Women-run Small and Medium-scale Enterprises (SMEs) Gaining strength to succeed in the global economy

In the whole forest, there may be one economic development model left, which is worth a second look. Scarcely given another look for its very nature, micro or small enterprise is, in fact, the starting seed and the ground from which everything else bigger evolves. In fact, it can well be said that the industry giants, from whom developed nations derive their strength and affluence, all started in the same way.

Moreover, to a certain point, small enterprises are the best generators of employment. When economies crash and unemployment spreads like an epidemic, there are no alternatives but everyone to himself, or herself. And yet, as economic histories attest in the experience of every nation, it is from this bottom line that the economy of a nation starts to pick itself up, regains health and becomes robust again. Individual initiatives are the headwaters from which flow cornucopias of goods and services, eventually bringing about abundance and industrial clout.

Engines of Growth
Among developed and developing countries, the role of small and medium enterprises in the economy has never been taken for granted. As the motive force of self-propelled initiatives in research and industry, provider of employment, and mass base of productivity and growth, SMEs are the indisputable engines, and barometer, of a nation’s economic resiliency.

The cultured sprout of small enterprises, especially in the form of cooperatives networking for production, with big sister companies as anchor, has been the power pack in the ascendancy of the Asian tiger economies of modern times. The efficacy spawned by this type of networking has made it the model for similar efforts being exerted by developing countries in the region, and elsewhere in the world.

It is getting increasingly evident that this is going to be the trend in the future. The information explosion, which has punctured geographic borders and cultural walls, paving the way for the globalization of economies, also brought with it the simplification and miniaturization of the workplace. Information technology now allows for business networking to be done within a space enough for a personal computer and in the easy convenience of the home or residential studio.

Interestingly, the high competitiveness spawned by global economics has placed a high premium to a range of flexibility and nimbleness which small business outfits are naturally equipped with, and to a customer needs sensitivity and to a person-to-person human approach, all of which are areas where women managers are increasingly showing an edge over men.

Native Resources
The fundamental power base of SMEs in boosting growth is the fact that they are generally resource-based. They tap the richness in the natural resource of a country, using and engendering the skills and creativity of the natives, to work out goods that are thus not import-dependent and not falling prey to global cost fluctuations. When exported, these goods contribute considerably in augmenting the foreign reserves of the country of their origin.

The prospect augurs well for a country like the Philippines, which abound in forest resources, minerals, marine wealth, agricultural and agro-industrial wastes which the poor economic situation and innate creativity of the people transform into usable and commercial goods.

One distinctive example is Philippine handmade paper which, aside from its traditional use for writing, books and cards, is now used as accent articles like flowers, dolls, wall decor, and novelties, also as gift wraps, shopping bags, and specialized boxes for jewelry, cosmetics, perfumes and chocolates.

The product, with initial buyers from the U.S., Germany, Spain, Italy, Japan, and Australia, has been cited for its uniqueness, artistry and rich texture, especially for its use of biodegradable and non-toxic materials, and had an export value of $115.03 million in 1999. It has successfully entered other export markets, in France, Canada, South Africa, Sweden, Saudi Arabia, New Zealand, Singapore and the U.K.

“Handmade paper can be made from almost anything,” says Fe Frialde, woman owner-manager of Los Baños Handmade Paper Enterprises, one of the local processors of the product. “We use rice stalk. But the technology can also use banana fiber, mulberry bark, cogon grass, and leaves of trees.”

It came naturally to Frialde to go into this business as, she said, she was part of the research team that developed the technology. Another woman entrepreneur, however, came to it in a roundabout way. Lynn Molina began first as a waste materials collector before she tried herself at handmade paper with a mere PhP 250 working capital in 1995. The initial investment earned for her Php 3,000 then, but it has since multiplied a thousand times in six years.

Growth Sector
Handicrafts, in fact, has been flourishing as an industry in the domestic market and fares with promise in exports. A wide variety of forest products like rattan, wicker, oleoresin, various fibers and seashells, and waste materials like hay, volcanic lahar, paper, broken glass are being made to go into the making of elegant furniture, garment accessories, fashion accents, home and holiday decor, and knick-knacks of various uses.

Lamentably, small enterprises are able to get access to export markets mostly as subcontractors to bigger firms and as suppliers to export traders. Actual figures are hard to come by, but government estimates place their actual contribution at as much as 60 percent of country’s total exports.

Other sources nevertheless attest to their growing clout. Marian Nash of Rainbow Cote disclosed in a recent forum that “90 percent of the success of the Philippine economy depends on small and medium enterprises,” while Donald Dee, president of the huge Employers Confederation of the Philippines, admitted that “95 percent of our companies are SME’s, of which more than half employ less than 20 workers.”

Recognizing the export potential position of micro and small home-based enterprises, government agencies like the Department of Trade and Industry and Department of Labor and Employment have pump-primed seminars and workshops on how to start and run a business and on the basics of entrepreneurship, marketing and product design.

Skills training and technology packages are available at the government Technology and Livelihood Resource Center and research institutes and programs affiliated with the Department of Science and Technology and state-run schools, as well as private schools. Even the promotional food cooking demos conducted periodically by private suppliers of foodstuffs and condiments help flush out closet gourmets and turn them into food processing entrepreneurs.

But, even for rural folk to whom these supports are as distant as the moon, there are traditional skills reposed in rural folkways and in regional acculturation that merely lie in wait to be tapped. Upland women in the hinterlands in north and south of the country are known for their fine weaving and fiber works, as the men are for woodworks. In the lowlands, staunch regionalism has borne its finer fruits in the form of pride in the excellence of local food preparations, delicacies, snacks and sweets.

Economic Hedge
Faced with economic difficulties and displacement, many enterprising Filipino women have turned home-bound skills into livelihood and an alternative source of income. Often, however, they venture out armed only with hardy guts and a measly starting capital. With no business management know-how, there have been an uncountable number of failures. Others, too, simply lucked through. An exemplary case was that of Trin Cayat, a government social worker, organizing local women and teaching them skills.

When an earthquake devastated northern Luzon, including Benguet province, their homes and their lives, in 1991, Cayat and her husband Francis were faced with the specter of destitution. With her work background, however, Trin decided to put up a home-based small business, helped with a PhP 1,000 loan from the local office of the Department of Social Welfare and Development.

With the capital, she started hand weaving bedroom slippers for friends and neighbors, who found them not only pretty and comfortable but durable as well. In a year, they were able to repay the loan, and with earnings put up a business they named Clarijee, but running it proved daunting.

Being a member of a women federation in the north named Tublay, Trin was able to get herself sponsored for seminars and workshops run by Department of Trade and the Department of Labor and Employment. She was also helped by the Design Center of the Philippines on design and color. Starting then, their main products, distinctive for their appealing color, of hand-woven slippers, espadrilles and sandals, with crocheted caps, bonnets and bags as secondary line, began finding themselves in Maharlika market stalls in Baguio City, then in trade fairs and bazaars as far as Metro Manila.

As buyers grew, so did their workers. First, neighbors with free time at home and looking for a source of extra income were taken in. The federation also assisted in getting other skilled workers and those willing to learn in other villages. The weavers did their work at home.

In 1999, Clajiree participated in a national trade fair in Manila, where a foreign buyer placed an order for 3,000 pairs. Soon after, Trin came to know, when no re-order came, that her buyer had set up his own slipper manufacturing plant in China.

The monkey on the back of most Filipino handicraft-makers is the greater competitive edge enjoyed by foreign counterparts brought about by larger government outlay in research and product development, easier access to sources of soft loans and imported components, bigger domestic and export markets. But even these they have lived with. What hits them hardest is the illegal appropriation of an intel-lectual property copying practiced by foreign competitors with impunity.

The prospect of getting one’s design copied through the worldwide webs and the Internet is cited as one of the major drawbacks in making Filipino small entrepreneurs realize the conveniences that business is bound to enjoy from emerging information technology accessing trends.

Being able to link up with foreign buyers with the flick of a finger, however, overweighs the risk of getting copied. As Marian Nash pointed out: “One drawback, especially for Filipinos, is that they are afraid their products will get copies. We have to think like the Japanese: when you design something, be prepared that it will be copied. There should be a lot of innovation. We have to have a lot of ideas to be able to make our products competitive in design and in accessibility.”

The situation is especially true in the small and medium-scale business handicraft sector, where designs are as fickle and fast-changing as women’s fashion, and, interestingly, where women business managers and leaders seem to grow in number-and flourish.

One woman entrepreneur who had to reckon with rampant copying of designs is Lorna Kalaw, owner-manager of Lokal, maker of stuffed toys in Malabon City. She said it’s almost impossible to avoid it, as designs have to be sent to prospective clients and approved by them before any orders are expected. Despite the risk, she keeps taking her chances, selling her designs even in countries presenting stiff competition to local products. “I even have orders from China,” she said. To fill the gap when exports flag, she falls back on the domestic market, where her toys have established a niche.

According to Miguel Varela of the Philippine Chamber of Commerce and Industry, “in the United States the number of women moving into small and medium businesses has surpassed the number of men doing likewise.” He also shared the observation that “women entrepreneurs have a lower failure rate than men in starting new businesses.” And, that “studies show that women rate higher than men in mentoring employees, producing a high quality of work, and goal setting.”

The trend seems to be gaining ground in the Philippines as well, but not as dramatic. Jessie Asuncion, executive director of the influential Women’s Business Council of the Philippines, said here the “the number of women executives has grown by about 50 percent only,” citing culture as having to do with family enterprises managed by the male spouse, with the female spouse coming second only in command and usually as treasurer.

But where women executives run it, she said, the business seems to take on a new aura and direction. Where with the male, profit is paramount, a woman-led business demonstrates values identified with women, such as transparency, nurturing, ability to reinvent the rules, and human touch-qualities identified with a transformative leader.

Such a leader, says Varela, “is one who develops a willingness in others to change attitudes, to explore new possibilities, to have the courage to go beyond what is familiar and comfortable, to search for new horizons, and to dream of things that never were.”

Still, there are successful male-female teamworking. Such were the case with Rufino and Anna Manrique, the husband-wife tandem behind Moonbake, Inc., which successfully diverted their flagging bakery into a top trendsetter in native food specialties; the sister-brother team of Annaliza Tangson and brother Rosauro of the now famed hatmakers of Aurora Province; and the houseware and novelties venture couple of Efren and Dory Armada of Laguna.

It was under this set of perceptions, together with the aim of promoting entrepreneurship among women, and boosting the rise of more small and medium enterprises in underdeveloped and developing nations that the WINNER project was conceived and implemented.

Standing for “Women into the New Network for Entrepreneurial Reinforcement,” WINNER is the project of the United Nations Development Fund for Women, launched in 1999 and implemented by the Technological Information Promotion System.

The project aimed to introduce to women producers and entrepreneurs the emerging economic globalization process. With information and communication technology helping out, the project was seen as a tool in capability-building among them. It has been implemented in two phases. The pilot phase covered five countries; namely, Albania, Ecuador, the Philippines, Nepal and Romania. The second phase, continuation of the pilot phase, extended the project to three more countries namely, China, Bangladesh and Zimbabwe. The project, from May 2000 to March 2002, extended training seminars and workshops to more than 400 women entrepreneurs and 40 women organizations nationwide.

As the objective of the project, an exclusive electronic market space for women-run enterprises was created on the Internet WINNER websites which are linked with procurement agencies in industrialized countries in Europe and the national bureaus of Technological Information Promotion System in over 40 countries. With the help of country coordinators, small businesses could link-match with suppliers and buyers for mutually beneficial relationships worldwide.

The next natural step after the electronic encounter of WINNER participants, would be the face-to-face meeting between matched parties for direct business negotiations, which should come in time for and to enliven annually and regularly-held international trade fairs and missions.

Coming Trend
That information and communication technology is a major driving force in the economic globalization process is beyond dispute. The Internet is fast becoming the new medium of communication in both the business world and our daily lives.

Surveys cited by Dr. Victor K. Fung, chair of Prudential Asia, place the number of users of the Internet worldwide at about 378 million in 2001, to top 490 million by 2002. Of the 2001 users, 170 million were in the U.S., 72 million in Asia-Pacific, and 66 million in Europe. Another survey projected that Asia-Pacific users, with the exception of those in Japan, would grow at a faster rate than users in the U.S. and Europe. It forecast 90 million users in 2001 in the region, rising to 176 million by 2004. These, said Fung, would have far-reaching implications in the economic landscape for Asia-Pacific.

That landscape is being increasingly seen as conducive to small and medium enterprises, for reason of the inherent flexibility and suitability of these entities as suppliers and partners of big companies. The emerging economic order is also being visualized as bringing with it a new sense of empowerment, so much for women as also for less developed Third World countries. In fact, the term “Third World” may soon be applied, not to nations, but to communities or enclaves, even of affluent nations, not plugged by the information and communication technology to the economic globalization process.

In effect, the WINNER project initiates and insinuates the germ of the technology into a population sector, that of women entrepreneurs and producers, of a heretofore Third World country and nursemaid it, so to speak, into the emerging world economic order.

Since start of the project, a total of 414 Filipino women entrepreneurs and representatives of women’s organizations and agencies have attended the training courses, complete with hands-on exer-cises, guided by resource persons. Among the 16 resource persons were three who had participated in an earlier WINNER trainor’s training course.

Training courses on e-commerce, international trade and entrepreneurial management were held at the mass base level, in specific target communities. As a result, 88 cooperation agreements, since the start of the project two years ago, were signed with various women’s organizations.

Many women entrepreneurs who have participated in the training seminars and workshops are already enjoying the benefits of electronic commerce. One is Venice Valdez, young and petite owner of Venice Handmade Design in Bae, Laguna. She said e-commerce has since made her work and getting clients so much easier.

Valdez, who has orders for her handmade fashion accessories from two prestigious stores in Makati and from Singapore, said she simply downloads purchase orders at her personal compu-ter. She submits her designs to the merchandiser by way of the Internet for viewing and approval. All the phases of business, she said, is now done in the same way, except collection and payment, but she said it will not be far when everything will be done electronically. She said it saves a lot of time and effort.

She is a member of a growing number of small entrepreneurs in Los Baños, Laguna, who organized themselves into a federation, and a good number of whom have participated in the training course offered by the WINNER project.

Ma. Lourdes Orijola, provincial director of the Department of Trade and Industry in Laguna, said her office and some federation members have long been sharing a common awareness of the opportunities being offered by and to be enjoyed from electronic commerce. They wanted to be educated, but the cost of getting a lecturer was high. When the WINNER project came to Laguna, they were overjoyed.

The problem faced by an entrepreneur about to go electronic, she said, may fall in any one of these cases: she does not have a personal computer; she has one but she does not know how to use it; she knows how but cannot use it because the children are using it for their school assignments; and, to top it all, there is no local Internet service provider.

At the time of the interview for this article Director Orijola was in the course of a regular meeting of the federation in Los Baños. She said she hoped that WINNER project would visit the province again, especially now that the establishment of an e-commerce facility in Laguna is a top agenda.

A marketing and training center project for small and medium entrepreneurs is in the works. To be privately managed, the center will provide an answer to the various problems faced by small entrepreneurs. The first floor, Orijola said, will have stalls for federation members to display and sell their products. There will be a library, an information center, and a tourism center. There will be communication facilities, function rooms, convenience stores, and food stalls. The land for the center has been identified and donated. They were meeting actually to discuss the timetable for construction.

But, best of all, she said, the center will have a place where federation members can have the use of a computer, where through the Internet they would be able to do business the e-commerce way-the WINNER way, talking business-to-business or business-to-client at the flick of a finger from a corner of the center in Laguna, Philippines, with anyone anywhere in the whole wide world.

by: Tony Calsado