PSFK Author:
Jason Tan

Rags2Riches offers designer accessories based entirely on recycled materials - but that’s not why people are talking about them. It’s their commitment to social good that’s setting them apart, the company pairing up the impoverished people of Payatas with some of the Philippines’ most reputable fashion designers (Rajo Laurel is the first one so far) to help elevate the area’s standard of living.

Payatas is the main waste dumpsite of Manila. People who live in Payatas have been known for their ingenuity in the face of desperation. They scavenge through piles of garbage for raw materials to make new products. This economically forsaken place represents the cottage underground of sustainable goods. The problem has been the people’s lack of access to market knowledge and their vulnerability to the opportunists - fine-tuned to the desperation - who buy from them at next-to-nothing prices (even for Philippine standards).

And this is where Rags2Riches is stepping in. The company has done well by treating the people of Payatas as stakeholders. The people now understand the concept of pricing to the market and realize the value added by good design. Perhaps most importantly, they now have a regular (and growing) market to sell to which means that they’re no longer put in a situation where they’re constantly selling out of desperation (i.e. getting screwed over).

The end market of Rags2Riches is generally elite. The products retail at select shops in Greenbelt, Manila’s poshest shopping destination. This has allowed Payatas workers to improve their profit by a factor of 50. Higher volume is on the way as export orders are expected this year from New York, San Francisco, Tokyo as well as certain cities in Europe and Australia. Keep an eye on the official site too as it’s expected to open for online retail soon.

Sari-sari stores are make-shift local community convenience stores that serve the vast underprivileged majority of the Philippines. There are about 650,000 of them scattered around the nation and virtually all of them are individually owned. For years, ambitious local entrepreneurs have dreamed of consolidating this massive retail category. A bunch of them dreamed with a social conscience and are now finding success with a venture called Hapinoy.

Hapinoy seeks to become a “preferred business partner of the poor” by partnering with local microfinance institutions to provide women borrowers with top credit scores a Hapinoy sari-sari store franchise. Hapinoy provides value by serving as a retail consultant, brand marketer and merchandise consolidator (it deals with manufacturers directly). The company makes money by getting a percentage off the merchandise, which ties its long-term interests with each individual store’s sales growth and inventory turnover. Because of the network effect and economy of scale achieved by being under one Hapinoy brand, store owners still end up with higher margins compared with traditional unbranded sari-sari store owners.

Hapinoy store owners also learn best practices on key retail essentials such as inventory management, store efficiency and branding. They achieve better negotiating power for merchandise, financing and even technology. Some stores are already planning to install internet kiosks to provide their communities with much-needed online access. The social community factor has been retained as well: stores allocate space on the walls for posters promoting local events and seminars.

This business is not only ideals-driven, but strategically successful as well. Because of how asset-lite the model is (microfinancers provide the capital and absorb the financial risks, lenders build/convert the stores, manufacturers supply the goods), the company has achieved a considerable level of scalability. Hapinoy is planning to open/convert 40,000 stores by the end of 2008 and 100,000 stores by the end of 2009.

“You are what you eat” is one of the main principles behind UNKL 347, Indonesia’s independent clothing pioneer. But “eating” in its case refers to the Warholian consumption of pop culture. In keeping with its of-the-moment ethos, 347 has seen three variations of its name over the years since the brand emerged in 1996, with each name change reflecting its revamped identity.

The brand started out as 347 boardrider, a reflection of the founders’ roots in made-to-order fashion inspired by their love for surfing and skateboarding. It then evolved into 347/EAT, in recognition of the influence that international pop culture was having on the brand. And now, in its most recent iteration, they go by UNKL 347, the brand having established itself over the years as a well-known influencer in its own right in Indonesia (”After ten years, friends called us uncle”).

With UNKL 347 quickly outgrowing its small label roots, so is debate about the brand’s right to continue to “eat” into other intellectual property. 347’s recent designs have appropriated imagery and logos from Nike, Xerox, popular song lyrics and even from Andy Warhol himself (the legendary appropriator). 347’s defense is that they are simply engaging in commentary and that it is far more noble (though illegal) to show your influences outright than hide them in a blur of pastiche. Inside Indonesia covered this in a discussion with Dendy, a 347 founder:

‘We’ve been cut ’n’ paste from the beginning, and now is the era of cut ’n’ paste,’ Dendy [said]. ‘We readily admit it,’ he says. ‘In fact, we make it obvious so that people know.’ One of 347’s designs, for instance, features an almost exact copy of the album cover for ‘Goo’ by the New York art punk band Sonic Youth. A young, modish couple in bowl cuts and sunglasses smoke cigarettes while they lounge in each other’s arms. Beside the image, the original handwritten words ‘I stole my sister’s boyfriend’ have been replaced with ‘I stole my Sonic Youth.’

This kind of borrowing is actually quite a common practice for small, independent clothing labels all over the world; but as 347 grows in reach and profitability, many are starting to wonder where to draw the line. Certainly 347 is more than just a copycat; the brand has produced a considerable amount of original work and has been a catalyst in the development of local underground events. In 2002, it put on the first largescale outdoor rave in Indonesia called Distance and started Ripple, an influential publication which has since sparked several spin-offs. Besides, it’s reasonable to believe that - in a country where blatant product piracy is rampant - customers are buying the “Nike” and “Xerox” shirts more because of what’s next to those icons: 347’s own bowl logo and the word “EAT” which 347 has filled with so much connotation.

But if you’re already contributing so much culture on your own, why bother to continue borrowing from others? Is it simply a lazy design shortcut?

The big city paradox: the denser the population, the more isolated you feel. This was the case even in hospitality-renowned Thailand’s big city, Bangkok. Then RDCK (Ruam Duay Chuay Kan or “Come Together to Help Each Other”), a community FM station, went on the air and brought everyone a little bit closer together.

In its latest issue, Monocle describes in detail how RDCK has empowered citizens with problems (e.g. snake attacks, missing people) to call in and get help. The station has also shown the city that many of its everyday heroes are driving buses and taxi cabs:

Around 40 per cent of the daily audience - typically between 80,000 and 100,000 - is found among the drivers of Bangkok’s fleet of 70,000 taxis who are frequently glued to the frequency. Up to two-thirds of calls to the station’s 1677 hotline are from people reporting items left in a taxi.

“If you dial 1677 you can expect to have a 50 per cent chance of resolving your problem. You don’t have to feel lonely in the big city; you call 1677,” says Boonchai Bencharongkul, 51, the station’s chairman and biggest patron. “Even the government calls to get help,” he laughs.

RDCK is officially not profitable but it does get a lot of advertising from corporations looking for some social luster and it has proven to be indispensable. A riot broke out in the streets when the station went off the air for three days in 2003.

[via Monocle]

In a recent panel discussion on business opportunities in the Philippines entitled “Bottomline 2008,” which included Philippine Finance Secretary Margarito Teves as well as representatives of Bangko Sentral ng Pilipinas and the International Monetary Fund, three industries were identified as high growth engines that will drive the country forward:

1. Business Process Outsourcing
2. Ecotourism
3. Mining

These three industries will play a major role in what the Philippines will look like in the future so any trend analysis on the country should pay close attention to the directions that these industries are taking. We’ve discussed in the past how business process outsourcing is already influencing city lifestyle behavior and Manila’s real estate landscape.

Philippine ecotourism is expected to have a similar impact for residents living outside the metropolis as it is seen as a great source of opportunity for small businesses and marginalized indigenous communities. When done properly, ecotourism (despite all its environmental contradictions), will finally enable more Filipinos to participate in the global economy by bringing the global community to their doorstep. It also creates a very real incentive to preserve the natural environment and keep any planned modernization as sustainable as possible. The New 7 Wonders of the World campaign is creating a lot of interest for ecotourism and the Philippine government has recently rejoiced that four of the top 10 destinations with the most votes are Philippines-bound. Perhaps success in the industry might also lead to more green thinking nationwide.

While ecotourism is being projected as the great new hope for the local underdog entrepreneur, mining is of course where big business is interested in playing in. Due to years of bureaucracy and violent tension with the separatist (and resource rich) Mindanao region that has kept foreign investment out, there’s still actually a lot of value underneath the country to dig for. This creates a very real dilemma though because ecotourism and mining obviously tend to conflict with each other. Who will the government side with if there’s gold underneath a certified natural wonder? So far, it looks as if the country is going for the gold.

Mobile television - made famous in 2005 by South Korea where citizens demanded to get their soap opera fix on their cell phones - is set to have its coming out party in China during the 2008 Beijing Olympics. The option to channel surf through other Olympic events on your phone during the timeout would probably be welcome; but beyond entertaining the masses, China has job creation on its mind. Bear in mind that the government has gone out of its way to develop China’s very own 3G network standard known as TD-SCDMA. The intention presumably is to give birth to a whole new high value technology industry that can help keep the country on its rapid growth pace.

Here are some figures on Mobile TV from Hong Kong Trade Quarterly:

According to a survey conducted by Mainland market research company CCID Consulting, mobile TV and music downloads are value-added services that cell phone subscribers prefer, accounting for 41.6% and 38.3% respectively.

Norson Consulting reckons that the number of mobile TV subscribers on the Chinese mainland will reach 52.2 million in 2008 and market value is expected to hit Rmb1.3 billion. After two more years of high-speed growth, the number of mobile TV subscribers should soar to 97.5 million by 2010, with market value reaching Rmb2.4 billion.

Reeling from massive losses, a barrage of lawsuits and overall disgrace because of its abuse of new exotic products that led the world into a credit crisis, the financial industry is coming back with more new exotic products. This time, they want investor green to follow green alternative investment ideas like carbon credit exchange traded funds (ETFs), alternative energy ETFs and green real estate investment trusts (REITs).

ETFs are essentially mutual funds for the masses. They allow an average individual investor to buy into a diversified pool of assets in small amounts and with minimal cost. Carbon credits essentially give companies the right to pollute and their value will almost certainly go up as governments of all major economies will eventually have to tax corporations for environmental damage. As investors buy up carbon credits, the cost to pollute will rise. The value of the international carbon market was reportedly about US$60 billion in 2007. That’s remarkable considering that the US still only has a voluntary carbon trade market in place via the Chicago Climate Exchange.

An actual carbon credit ETF has not been launched yet but one of the main headliners for recent risk management shame, Merrill Lynch, has already launched a carbon emissions index. ETFs typically are linked to index benchmarks such as these and so usually follow soon after the benchmark is created.

DangDang.com has long been dubbed the “Amazon of China” because it matches the online retailer in broad ambition; it leads the Chinese online marketplace, and, well, founder Peggy Yu openly admits that she wanted to build an Amazon.com for China. Certainly no shame in that. Sales growth for DangDang.com is at an unbelievable 100% per year since it setup virtual shop in 1999. The site cribs the most popular Amazon features like the product recommendation system, search engine and customer feedback loop, but DangDang has also done some innovating of its own to tailor online selling for the Mainland.

DangDang’s gives back to its customers (and encouraging their vigilant attention to the site) by randomly assigning one hour a day as “Lucky Time” in which all purchases made within that hour are free of charge (restrictions obviously apply). Online rebate coupons and VIP membership are offered as an extra bargain incentive as well.

DangDang also works to give its customers a reason to trust them. China never had an established mail-order industry so it was previously unheard of for customers to part with their money first before getting what they paid for. To put customers at ease, DangDang has a door-to-door return policy within seven days after purchase and allows exchange of goods within 15 days. Also because this is China, the site makes a pledge not to sell pirated products.

And finally, the online supersite makes the transaction all the more convenient and worthwhile with its flexible payment options. Zero debt is seen as a virtue in China, so credit card penetration has been slow. This means that DangDang can’t just rely on credit card payments like Amazon does. Instead, it allows customers to pay cash upon delivery. Not surprisingly, this has proven to be the most popular payment option. For those willing to embrace technology, DangDang has partnered with Yeepay (China’s answer to PayPal) which enables customers to pay online using credit cards, via mobile phone using SMS messages integrated with customer bank accounts or through a touch-tone phone by linking with the interactive voice response systems of the major banks.

As we’ve mentioned in the past, Japan’s population is aging and will continue to get much older going forward.  This has led to some rather interesting counter-aging trends, including the continued development of advanced robotics to aid workforce productivity and the rising popularity of collagen-based consumer products. We can now add IV drip cafes to this list:

Tenteki10, located in the swank area of Ebisu, Tokyo, offers customers a walk-in service that features IV drips starting at 2,000 yen ($20). The service is meant to provide a skin care boost, act as an anti-aging remedy and alleviate stress and exhaustion. Administered by on-site nurses, this could be the perfect way for hypochondriac, futurist, medical fetishists (yes, that is a real sub-culture) to get their fix in one shot.

Tenteki10