The recent New York Times revelation that Wal-Mart paid bribes to grease the skids of rapid expansion in Mexico is not shocking to anyone who has built a retail business in a developing country. It would be shocking if they hadn’t.
Retailers paying bribes is a normal cost of doing business for some in developing markets. I was CEO of a chain of 75 specialty coffee shops around Asia for 10 years. It’s almost impossible to do business in places like the Philippines and Indonesia without someone communicating – usually tacitly – that they could make things hard for your business if you didn’t take care of them. We were smart enough not to try to do business in Indonesia. I wish I could say the same about the Philippines.
Here’s how it works.
We were based in Kuala Lumpur and roasted our coffee there. We saw the huge success of Starbucks in the Philippines and opened an office in Manila in late 2000 to get into the market. Our country manager was an ex-hotel executive, a Filipino, who had lived in Malaysia for many years and wanted to move home. Our Malaysia team was excited about our first expansion abroad.
By July 2001, we were ready to open our first shop, 1,500 square feet in a busy area of greater Manila. Part of our competitive edge was the freshness of our coffee, so shipping by air was part of our plan. We flew a ton to Manila a week before opening.
When it arrived, our freight agent called. Customs was backed up and wouldn’t be able to clear our shipment for a month.