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Nurturing future big brands

By Ron Jabal for Kultura Filipino Published Dec 24, 2022 4:50 am

In a post-pandemic world, the micro, small, and medium-sized enterprise (MSME) sector continues to be an important engine of economic growth, job creation and poverty eradication in the country. Therefore, a whole of country approach has become imperative to support its growth which was largely hampered due to the havoc created by the COVID-19 pandemic.

According to the latest available data from the Department of Trade and Industry, there is a total of 1,080,810 business enterprises operating in the country. Of these, 1,076,279 (99.58%) are MSMEs and 4,531 (0.42%) are large enterprises. Micro enterprises constitute 90.54% (978,612) of total establishments, followed by small enterprises at 8.63% (93,230) and medium enterprises at 0.41% (4,437).

Majority of the MSMEs can be found in the National Capital Region (NCR) with 198,652 (18.46%) business establishments, Region 4-A (CALABARZON) with 159,377 (14.81%), Region 3 (Central Luzon) with 137,677 (12.79%), Region 7 (Central Visayas) with 77,698 (7.22%), and Region 6 (Western Visayas) with 73,515 (6.83%). These top five (5) locations accounted for about 60.11% of the total number of MSME establishments in the country. Regional concentration of MSMEs is largely associated with economic activity and population size. 

Together, these MSMEs generated a total of 5,461,731 jobs or 64.67% of the country’s total employment. The micro enterprises produced the biggest share (32.46%) closely followed by small enterprises (25.08%) while medium enterprises were far behind at 7.12%. Meanwhile, large enterprises generated a total of 2,983,847 jobs or 35.33% of the country’s overall employment.

Unfortunately, due to mobility restriction and the imposition of containment policy by the national government due to COVID-19, around 60% of the firms were not in operation. Among others, the MSMEs, were prohibited to operate which impacted cash flow issues and supply chains. Worse, there was no available personnel to continue the business as 55% of non-operating firms reported loss of employees at varying degrees, with 30% experiencing 100% loss.

Those MSMEs which remained in in operation experienced some level of reduction in operating hours, resulting in about 65% of firms reporting at least 60% reduction in both revenues and production volume and roughly 60% of firms reporting some loss of employment up to as high as 90%.

Now that the economy is getting back up and the MSMEs are slowly revving up its operations, they need all the support they need not just to restart their engines but also to scale up. And this is where the nurturing embrace of a bigger business comes into play. Now, the MSMEs, more than ever, need bigger establishments to be become more socially responsible by helping them weather the storm that had passed and help them expand moving forward.

With retail as its core, SM has stepped up and selflessly provided the needed home for these MSMEs—recognizing the role of MSMEs as a vital cog in the SM supply chain.

Indeed, SM understands the path—both travails and triumphs—that these MSMEs have navigated and continue to tread as the retail giant was once an MSME like them. Before becoming the largest retailer in the Philippines, SM began as a small business in the streets of Carriedo. SM understands that the best support it can provide to MSMEs is a generous platform—a marketplace to showcase their products and offerings as well as an avenue for these MSMEs to hone their entrepreneurial skills to grow their businesses. SM is deftly positioned as a marketplace for MSMEs so that customers can discover, enjoy, and support their products.

One of the biggest showcases of its generous support for MSMEs is through one of SM Retail’s affiliates, Kultura, which houses all things Filipino. Kultura showcases local artistry and craftsmanship, bringing together specialties from all over the Philippines for a unique shopping experience. It provides an excellent opportunity to get amazing homegrown Filipino goods into the hands of more appreciative consumers. 

To help promote enterprises that produce sustainable products, SM offers a home to Jabon Jabon and Sibol—brand owned by the Wonderful World of Wellness that offers locally-sourced and genuinely natural products. Through their partnership with Kultura, Jabon Jabon and Sibol found a platform for their brand to be closer to consumers. Despite reeling from local disasters and the negative impact of the pandemic and subsequent lockdowns, this sustainable enterprise found great support from SM that helps them overcome challenges. They were even able to boost their presence online while being available in retail outlets through Kultura.

Another MSME that found a beneficial space in Kultura is Cocobody. Because of the fruitful relationship with SM, Cocobody founder Reynaldo Pacheco has not only provided employment to several communities and upgraded skills of his workforce but has also promoted fair trade and community development. Cocobody sources coconuts from Maguindanao and Lanao del Norte, two of the poorest provinces in the Philippines. The indigenous communities in Mindanao also benefitted from the brand’s relationship with Kultura as they are employed by Cocobody.

An MSME from Cebu—Shepard—has also greatly benefitted from its association with the Kultura brand. Offering nature-derived personal care products that are now housed in this SM Retail affiliate, Shepard has created a line of lifestyle products that is part of the solution to the pollution problem while also providing family care products that are both trustworthy and safe.

Also receiving much needed support from SM is Pili Ani—the only local beauty and wellness brand that uses a unique combination of Pili and Elemi Oils. Made in the Philippines from all-natural ingredients, each product is fair trade, ethical, cruelty-free, vegan, and sustainable.

All Pili Ani products contain ethically and sustainably sourced ingredients from the Bicol region.

“Indeed, Kultura has proven over the years that partnering with SM is good for communities, the environment and for consumers that value sustainable products. By providing a platform for MSMEs and social enterprises to thrive, Kultura has given more consumers access to eco-friendly items from all over the country. Each purchase helps support our foundations and uplift our craft communities. “ Ivy Uy Yap, Kultura President stresses.

SM founder, Henry Sy Sr, or Tatang, as he is fondly called, has always stressed that business growth and social development should go hand in hand. SM took to heart the importance of stewardship that goes beyond business—from creating fair trade through implementing standard retail pricing to extending basic social programs like education, health care and food security to our communities, and livelihood creation.

“As we recover from the COVID-19 pandemic, we take our learnings by creating a greener future where no one gets left behind. With 90,000 MSMEs under our wing, most of which are women-led, we will continue to ensure that we make the most vulnerable sector of our value chain, our MSMEs, strong and resilient…. In the words of our founder Henry Sy Sr, whatever you earn, you must give back. We must do something to help others in society,” Cathy Ileto, Vice President for Corporate Communication Ileto says.

In an era of cutthroat competition even as we continue to feel the pernicious brunt of the pandemic, it is refreshing to see how retail conglomerates such as SM extends its mighty arms to MSMEs that truly need all the help. By providing a home, SM is not just nurturing these MSMEs to survive but also helping them achieve their dreams of becoming big brands in the future—truly an excellent feat by a business that started only as a small shoe store in Manila. Truly aweSM!

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Editor’s Note: This article was provided by Kultura Filipino.