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Whither
the Recovery
By Michael Alan Hamlin
May 13, 2002
Part of it is disappointment with
liberalization, especially if you are in the tuna business, and
trying to understand why the EU and the U.S. both have put up walls
blocking the import of what experts agree is the best "maguro"
in the world. And then claim that they are not hurting the Philippine
tuna industry. Then again, there are the usual deadbeat companies
that refuse to modernize and so can't compete against imports. We
also have true blood protectionists, who could compete but believe
in traditional monopolies whether they sell cement or airline seats.
There are others, too, both deserving of sympathy and
otherwise, that collectively account for the communal gloom that
seems to have settled over much of the small, medium, and large
sectors. One recruiter recently told me that around 2,000 salaried
employees are being laid off every day by companies struggling with
sagging sales, or just pessimistic about future prospects. Offshoots
of all those productive bodies made idle include the surge in visa
applications and the sudden popularity for learning entrepreneurship.
So I was surprised this week when executives in the
construction and real estate industries told me that things seem
to be looking up. Now, we do know of sectors that have done and
continue to do well despite the general moping so prevalent. Most
are in the no longer "oh so sexy" non-traditional sectors
that we've talked about before in this space. That's why everybody
wants to be a call center or medical transcription services provider
these days. I talked to a banker the night before I wrote this column,
in fact, who excitedly told me that a hardware vendor was giving
him 50 percent off the equipment he needs to setup a medical transcription
service. The reason for the discount? "I think a call center
ordered the equipment, but went broke."
If that set off any alarm bells in the technopreneur
wannabe, I didn't hear or see any evidence of them. But the gold
rush mentality reminds me of prawn farming a decade ago. Suddenly,
everyone was a shrimp farmer whether he knew the business or not.
The sector got crowded (and the shrimp diseased) and it imploded.
Now, everyone wants to operate a call center (It's not as messy.).
I expect the prawn farming pattern to be repeated because so many
people will get into the business without acquiring a real understanding
of the business model. The sector will continue to grow for the
professional firms, but there's going to be a lot of grief among
the entrepreneurs that don't grow up fast.
The fate that awaits many enterprise opportunists is
fun to speculate about, but doesn't really have much to do with
the bad business mood. And it certainly doesn't have anything to
do with anecdotal evidence that things may be getting better in
the core traditional sectors like construction and real estate.
What is driving this activity? And will it be sustained?
According to the fellows I talked to, the real estate
industry is moving "primarily because values have gotten so
low." That suggests a couple of things. First, that opportunities
now are just too good to pass up (leases going for a fraction of
the original asking price in spanking new Makati office buildings,
for instance). Second, that there is money available to invest in
these opportunities. It could also mean a third thing, and that
is that there is the general perception that these great deals may
not be around much longer, although there's still an awful lot of
empty space in the market. I guess when the gravy deals do disappear,
we'll know that we really are in recovery mode.
The reasons for movement in the construction industry
seem a bit more nebulous, and the expert I talked to wasn't really
sure himself why his company has seen, in the past couple of months,
a pretty substantial increase in requests for bids. He is quite
naturally spending his time concentrating on the bids, rather than
contemplating on why they are coming his way. Who can blame him?
Whether a recovery is really in the offing or not,
and I suspect that it is (by default if nothing else), could a little
positive mindset help things along? Foreign businesses in Hong Kong
think some positive thinking could help that equally, emotionally
depressed market. The Asian Wall Street Journal reported last week
that four foreign firms, including Kentucky Fried Chicken, are funding
an Ogilvy & Mather campaign that encourages Hong Kong people
to think positively and stop letting the economy get them down.
The multi-channel campaign features signs on taxis
that read, "There's a bump in the road. Get over it."
and a TV commercial that equates all the time people spend complaining
about the economy to the time necessary to complete productive tasks,
like re-shooting every Hong Kong movie ever made, eating 600,000
egg tarts, or even completely rebuilding Hong Kong from scratch.
I think it's worth trying here, too.
(Michael Alan Hamlin is the managing director of consultancy
TeamAsia and the author of three books on Asian economies and companies.
His latest book is Marketing Asian Places, of which he is co-author.
His e-mail address is mahamlin@teamasia.com)
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