these days it boasts a local customer base of more than 50 per cent in Hong Kong, where it has eight outlets.

Flores says the company regards Hong Kong as a particularly exciting market, and has ambitious expansion plans over the next five years.

Similarly, the level of localisation, both in the company’s operations and its menu, varies from country to country. “When we enter a market, we bring the products we’re famous for – the chicken, the spaghetti, the burger,” he says. “Over time, we bring in local products: in Vietnam we have chilli chicken, and in Brunei nasi lemak.”

Its strategy in China has been a little different from most other places, buying local brands rather than introducing its own. Jollibee bought its first overseas brand, Yonghe King in China, in 2004, and also owns chains Hong Zhuang Yuan and San Pin Wang. It has gone down the same route in the US, buying 40 per cent of local chain Smashburger in 2015 and fully acquiring it last year.

Chowking Food is a Chinese restaurant chain operated by Jollibee Foods. Photo: Carlo Gabuco/Bloomberg

Jollibee started moving into other food sectors domestically in 1994 when it acquired Greenwich Pizza. It now also owns Chinese fast food chain Chowking, Red Ribbon Bakeshop and barbecue chain Mang Inasal. The company is also joint owner of Highlands Coffee, with more than 300 branches in the Philippines and Vietnam, and of Pho 24 in Vietnam, the Philippines, Indonesia, Cambodia, Macau and South Korea.

The company started running TV ads as early as 1980, and in the same year it introduced what has become the focus of its marketing, its mascots – particularly the brand’s instantly recognisable bee character, which appears in life-size form in its stores. It was inspired, says Flores, by the popularity of Mickey Mouse.

“Tony was trying to think of something that would represent the Jollibee brand, and the benchmark at that time was Disney.”

Dennis Flores, head of international markets at Jollibee Foods. Photo: Jansen Romero

Jollibee has been also involved in creating media content, with Jollitown, an animated children’s TV series starring the company’s mascots that began in 2008 and was the highest rated children’s programme in the Philippines while it ran.

Children’s education and health have been a focus of its charitable endeavours, along with the welfare and economic development of farmers, formalised since 2004 in the Jollibee Group Foundation.

There’s a distinct family feel to Jollibee the organisation. Flores himself has worked for the company for 19 years, and he says there are many similar stories.

“I feel very strongly that we have a unique culture: our values are putting the customer first, speed with excellence, humility, a spirit of generosity, and integrity. These are not just words in a document framed and hung on a wall; they’re values lived from the store teams to the senior management. There’s a synergy and unity of purpose among a diverse set of employees.”

It’s also a company that many customers hold very close to their hearts, tied up with memories of home and childhood.

Flores says the reaction when he tells people he works for Jollibee is priceless.

“It’s actually very heart warming to see the reactions of people when I tell them. When we opened in Saudi Arabia, it was like customers were home,” Flores says.

“Filipinos are all part of Jollibee; all through their lives they’ve been going to Jollibee, and they feel like they have an attachment. They give you suggestions on the menu, the service. Where there’s no store, people plead with us to open one. It’s heart warming to have Filipinos, our core customers, love the brand.