SENDING THE WRONG MESSAGE

 

Swedish vacuum maker Electrolux got a quick lesson in English slang when it introduced its product in the American market. Highlighting its vacuum’s high power, the Scandinavian company’s ad campaign boasted, “Nothing sucks like an Electrolux.” Grammatically correct, but never did it take off with U.S. shoppers; more so in times of crisis when “life sucks” has been the daily sulks.

Here’s another wrong message.

KFC got off on the wrong foot when it opened in China in the late 1980s. In Beijing, the company’s famous slogan, “Finger-lickin’ good,” translates to “Eat your fingers off” – aargh!

Not only wrong but here’s a “killer” message.

American Motors made this mistake in the early 1970s by naming its midsize car “The Matador.” Although the name was intended to conjure up images of courage and strength, it may have been a little too aggressive for Spanish-speaking consumers: In Spanish, “matador” means “killer.” Of course, the name didn’t appeal to drivers.

(Snippets of information above were taken and edited for brevity from the article “Lost in Translation: 13 International Marketing Fails” by Skye Schooley, staff writer of Business News Daily.)

THE ISSUE

I started with such amusing business stories to lighten up a bit my opening since I will take up this complex subject: the Special Economic Zone (SEZ) – specifically, the Bulacan Airport City Special Economic Zone and Freeport.

Grabbing the headlines lately, the news item caught my eye: the final corporate project I carried out many years ago -- putting up an SEZ. My team was in full swing then laying out everything on the drawing board when our company hit the proverbial economic iceberg. Right then and there, like the Titanic, our company went underwater together with our SEZ project. My consolation prize: the SEZ theory I stockpiled in my brain. I’m glad I could put it to good use in my article today.

The issue at hand: PBBM vetoed the proposed Bulacan Airport City Special Economic Zone and Freeport Act or House Bill 7575.

WHAT IS A SPECIAL ECONOMIC ZONE(SEZ)?

An area where the business and trade laws are different from the rest of the country, it aims to increase trade balance, employment, investment, job creation, and effective administration (Wikipedia). Created to facilitate rapid economic growth by leveraging tax incentives, it tends to attract foreign investment and spark technological advancement (Investopedia).

WHERE, WHEN, AND HOW DID SEZ START?

In Shannon, Ireland in 1959, the first modern industrial SEZ was established. Douglas Zhilua Zeng in his paper “Special Economic Zones: Lessons from the Global Experience” reported that most started in the form of export processing zones (EPZs). East Asian and Latin American regions began establishing such zones in the 1970s – to attract foreign direct investment in labor-intensive manufacturing sectors to encourage exports. Such an early model was successful in many countries: the Republic of Korea, Taiwan, China, Vietnam, Bangladesh, Mauritius, the Dominican Republic, and El Salvador. According to the International Labor Organization (ILO): 176 EPZs were operating in 47 countries by 1986. And by 2015, their presence had grown to around 4,300 EPZs in over 130 countries.

AN EARLY MODEL

The Sino-Singapore Suzhou Industrial Park (SIP) is well-known for its “first-class living environment” and sound industrial-urban integration. It strives to be an “internationally competitive high-technology industrial park and modern, garden-like township.” Thanks to its sound design and planning, the zone is not just an industrial area but also a very livable city, which is essential for attracting high-end investments and talent.

The park features well-conserved nature areas and scenic views, high-quality urban and social amenities, and highly regarded education options (such as the Suzhou Singapore International School). Distinct areas are designated to serve different functions as residential neighborhoods, centers of education and training, and sites for recreation and leisure (a culture and art center, museums, an opera house, stadium, exhibit center, etc.), and many green spaces and eco-gardens. It also has well-established, industrial and consumer service sectors, including banks, schools, hospitals, health clinics, postal services, retailers, and hotels. (Source: Zeng, 2016)

In other words, SEZ is good news. But, here’s a caveat: Murphy’s Law states, “Anything that can go wrong will go wrong.”

WHAT CAN GO WRONG WITH SEZ?

Many things can go wrong with SEZs. Zeng affirmed that “[SEZ] can be an effective instrument to promote industrialization and structural transformation, but only when implemented properly in the right context.” He added that “the results are quite mixed globally.”

What went wrong could have been due to SEZs limitations: they tend to become “enclaves” – without much linkages with the local economy and rely heavily on fiscal incentives. To fine-tune, many countries began to move towards the modern concept of SEZs – called “Zones 2.0” -- which have wider size, more linkages with the local economy, and are multifunctional and less reliant on incentives. I believe the Bulacan Airport City Special Economic Zone and Freeport have caught on to and aligned with such SEZ evolution to suit the new business and economic environment.

THERE’S THE RUB

The crux of the issue at hand is embedded in the words of no less than PBBM’s sister Senator Imee Marcos: “Ang kinatatakutan ko, baka hindi naaral nang maiigi or may naggagaling-galingan.”

The following two cases of SEZ failure may shed light.

First, let’s take Thailand’s SEZs which failed to deliver. Excerpted from The News Lens article by Wannaphong Durongkaveroj of Crawford School of Public Policy, Australia National University:

“Under a NEW GOVERNMENT, there is no guarantee that SEZs will still be encouraged. This only brings UNCERTAINTY TO INVESTORS who might be considering projects in these zones.” (Underscoring mine)

Second, in India SEZs have also failed. A research paper by Meir Alkon of Princeton University revealed the root of the problem -- the local politicians:

“Site selection for SEZs has been guided by SELF-SERVING AGENDAS rather than considerations of growth and development. Local politicians often influence bureaucrats at state-owned industrial development corporations to secure land for PERSONAL GAINS… Local politicians also use site selection of SEZs to target specific ethnic and caste groups to CREATE VOTE BANKS.” (Underscoring mine)

Could PBBM’s veto send a wrong (hopefully not a “killer”) message of uncertainty to investors that would perceive it to be due to self-serving agendas?

Head still photo courtesy of Andrea Piacquadio at pexelsdotcom