MSMEs with IP fared better during pandemic

Published May 10, 2021, 5:00 AM

by Bernie Cahiles-Magkilat

Micro, small and medium enterprises (MSMEs) with protected intellectual property (IP) and positive branding strategies have defied store closures and revenue losses that marked the first pandemic year.

At the recent Intellectual Property (IP) Grand Forum, Lazada Chief Operating Officer Carlos O. Barrera said the leading online shopping platform revealed this as the shift to e-commerce opened a gateway for greater interconnectivity, demanding more meaningful customer connections which effective brand protection and management could satisfy. 

“Over the course of the last year, we’ve had hundreds of thousands of MSMEs [transition to e-commerce] and we consistently see that those who are serious about IP, the ones who focus not just on selling and [giving] discounts, but the ones who focus on building a brand, delighting their customers, having very strong social media presence, having very clear branding… those really do much better,” said Barrera.

Sherill R. Quintana, president of Philippine Franchising Association, echoed this, saying that “at the height of the pandemic, those who were able to put extra effort in building their brands through the years, they are the top-of-mind.” 

Quintana added that many homegrown brands, given their long-term aspirations, proved true to their values by “taking the extra mile” to respond to their customers’ needs in the midst of mobility restrictions.

She noted that homegrown brands were the mainstay at the height of the lockdowns. “That taught us that the homegrown brands will always be there for you,” said Quintana who is also founder and president of Oryspa Spa Solutions, Inc., a pioneer in making natural rice bran-based health and beauty products. 

Quintana defines a brand as the emotional association customers create with a product or company. Building the brand, she said, is linked to everything a company does, from ensuring customers get value for their money to “going the extra mile” for customer service. 

This makes protecting trademarks, innovations and creations the “integral” first-step to brand-building as IP assets can highlight the unique, competitive edge of a business and, from there, establish trust with customers.

“Those who are able to quickly respond to ideas and transform it into reality, and first and foremost register it by protecting it at IPOPHL, wins the right to that idea-turned-product,” Quintana said, sharing how Oryspa applied at IP Office of the Philippines (IPOPHL) for the registration of IP assets related to five new brands during the pandemic to cater to emerging customer needs.

A homegrown brand itself, Oryspa gained international presence due in part to the company’s high regard for what IP protection and a clear, concise branding strategy can bring to the company’s equity, according to Quintana.

As companies re-examine where to best steer their efforts and spending in the new normal, experts articulate how IP registration and enforcement are some areas that can help them grow faster and realize their long-term ambitions. 

“We need to make sure that there’s an IP protection budget for companies who are bigger and even for MSMEs like me,” said Carissa Cruz-Evangelista, founder-chairman of Philippine Fashion Coalition.

She said IP protection is crucial especially for those venturing into different markets through e-commerce, which she encouraged MSMEs to pursue amid exploding growth in online trade. 

In a May 3 published report by the United Nations Conference on Trade and Development (UNCTAD), it was shown that COVID-19-induced movement restrictions increased online retail sales’ share to total retail sales from 16% to 19% in 2020, with UNCTAD calling it a “dramatic rise.”

In 2019, global e-commerce sales jumped to $26.7 trillion, up 4% from 2018. 

“Through e-commerce, MSMEs can reach out to more potential consumers not only within the country but also within international markets. E-Commerce not only became a means for businesses to keep afloat during the pandemic but, in some cases, even helped MSMEs expand their markets,” Department of Trade and Industry’s (DTI) Special Concerns and Trade Promotions Group Undersecretary Abdulgani M. Macatoman said.

However, Macatoman acknowledged that with opportunity comes risks, particularly that of unfair competition from copycats once creations and products of MSMEs are out in the open.

Latest estimates by the Organisation for Economic Co-operation and Development show that imported faked goods are at $509 billion as of 2016, about 3.3 percent of total trade that year.

Figures are expected to have spiked due to COVID-19 and the accelerated e-commerce adoption. 

In the Philippines alone, IPOPHL reported counterfeiting and piracy reports and complaints surging to 121 in 2020, surpassing the 100 reports and complaints that IPOPHL received from 2016 to 2019 which even took into account all types of infringement. 

“IP stands as a protective guard to the activities in the e-commerce arena… As such, IP protection must be at the forefront of MSME business strategies more than ever,” Macatoman added. 

Cruz-Evangelista called on MSMEs and the government to do more especially in helping the creative economy, the hardest hit due to lockdowns.

“We need to take a look at our IP, our creative economy, how to prevent online piracy and online counterfeiting… protect your intellectual property and take care of all the avenues where you sell,” Cruz-Evangelista said.

For its part, Lazada assured that adequate measures are in place to prevent the sale of counterfeit and fake goods on its platform. 

“We are identifying, through technology, in real-time, all these things and constantly deactivating thousands and thousands of items every day,” Barrera said, encouraging IP owners to directly communicate with Lazada for concerns and takedown requests. 

To recall Lazada, together with Shopee, forged last March a partnership with brand owners to jointly create a mechanism that can take down IP infringing posts in a timely and efficient manner. 

The partnership, facilitated by IPOPHL and the British Embassy, is seen to create trust and ensure the safety of both IP right holders and consumers at a time marketing platforms are proving to be large, if not the main, channels for fraud and deceptive practices. Already,  consumer complaints filed at the Department of Trade and Industry  against online businesses spiked 550 percent last year to 15,967 from only 2,457 in 2019. 

“We acknowledge the concerns and we want to differentiate as an e-commerce platform. Lazada is about trust. And we can only build trust if we have the trust in the brand, trust in the seller, and we want to empower everyone to own their identity and grow, no matter how big or small you are,” Barrera said.