Chris Urbano – Philippines: The Most Favourable Market to do Business

Hi and welcome to another episode of the Outsource Accelerator podcast. This is episode 128 and my name is Derek Gallimore. So today we are joined by Chris Urbano of winery Philippines. I have got Chris on this podcast because he’s a really interesting guy. He has pretty much grown up in Southeast Asia. He has family origins in Australia. He’s done a little bit of management consulting time in Australia and now returned back to the Philippines where he’s been here for the last four years. He’s a wealth of knowledge in terms of kind of business commerce, management fundamentals but also has really interesting insights into the Philippines as I’m sure you’re here. So today we look into his journey to this point and I’m sure you’ll find this really interesting. Of course if you want any details you want to get in touch with Chris then all of that is in our show notes at outsourceaccelerator.com/128. Enjoy.

Derek: Hi and welcome back everybody. Today, I’m excited to be joined by Chris Urbano of Winery Philippines. Chris has a really interesting background which I want to kind of deep down for them here. And of course he is far better at explaining that than I am. But effectively he has spent the vast majority of his life in Southeast Asia and he’s now here in the Philippines building businesses here. So. Hi Chris. Thanks for chatting.

Chris: Thanks for having me Derek.

Derek: And I suppose initially just give us a brief introduction to you and then we can deep dive a little bit more into that.

Chris: Sure. So I’m a entrepreneur and still a consultant based here in the Philippines and back here about four years ago from Australia but I spent time here in my youth here as a University student where I studied Philippine politics and Philippine language or Tagalog. In the last four years I’ve been focused on a couple of different ventures largely in sort of the nexus of FNB e-commerce and digital marketing. So the first of those as you mentioned is Winery Philippines which is the Philippines first created online wine marketplace. And you know brings great Wine from around the world and puts it in the hands of consumers. The second thing is that I started a YouTube channel so I love cooking and I love Filipino food. So I’ve had become I guess an advocate of the global Filipino food movement. It’s taking place through my online cooking show thing cooking which is you can check it out at YouTube if you search for Chris Urbano or you’ll find it. And here I showcase Filipino cuisine, teach Filipino cook their own cuisine which is sort of a fascinating vehicle not only Filipino culture but also a way for me to really explore and understand digital marketing trends in the Philippines. So, I found it to be very, very useful. Also opens a lot of doors you know you sort of get on the TV a bit and a public profile in the Philippines. So that’s the things that I do at the moment here and obviously it’s a little bit of consulting on the side, often for startups. But the BPOl companies as well you know they help pay the bills by where I’m building the company.

Derek: Yeah, fantastic and you know I’ve seen you on YouTube and I’ve seen you on TV and you really are making quite an impact here in the Philippines. And certainly you know I have spoke to other expats here and one of the guys Judah Hirsch of Salarium. He suggested actually which really struck a chord with me, some countries it’s very difficult to be an expat. And some countries like the Philippines it’s actually very easy to be an expat. In that doors are open for you. People are very open. People are very friendly. And of course it’s kind of complexities in there because the society is very complicated and multifaceted but you really have had made quite a splash here. But it’s also I think quite unusual for many expats to really settle here and call their home because the Philippines is quite off the radar to many people. People know about Bali. People know about Thailand but kind of Philippine’s isn’t really there. What was it about your journey that brought you to the Philippines in the first place and then what struck a chord with you that that meant that you are still here.

Chris: Yeah. So I mean I think it’s it’s it’s a little bit of a long story I’ll try and synthesize it down to the key points I mean. I would say I actually grew up in Indonesia and spent a lot of my high school days there in Jakarta. When I was at a high school student I went back if the university as well and now said that I studied at university in Indonesia and the Philippines. Well actually where I really studied was the Australian National University where a hold an Asian studies degree Southeast Asia specialist Indonesia and Philippines. So that allowed me to kind of come up here for the university but I guess I imagine myself having a career in Southeast Asia and probably Indonesia but that all changed when I met my now wife on a school bus in Canberra. When I was when I was studying there and I actually at first thought she was an Indonesian when I first saw her I remember this very clearly. And I thought oh great you know because she’s she’s both very pretty and you know somebody can practise language within all of all of this and probably from the same place. And then I sort of sat down introduced myself on the bus one day and she told me she is from the Philippines and little did I know that you know five years after that I would find myself moving to the Philippines and thinking to myself well I like her and I’ve been in Indonesia for so many years i’ll brought in my expertise to the Philippines. Academically I studied and learned that language because I didn’t want to be one of those. I guess there’s a lot of expats who come to Asia and never really deeply engaged with the culture and language of their wife. I wanna be one of these guys who are Christmas parties. Just sort of drinking a beer in the corner and have a chat with the family.

Derek: It’s even more common in the Philippines isn’t it because they are just so good at English that I think very many expats don’t even attempt to take on the language.

Chris: Yeah I think that’s right and the funny thing is that almost means that you end up in the corner more because although you can have the functional communication of would you like more food and you know did you sleep well last night and so forth. You, I think language is so critical to getting you know beneath the surface of of a culture and connecting with people at a different language. I’d say language and food usually is sort of universal connectivity. So, I suppose I’ve found that in some ways it’s even more important to make the effort in a place like the Philippines because the function of communication comes easy. So I think you don’t tend to be on the surface if you if you don’t make that extra effort even even to learn 100 or 200 words and a few phrases it makes it an enormous difference. So, I’ve never regretted the time I spent studying Tagalog.

Derek: Yeah. It’s interesting, isn’t it? I actually just took up Tagalog pretty much at the beginning of the year and I made a commitment to that because of Outsource Accelerator and I am trying to be a bit of a spokesman for the Philippines and outsourcing. And I thought it was somewhat kind of remiss if I didn’t then take on the language and I’ve been here for years myself and it’s a combination of just being kind of not lazy and also respectful of the environment you’re in.

Chris: Yeah, I definitely agree and I think you know it’s funnily enough I mean I’m a Bahasa speaker as well and I spent more time by studying Indonesian but I use Tagalog all the time when I travel. I mean the fascinating thing about this language is that if you go to and I mean this year I’ve already been to sort of Italy the east and west coast of the US, Singapore and Hong Kong and I have used to look in every single one of those countries where I’ve not used Indonesian once. You know you don’t use Indonesian outside of Indonesia maybe a bit of Malaysia, Singapore, Brunei but Tagalog it’s a language where because of the global Filipino diaspora I find myself constantly hearing it spoken on the subway in Milan or in the airport. So it’s actually very very handy language wherever you are in the world.

Derek: Yeah they’re very very well travelled and certainly kind of very industrious. And then so what is your take on the Philippines versus Southeast Asia. I mean you knew a very commercially astute you’re in business yourself. How do you compare the pros and cons. Obviously our audience is here because of interest or potential interests in outsourcing and the Philippines is known as one of the primary outsourcing destinations in the world and we’re actually trying to pitch it as the kind of Swiss banking of outsourcing as a destination. You know how do you see the commercial aspects of the Philippines versus other Southeast Asian communities and cultures.

Chris: You know perhaps let me start on sort of the question that might touch on your point earlier about what was the decision to actually rebase here and I think the Philippines presents or you might say Southeast Asia presents a number of arbitrage opportunities for any entrepreneur you know if you’re mobile. Do you base in South East Asia? The arbitrage around taxation so you would normally facing a lower rate then you know the developed economies are certainly between the Philippines and Australia just headline tax rates. The second arbitrage is the cost of living.  So if you are looking at starting a business or a venture you can afford to you know your savings go a lot further or your runway is a lot longer being based in a market that has low cost of living and consume in this economy again relative to developed economies. And the third one is to your point the arbitrage of labor which means you can hire people for a few hundred dollars a month instead of a few thousand dollars a month. And when you combine those three arbitrages for people who are somewhat internationally mobile in their skill sets or their career or even their outlook and aspirations that presents an opportunity to like a certain career trajectory. So the opportunity to go from being a rat race worker in Sydney to to being a you know business owner somebody who raises money and builds companies. That’s something that a lot of people you know you need a lot of a lot more network behind you to do that in Australia than you do if you were to rebase to somewhere like here. So I think that’s sort of the initial starting point and then you look at within Southeast Asia. How the Philippines stacks up and on that perspective I would say on the labor arbitrage it’s probably the most favourable market to work in predominantly because of the English speaking workforce and that for me is a big drawcard to be in the Philippines over places like Indonesia where obviously it would be an obvious choice for me given my background there. But I would say on the other to arbitrages around say tax and cost of living in the Philippines probably is. I think it is fair as compared to.  And certainly Singapore in terms of tax rate one places. I think if you’re in the Philippines how do you tap labor arbitrage and the relatively low cost of living but then kind of structure your affairs in a way that you’re largely servicing overseas customers or your company headquarters may be somewhere else in the Philippines might just be a source of you or your labour but your revenues might be large in other markets.

Derek: Yeah I think I think and I think the world is becoming more of a smorgasbord isn’t it? And I think it sounds you know you were brought up in an expat community and you have a sense of using the world to your advantage which I think more people should kind of click on to. But kind of any any any market has its pros and cons isn’t it? if you are based in Monaco there’s a lot of wealth but it’s a small market and you know there’s tax considerations and things like that. And certainly Australia you know it’s a very kind of commercially viable country but the taxes are high and cost of living is extremely high. And as you suggest, really I think more people will start quick on to the fact that you can basis out from one market or build things out of one market and sell to another market. It’s really becoming you know a lot more interactive in terms of treating the world as one global marketplace, really, isn’t it?

Chris: Yeah I think that’s a fair comment. I mean you know certainly technology has broken down a lot of the traditional barriers to cross-border movement. So I guess it is. But also labor but I think digital has actually meant that Labor can flow across borders without people flying across borders. I think that’s really the big change of the last say 10 or 10 or 15 years. And part of the promise of the Internet era is that people don’t necessarily need to move to be reforming work and services. So in the past the outsourcing movement was you know large typically manufacturing MNC would drop a factory in you know a place of cheaper labor. Now you actually don’t need to move the factory or the infrastructure. You can just basically you know get online and identify somebody who can help you out from a low cost market and you know even frankly in the Philippines I find that a mix exercising some arbitrage between you know Makati City Central CBD Manila labor prices are quite high but the first website I built was actually done by this developer that I think I  found through Craigslist which is the most talent. I think my first website was built by a 19 year old girl based in a village in Laguna for about 200 bucks. And you know we did it in for four weeks or something like this in her spare time. And that’s just a crazy cheap way of getting things done. So if you’re prepared to adopt new ways of working and that opportunity it’s definitely there.

Derek: Yeah there’s always kind of cheaper and cheaper markets isn’t there? So it’s finding that balance of good skill and depth of talent vs then the price of things but. Yeah you know to your point on the flow of production. I realized that as well that you know historically things were able to be controlled at borders. Like there was manufacturing which of course you can control the inflow of manufactured goods. And I suppose the original type of exportation was migrant labor and of course you can very easily control that in the borders. But now as you say with services as a product it really can’t be monitored or controlled at all kind can it. And I look at Donald Trump who is trying to maybe potentially clamp down on outsourcing and it’s really difficult to you know an email just sending an email could contain anything between kind of 10 dollars or 10 million dollars worth of value in what is contained within the content. And you just you would actually…. in that you would have to read the emails and make sure that there’s no transfer of knowledge or service or information. And I think like border controls and customs and taxation really have to kind of catch up with the new economy of just information transfer.

Chris: Yeah I think that’s certainly the case.  I mean and I think it’s not confined just to this issue obviously pretty much any disruptive digital technology you know ridesharing in the economy. You know …and so on that that’s creating massive regulatory challenges everywhere. I think this one it’s sort of cross-border movements is there’s a couple of things in there. There’s one obviously around taxation which obviously be shocked if a lot of the work in the Philippines is generating tax revenue for either their country it’s being sourced from or from the Philippines either. I think there’s also issues around minimum wage standards. So at the moment you’ve got websites like the one that comes to mind is fiber just because it’s a unit of about like five dollars. And you can get various services or you put up an ad for what you want done for five dollars. And you know the the idea there is is that five dollars is that above or below the minimum wage that a lot of countries and may or may not be. I don’t know with you but it is that I don’t think anybody really knows. And it’s I think the whole labor market issue is well over. You know people work in these industries. Employees are they contract is what the protections that govern these digital workers of the 21st century. And I think those are all questions that are starting to get asked and and the solutions are probably you know some some years away.

Derek: Yeah I think any of the historic values are completely different now are people employees or contractors and cannot really be held to those old concept. But I think also the difficulty is that regulation and institutions they move too slowly and I think society is now evolving at such a pace that it’s always going to be a few steps behind in terms of actually the relevance of what they’re actually attending to.

Chris: Yeah. And I mean I’ll be honest with you in and out of faces by saying you know why winery Philippines is a completely compliant employer here in the Philippines but when I was starting out and sort of bootstrapping and operating out of my apartment which is you know I started the company the first few people I dealt with was was just on a sort of brokered by the Internet. Typically cash only basis. And funnily enough those those workers are all happy with that and when I said to them you know we’ve incorporated company and I now need to put you on a proper labor agreement let’s comply with Philippine law. Now I’m going to you know Clipper you know X percent of your salary going to pay for all these various government programs none of them were basically happy about it.

Derek: Yeah absolutely. Absolutely. And you can understand why because these people don’t really receive anything from the government or you can certainly be the argument. It is a problem isn’t it. And also you know I want to get you back for our next episode to actually deep into winery and we can talk about that there. ] But it is. It’s in these developing countries it’s actually far more difficult to set up a corporate structure to get your taxes done to comply with all the labor laws and then actually it becomes an impediment to doing things properly doesn’t it. And it becomes an impediment to actually setting up commercial commercially viable enterprises because of the structures. It’s a bit of a catch 22 isn’t it?

Chris: Yeah. Well I think that’s mean. But back to your point of the chat challenges in the Philippines versus other markets I mean there is a red tape and compliance cost here and you can measure it in both dollars or pesos and you can also measure it in terms of time and time taken to set up and establish something. And you know I would view that the you know if you like the regulatory red tape and you know the corruption burden of building a business in the Philippines is probably represent somewhere between you know certainly in the early stages your company you know 20 to 30 percent of your expenditures or your revenue have about that.

And when you think about the time taken to stand up a business I think you know in countries you can set up in a couple of days. In the Philippines you know you’re looking at sort of 6 months is sort of a reasonable timeframe just to get a basic you know company establishment and maybe rent an office.And that’s a staggering amount of upfront time.

Derek:  And a sadness isn’t it? And it’s keeping the population then the kind of the entrepreneurial zest of the country down really isn’t it which is exactly what they don’t need.

Chris:  Yeah and it’s frustrating to see and it’s frustrating to experience it. I think what it means is that unlocking the promise of the Philippines you know unfortunately despite you know Internet enabling a lot of new business models here at some level that promise is still constrained by the government structures and the inefficiencies of Philippine bureaucracy and the challenges of the operating environment. So that is something like In…. this market if you don’t want to do it yourself the people you do work with have that sort of experience a long time in the market. And there are people who invested over many years. You know yourself and myself there to say that four years in country where I knew now becoming I suspect useful people who know how to get stuff done in this market whereas that would be probably one or two year journey had I gone in decline in basements of the United States.

Derek: Yeah absolutely. It’s interesting. Thank you Chris. I want to get you back so we can sort of deep dive into Winery Philippines if people want to contact you in the meantime how can they do that?

Chris: Yes. So, get in touch any time at [email protected]. You can check out what we do at Winery Philippines at winery.ph. URL So how do you.

Derek: Fantastic. And of course all of that is in the show notes. Thanks so much Chris.

Okay that was Chris Urbano of Winery Philippine’s or winery.ph. If you want to get in touch with Chris then of course go to our show notes which is at outsourceaccelerator.com/128. And if you want to ask us anything at all then please do so at [email protected]. See you next time.