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Well if there’s one thing to be said about a small (market capitalization under $ 30 million) publicly traded company that’s also an uncontested innovative global industry leader, is that it never gets boring. Falken Industries (OTC : FLKI) has an incredible knack for finding the most unusual markets and polishing them to gem like qualities. It does equally well in introducing its product concepts years before its competitors appear or come to take the market seriously. Today the target of its attention is; the Philippines. The world has been passing the Philippines by, unmistakably. Back in the 60’s, the country had the second-highest per capita income in Asia, lagging behind only Japan. But in the decade that followed, South Korea and Taiwan had surpassed it, ten years later it was Malaysia and Thailand that streaked by and China not to be outdone did it in the 90’s. Now, to the dismay of the Philippine privileged class, Indonesia has roared by to pass it. I was back in the Philippines (my first visit there was while on R & R from Vietnam in 1967. I was deployed there with the USMC from 1966 to 1968) just last fall: very little had changed in Manila. I was back in the same hotel as 15 years before while covering an Asian Automobile After-Market convention. There are few options upon which I could target my interest, there were hardly any new companies to meet and the same handful of family businesses controlled or in the least dominated the market. Jeepney buses were about, triggering a nostalgic remembrance of years gone by. To place your thoughts in time, Jeepneys were around during WWII and remains even today the preferred mode of public transportation. The point is made early to foreign travelers. From spanking clean ultra modern airports everywhere throughout Asia travelers to Manila must plow through a 1970’s style budget facility overwhelmed by excessive painstaking controls and a novel tax which must be paid in local currency to pass through the return gate; tax calculated to leave you with a few hundred useless pesos when boarding (no credit cards accepted – cash only and pesos at that). The obvious mechanism is apparent; the tax forces a remainder from the even number that cash withdrawal from the local machine will oblige – nice way to generate foreign currency reserves ! Some of us can remember the 50’s and the 60’s. The Philippines were then the star of the day – remember Burma and Sri Lanka – they were part of the club of three. Forget the last two who fell into disuse and disfavor long ago. The Philippines is now a horrific reminder of how fancy projections go askew and why playing catch up lacks the element of inevitability – and this even for the Philippines which is, hands down, a wealthy state in terms of human capital and natural resources… hum are we getting close to a motive for FLKI’s global strategic success in these countries ? True, the Philippines are not the only country that has lost its way, history – current history is tormented with such instances. The Philippines have missed out on waves of investment led booms and the quantifiably few successes translate into no real progress for a nation whose population is increasing at the rate of 2% annually. The country is a laggard. One obvious cause is the highly subjective enforcement and interpretation of laws and regulations. Simply the rules can change on a whim midway through the game. Little wonder then that there is so little foreign investment – the Philippines attracted barely 12% of the amount invested say in Indonesia. It takes guts, experience and a strong back to navigate these waters. But why then FLKI’s keen interest and decision to proceed: Auto sales have stagnated and remain at the level of the 90’s. This translates to a huge pool of used vehicles requiring repair, maintenance and car care! That coupled to FLKI’s extensive experience in developing these markets, makes for a huge opportunity. Will the game change with the forthcoming election? Manuel Garcia, communications Officer at FLKI had this to say : “Six years ago Indonesia and the Philippines were on parity and while Indonesia is hardly the epitome of economic virtue, it has, due to a modicum of political stability, had relative success over the past few years. We believe the same will occur in the Philippines and that reforms will usher in the good times.” Garcia added: “And yes, FLKI will have no competitors. Existing products are meaningfully inferior to FLKI’s product conceptions, appallingly expensive, and lacking in all manufacturer support.” With 10 million Filipinos abroad – many of which apparently shareholders of FLKI - better prospects are very likely to bring some of that talent to return home enhancing prospect for well established brands (FLKI’s most successful product conception is the Clean Plus® branded lines) by adding to the economy’s underlying productivity – it thus seems timely and judicious for FLKI’s decision to undertake the establishment in the Philippines of a landing platform and production facility targeting the Asian markets. Falken Industries Ltd OTC : FLKI is a diversified industrial conglomerate that operates in Chemicals, Wet Wipe and Biodegradable Technology. Falken Industries Ltd is the concept behind more than 160 products distributed through a network of global platforms and the recipient of trade awards for innovations, biodegradability and environmental and health quality standards.
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