Business bustling in booming Philippines

MINORU SATAKE and YASUO AWAI, Nikkei staff writers Economic growth has been a boon to chains such as Uniqlo. MANILA/HONG KONG -- The Philippines is enjoying rapid growth after a long stretch of political turmoil and economic stagnation, and foreign companies are looking to take advantage of strong consumer spending while successful local businesses start to look abroad. Customers continue to flock to the Uniqlo store in the Mall of Asia near Manila even two years after its opening. In its 1,550 sq. meters of floor space, the store offers nearly the same T-shirts and other apparel as its counterparts in Japan. On weekends, it overflows with Filipino shoppers with clothing crammed into their baskets. The casual apparel chain, run by Japan's Fast Retailing, has opened 15 stores in the Philippines, chiefly around Manila, since moving into the market in 2012. It is enjoying brisk sales and aims to more than triple this network to 50 by 2015. And Japanese convenience store operator Lawson has set up a joint venture in the country with Puregold Price Club, which runs shopping centers and other facilities, and plans to open stores this year. Famous ramen chains such as Santouka and Ippudo have branched out into in the Philippines as well. From "sick man" to Asian miracle After the end of World War II, the country, once under U.S. administration, boasted one of Asia's leading economies. But the long-standing regime of Ferdinand Marcos crumbled in the 1980s, and coups and other developments threw the country's politics into disarray. Japanese companies fled amid deteriorating security, and an economic slump led to its labeling as "the sick man of Asia." The inauguration of the current administration under Benigno Aquino stabilized the country, allowing its potential to fully blossom. The Philippines has a population of around 100 million, with an average age of 23. Its gross domestic product growth is outstanding, reaching 7.2% last year. Per capita GDP is seen exceeding $3,000 next year, and the International Monetary Fund estimates that it will surpass Indonesia's in 2019. In fact, the title of one session at the World Economic Forum on East Asia, held in the Philippines in May, went so far as to call the country "the next Asian miracle." Its main growth driver is consumer spending, which accounts for 70% of GDP. For a long time, many Filipinos have worked abroad as maids, sailors or in other occupations. More than 10 million now live outside the country, and remittances from abroad swelled to $22.9 billion last year. This, combined with political and social stability, as well as the success of such policies as low interest rates, has lifted domestic demand even further. Retail giant SM Group is building a massive shopping center on Cebu, a famous resort destination. It will also expand into areas seen as less affluent, with plans to open four malls on the southern island of Mindanao, which has many poor residents. The problem is the sluggish manufacturing sector. The Department of Finance plans to hold a seminar in Japan as early as this fall to attract investment from Japanese businesses. Philippine companies on the rise A Jollibee location in Hong Kong's Central business district was nearly full Thursday afternoon. Businessmen in dress shirts were scattered among the Filipino women who made up 80% or so of the customers, chatting while eating hamburgers and spaghetti. "I like the golden-brown fried chicken," said one Hong Kong bank worker in his 30s. "I come a few times a week." Philippine fast-food chain operator Jollibee Foods runs some 2,800 stores worldwide, rivaling Japanese beef bowl company Yoshinoya Holdings. The key to its buildup is a food selection catering to local tastes. Although it is a burger chain, it also offers such items as spaghetti and Chickenjoy, a meal with fried chicken and rice, attracting a variety of customers. The slightly sweet seasoning is a hit with Filipinos, and it has been called one of the country's national foods. Jollibee is using its success at home to ramp up expansion abroad. It brought Chinese fast-food chain Yonghe King under its umbrella and is adding more stores there, and it has moved into Vietnam, Singapore, the U.S. and the Middle East as well. Its 588 stores outside the Philippines account for around 20% of the total, but Chairman Tony Tan Caktiong aims to raise this to 50%. Strong demand has helped the company grow at home, and it is making use of its know-how abroad. Filipinos working in other countries enjoy the chain's food, boosting its sales. Universal Robina, a snack and drink maker owned by the Gokongwei conglomerate, is building a $30 million snack plant in Myanmar. It has three factories in Vietnam, including one slated to come online this year, and facilities in Thailand, Indonesia and Malaysia as well. Brandy maker Emperador announced in May that it will purchase Scottish whisky distiller Whyte & Mackay for $725 million. The Philippine company makes and sells low-priced brandy domestically and is overwhelmingly popular with middle- and lower-class consumers, success that has helped it expand abroad.