The special guest speaker is Dr. Atty. Rami Amer G.Hourani, President of PhilExport – Cebu, Professor at the University of Cebu – School of Law. Dr. G.Hourani’s presentation is about “Retail industry during the Covid-19” by analyzing two typical case studies of E-commerce adoption to overcome the pandemic. One is a 40-year enterprise in exporting handicrafts to the European and American markets, and the other is a small-scale and limited staff and technology startup. This topic is driving giant public interest, therefore, the Faculty of International Business and Economics, VNU University of Economics and Business implemented a deep interview with Dr. G.Hourani through several questions after the webinar ends.

 

 

 

Business is undertaken differently in certain political realities. A business in Myanmar will face many different challenges than a business in Singapore, where it ranks very high in terms of the ease of doing business index. As a businessman, you undertake the task of your own interest. You understand that there are going to be certain opportunities and certain obstacles that are going to happen, which is why you do not necessarily call out your country or hope it is going to change. You acknowledge that there are going to be opportunities, which is the best approach.

For example, you say and imply that Myanmar is harder to do business than Singapore. But let me reverse your question: is that, for example, harder for a basket weaving business, or cotton processing plant to set up in Singapore or in Myanmar. In fact, it is much easier to do it in Myanmar because of the presence of cheap labor.

If your job is as a business person, it is not to hope that things can be different so much. It is your job to acknowledge that things are going to be the way that they are going to be and that you have to respond to the best of your ability.

 

 

These are global economic problems. Just like in the 2008 financial crisis when a large investment bank of the US went down and our customers suddenly lost their liquidity and they canceled a lot of their orders. These are the costs of doing business. At least, the Evergrande group is limited to real estate holding in China, which is relatively insular. I don’t think it will have the global knock-on effects like the larger investment bank Lehman Brothers had.

Relatively, Vietnam and the Philippines are smaller economies, like smaller fish in the water inhabited by dragons. There are going to be these large systemic problems that occur in other countries and they are going to affect you. But when they drop the ball, Vietnam has been able to benefit from it, you have to have that kind of high degree of diligence to attract those opportunities. If not, I will be working very hard to make sure that those opportunities which have left China, will come to the Philippines.

 

 

Freight costs have gone up because the pandemic has destroyed the international shipping industry, so the logistic costs have been going up. So, where people previously ship efficiently by boats would now transition to air. That is the reason why the air freight costs have caused a knock-on effect and the sea transportation cost has gone up similarly.

This not only affects Balik Batik but also the business which I thoroughly give you an idea of the difference. A container to ship to the US would normally cost 4000 US dollars. Now, during the pandemic, at the worst time, it hit about 18 to 20,000 US dollars.

One of the things you need to understand is that, as a businessman, you operate in a given status quo. And we need to alter the payment terms as far as the expert industry is concerned. We may have waited for the shipping rates to normalize before we ship our goods, but that would destroy our cash flow. That made it impossible to survive for a certain period of time.

For e-commerce, Balik Batik operates in a very niche area, it is ready to wear and customized goods, which are very relatively expensive. Some of the goods Balik Batik sells at 100, 200 US dollars a piece. So, the logistic costs going up considerably for a piece like that would not actually be that bad because it is a small percentage of the cost of the total payment. Balik Batik does not sell on the channels of Amazon, Lazada, or Shopee because they would take a large chunk of the costs and Balik Batik also does not produce the kind of volume that would be profitable on these platforms. If you look at the costs of marketing on social media, not to look at your value proposition, you would see that you sell individual pieces that are high value, in which case, you can afford the extra overhead and the time spent on marketing on Facebook and Instagram, because you don’t have the advantages of the automated process but you also don’t have the volume where it matters. But if you are selling a defined product and you are looking to sell thousands of those individuals of those products, then perhaps, that is a good indicator that you should be on Etsy, Amazon, Shopee, or Lazada because for you, you don’t care if they take about 15% to 20% of the purchase price because you only care about getting 10,000 units in sales. That is how you should approach these E-commerce platforms because if you go into it with social media or E-commerce platforms being this monolith, you are setting yourself up for failure.

 

 

The live streaming video is structured in the way that the algorithm dictates whether or not people will see a given post based on the biased favors of the videos. Because videos increase engagement more than any other media.

I used to think that showing a blouse on live streaming is strange but when I operate a business page, I realised that this is actually a really good way to get people to look at your business. You may also increase the chances of making a sale. When you live stream, you can interact with people. That is when the organics of the interaction come up. People would have lower expectations for a live streaming video compared to a premade video.

I think it is an opportunity that you should consider all kinds of retail.

 

 

We have been asking for years for the Bureau of International Revenue, which is the tax authority in the Philippines to transition to an E-platform where you can do your taxes. People should embrace technology not only in the private sector but it also applies to the government