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The Philippines
as Value-Added Hub
By Michael Alan Hamlin
October 21, 2002
An interesting, and probably unexpected,
thing happened last week. The Philippines - normally viewed as an
assembly and testing platform for manufacturing and an emerging
center for outsourcing e-services like contact centers - successful
performed the role of commercial hub, instead of commercial spoke.
Well, it wasn't the Philippines, actually, but the Philippine owned
and managed BayanTrade e-marketplace. BayanTrade conducted its first
purely international e-Bidding event involving a foreign buyer and
foreign suppliers.
BayanTrade (Full Disclosure: BayanTrade
is a client of mine.) has been a venue for foreign e-procurement
and e-bidding for quite some time. COO Dante Briones tells me that
suppliers from Japan, Singapore, South Korea, Australia, England,
Germany, and the United States regularly participate in the company's
e-Bidding events. In all, close to 1,500 companies participate in
the company's e-Bidding events, but last week was the first time
exclusively foreign parties were involved.
That's because it was the first e-Bidding
event conducted for the Asia Pacific Utilities Group (APUG). BayanTrade
developed and hosts the APUG e-commerce portal. APUG is made up
of energy generators and suppliers throughout the Asia Pacific region.
The members agreed to form an industry-specific e-commerce portal
together in order to leverage buying knowledge, practice, and economic
scale. They plan to purchase some supplies as a group to increase
volume and lower unit costs. Together they will benefit from the
market intelligence and efficient buying processes the portal presents.
By opting to have BayanTrade operate
the portal, APUG avoided the large upfront costs associated with
what in effect would be replicating BayanTrade's e-commerce infrastructure.
Instead, they are leveraging that infrastructure to minimize upfront
costs as well as to avoid the costly and time-consuming process
of replicating both the infrastructure and the systems that support
e-commerce transactions.
The bid that took place last week
involved a utility company in Australia as buyer. Prospective sellers
were likewise all foreign. The value of the transaction was approximately
US$1 million, and the final price reflected a savings of seven percent
from the originally anticipated price. While that's not a large
transaction for the energy sector, it was the first test of the
portal, according to Briones, and it went so well that another bid
is already scheduled for this week. That bid is expected to involve
a final transaction value of somewhere around US$2 million.
The aggregate value of purely foreign
e-Bidding events is expected to grow based on BayanTrade's experience
with e-Bidding events in general. The company recently reported
that it exceeded last year's e-Bidding value pass through (VPT)
- representing total transaction value - by 25 percent in just three
quarters. Meanwhile, the net income to BayanTrade from these events
doubled from the same period (three quarters) last year. The number
of e-Bidding events in three quarters exceeded last year's full-year
total by 52 percent, a jump from 340 to 521.
e-Bidding events increasingly involve
very sophisticated products and services, according to Briones,
increasing their value. "We started out with simple items like
office supplies and computers," he says, "but now we bid
more complex items from industrial transformers to the construction
of large buildings and warehouses." Bids this complex can involve
thousands of variables.
But why is APUG e-Bidding event especially
notable in the context of Philippine e-commerce? First off, BayanTrade
is positioning the Philippines as a provider of world-class e-commerce
infrastructure. Second, that role will result in foreign exchange
inflows into the country. Those inflows are likely to increase substantially
as recognition of BayanTrade as an efficient, well-managed e-commerce
hub grows. BayanTrade has already earned a reputation as a leader
in e-bidding implementation and processes management internationally.
As a result, the company's e-Bidding director, Cherokee Chamorro,
has been named director of the E-Bidding Special Interest Group
of CommerceOne Net. BayanTrade implemented and grew e-Bidding in
the Philippines faster than any other e-marketplace in the world
according to CommerceOne executives.
Third, BayanTrade will begin to play
an important management role in international supply chains by offering
e-sourcing, e-logistics and e-payment services. This will transform
BayanTrade from a facilitator of trade, to a value-added manager.
Other value added services the company is likely to offer buyers
and sellers include integration of sophisticated backend enterprise
systems with the e-marketplace. Integration provides a seamless
procurement interface for buyers and sellers with their own financial
and other management systems. For non-technology types, that's sort
of like "one button does all."
The Philippines is a very small marketplace,
and by positing itself as a value-added e-commerce hub for international
buyers and sellers, BayanTrade is also dramatically enhancing its
own prospects for growth and profitability. And there are important
advantages for its Philippine-based suppliers as well. As BayanTrade
sellers, these mostly SMEs will achieve visibility internationally,
generating new opportunities for growth and enterprise development.
There's a lot of talk about what
Philippine companies could do if conditions were right, and other
excuses. BayanTrade's obviously not paying attention. It's going
out and doing great things anyway.
(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 a co-author (Wiley, 2001). He can be reached
at mahamlin@teamasia.com.).
Copyright © 2002 Michael Alan
Hamlin. All Rights Reserved.
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