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VOL. 127 | NO. 89 | Monday, May 7, 2012

Global Connections

Memphis in May International Festival honors the Philippines – a nation that boasts plenty of trade possibilities for local businesses

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Although the Memphis in May International Festival is widely known for its Beale Street Music Festival and World Championship Barbecue Cooking Contest, the festival’s focus on developing international economic trade and fostering Memphis companies’ global business relationships remains central to its mission.

This year’s honored country is the Philippines, the “Pearl of the Orient” – a Southeast Asian nation composed of more than 7,100 islands. Its emerging economy, democratic system of government system, and workforce of 38.9 million people – many of whom speak English, which is one of the country’s two official languages – make it an attractive potential trading partner for American companies.

“There are a lot of commonalities with the Philippines and Memphis,” said Jim Holt, president and CEO of Memphis in May International Festival Inc., the nonprofit that produces events throughout the month of May that annually generate more than $40 million in economic impact. “It’s a distribution center for all of Asia, and it’s got a lot of attractive elements. It’s a stable environment, it’s an English-speaking population that’s very pro-American, and there are a lot of commonalities with our city and our distribution and logistics capabilities and expertise.”

Filipino exports in 2010 totaled $50.7 billion, and major exports included semiconductors and electronic products, transport equipment, garments, and copper, petroleum and coconut products, according to data from the Greater Memphis Chamber.

In fact, the Philippines is the world’s largest exporter of coconuts, and Memphis’ largest Filipino-owned company is coconut importer and distributor Franklin Baker Inc., which this month will sponsor a Filipino Memphis in May cultural performance at The Orpheum Theatre and a gala dinner at The Peabody hotel.

After coconut is processed in the Philippines, Franklin Baker distributes it throughout North and South America.

Carl Ledgerwood, general manager of Franklin Baker, says he estimates 70 to 80 percent of the processed ingredient coconut found in U.S. supermarkets “directly or indirectly comes from us.”

The company’s coconut is also sold in bulk as an ingredient to large retailers, and ends up in products such as Girl Scout’s Samoas cookies, Hershey’s Almond Joy and Mounds candy bars, and Hostess Sno Balls cakes.

And its latest venture is selling its mature coconut water to a Brazilian company that blends it with young coconut water for retail sale.

The Memphis facility is the company’s American sales and marketing office, which employs six people, but its presence also contributes to the local economy through third-party logistics, lawyers, accountants, auditors and other outsourced consultants.

“We’re very happy to have Franklin Baker here in Memphis,” said Ernest Strickland, director of Economic Development at the Greater Memphis Chamber.

In terms of imports from Tennessee to the Philippines, the chamber says $59.9 billion in products was shipped to the country in 2010. That included electronics, mineral fuels, machinery, transportation equipment, steel and iron, textile fabrics, grains, plastics and chemicals.

The U.S. is the Philippines’ second-largest import partner, after Japan. And in 2010, Tennessee ranked as the ninth-highest importing state to the Philippines.

Tennessee exports to the Philippines grew 133 percent between 2005 and 2010 – a year in which the state exported $208 million in goods to the island nation.

Computer electronics, which accounted for $108 million of that figure, made up more than 53 percent of Tennessee’s total exports to the Philippines.

Calvin Anderson, chairman of the MIM board of directors, from left, and Myron Lowery, chairman of the Memphis City Council, present a key to the city to Leslie Bassett, Deputy Chief of Mission for the U.S. Embassy in Manila. (Photo: Courtesy of Memphis in May International Festival Inc.)

“Electronics, chemicals – these are major import items to the Philippines,” Strickland said. “So what we do is canvass the business terrain to find what it is that they’re importing. Then we cross-reference them with Memphis companies that provide those types of products. That’s sort of the low-hanging fruit for us, and we’re able to get that information to our local companies so they can go after opportunities.”

Strickland was part of a Memphis delegation that traveled to the Philippines in March, which also included Holt and Memphis City Councilman Myron Lowery.

Strickland traveled to Makati, the Philippines’ financial capital, where some of the country’s financial experts educated him about navigating the Filipino marketplace, and discussed with him where opportunities may exist for trade with Memphis-based companies.

“As with all of our international business council activities, the goal is twofold,” Strickland said. “The first part is to go out and recruit new foreign direct investment into the Memphis and Shelby County community. The second part is to help Memphis’ existing companies increase their exports to foreign markets.”

Lowery said he saw great economic potential for a strong trade partnership between Memphis and the Philippines.

“Any city that does not expand its opportunities internationally will not survive in the long term,” Lowery said. “The exposure globally between cities and countries is extremely important, and Memphis in May provides wonderful opportunities for this to happen.”

It was the third trip to the Philippines for Lowery, who traveled twice before to the country in his previous corporate relations role with Memphis-based FedEx Corp.

“I mention FedEx because we’re all globally connected,” Lowery said. “The transportation infrastructure is currently there to ship products to the Philippines and all over the world right from here in Memphis. The right entrepreneur with ideas in mind to sell to the Philippines only has to establish his contacts because the infrastructure exists to fly the products there overnight.”

Also part of the March delegation were a number of Memphis business leaders – some who already had strong Filipino contacts and others who were looking to establish them.

Among them were Ron Coleman, president and CEO of auto parts equipment manufacturer Competition Cams; Bobbi Gillis, executive vice president at FaxonGillis Real Estate; Herbert Hilliard, executive vice president and chief government relations officer at First Horizon National Corp.; franchise restaurateur Edith Kelly-Green, president and CEO of The KGR Group; and Carolyn Hardy, president and CEO of beverage bottling manufacturer Chism Hardy Enterprises.

Also joining the group was Leigh Shockey, chairman and CEO of Drexel Chemical Co., who also serves as chairwoman of the Greater Memphis Chamber’s International Business Council.

“She does quite a bit of business in the Philippines with sales of chemicals,” Strickland said.

The biosciences and medical equipment sales are another area that may offer a great deal of growth potential in the Philippines for Memphis companies.

According to “Healthcare Technologies Resource Guide: A Reference for U.S. Exporters to World Markets,” a recent report released by the U.S. Department of Commerce International Trade Administration, the Filipino market for medical equipment is small but with a strong U.S. presence, and the sector offers good medium- to long-term opportunities for American firms.

Regina Whitley is executive director of Memphis Bioworks Business Association, which works to advance the bioscience industry in the Memphis region through education, advocacy and professional networking. She says trade opportunity with the Philippines is similar to that of India, which, with its growing middle class, has American businesses – including many from Memphis – racing to expand into that nation.

“With the Philippines it’s more about their imports of medical devices than export opportunities for the Memphis market,” Whitley said. “I think it’s a less mature market than India, but a growing middle class that has more of an ability to spend disposable income on health care technologies.”

The Philippines’ medical equipment market is nearly 100 percent imported, as medical equipment, such as MRI machines, is not manufactured there.

Whitley says it’s a prime time for U.S. suppliers to begin building relationships with distributors, who can handle all aspects of importation, from obtaining a license to acquiring customs clearance.

“It’s a growth opportunity for any company to get in early, and typically market entry is through a distributor, versus having a presence there immediately,” she said. “So that’s a great way to enter the market – taking it slowly by establishing a distributor relationship before going to a direct market situation.”

On May 18, Memphis Bioworks and the Greater Memphis Chamber will co-present a breakfast and lecture focused on bioscience in the Philippines with keynote speaker Dr. Jaime Montoya, executive director of the Philippine Council for Health Research and Development. That event will take place from 8 a.m. to 9:30 a.m. at the University Club, 1346 Central Ave.

Anytime you bring business interests together, there’s potential for commerce. All governments are looking to foster additional alliances with other interests and expand their global presence through commerce.”

 Jim Holt
President and CEO of Memphis in May International Festival Inc.

Other business-focused events lined up this month include a Wednesday, May 9, meeting co-hosted by The Economic Club of Memphis and Memphis in May, featuring Aurelio R. Montinola III, president and CEO of the Bank of the Philippine Islands. The event will be held at the Tower Room at Clark Tower, 5100 Poplar Ave.

And on Thursday, May 10, the Greater Memphis Chamber will join the U.S. Chamber of Commerce and FedEx Corp. in hosting “Doing Business in the Philippines.”

The keynote speaker for the luncheon, which will be held at the Hilton Memphis, 939 Ridge Lake Blvd., is Philippines ambassador Jose L. Cuisia Jr.

“Anytime you bring business interests together, there’s potential for commerce,” Holt said. “All governments are looking to foster additional alliances with other interests and expand their global presence through commerce.”

Holt says the festival and its related events are “a door opener” for local businesses.

“We work in very close harmony with the chamber to try to bring together interests that would have the potential of mutually successful business relationships,” he said. “This year’s festival has a great array of opportunities and speakers that we’re bringing in. It’s an opportunity for us to showcase our capability and increase our profile on a global basis. You never know what will come of it.”

For a full list of Memphis in May business events, visit www.memphisinmay.org.

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