John Gokongwei , Jr.
Ad Congress Speech
Nov 21, 2007
Before I begin, I want to say please bear with me, an
81-year-old man who just flew in from San Francisco 36 hours ago and is
still suffering from jet lag. However, I hope I will be able to say what
you want to hear.
Ladies and gentlemen, good evening. Thank you very much for
having me here tonight to open the Ad Congress. I know how important
this event is for our marketing and advertising colleagues. My people
get very excited and go into a panic, every other year, at this time.
I would like to talk about my life, entrepreneurship, and
globalization. I would like to talk about how we can become a great
nation.
You may wonder how one is connected to the other, but I promise
that, as there is truth in advertising, the
connection will come.
Let me begin with a story I have told many times. My own.
I was born to a rich Chinese-Filipino family. I spent my
childhood in Cebu where my father owned a chain of movie houses,
including the first air-conditioned one outside Manila . I was the
eldest of six children and lived in a big house in Cebu ’s Forbes Park .
A chauffeur drove me to school everyday as I went to San Carlos
University , then and still one of the country’s top schools. I topped
my classes and had many friends. I would bring them to watch movies for
free at my father’s movie houses.
When I was 13, my father died suddenly of complications due to
typhoid. Everything I enjoyed vanished instantly. My father’s empire was
built on credit. When he died, we lost everything-our big house, our
cars, our business-to
the banks.
I felt angry at the world for taking away my father, and for
taking away all that I enjoyed before. When the free movies disappeared,
I also lost half my friends. On the day I had to walk two miles to
school for the very first time, I cried to my mother, a widow at 32. But
she said: "You should feel lucky. Some people have no shoes to walk to
school. What can you do? Your father died with 10 centavos in his
pocket."
So, what can I do? I worked.
My mother sent my siblings to China where living standards were
lower. She and I stayed in Cebu to work, and we sent them money
regularly. My mother sold her jewelry. When that ran out, we sold
roasted peanuts in the backyard of our much-smaller home. When that
wasn’t enough, I opened a small stall in a palengke. I chose one among
several palengkes
a few miles outside the city because there were fewer
goods available for the people there. I woke up at five o’clock every
morning for the long bicycle ride to the palengke with my basket of
goods.
There, I set up a table about three feet by two feet in size. I
laid out my goods-soap, candles, and thread-and kept selling until
everything was bought. Why these goods? Because these were hard times
and this was a poor village, so people wanted and needed the basics-soap
to keep them clean, candles to light the night, and thread to sew their
clothes.
I was surrounded by other vendors, all of them much older. Many
of them could be my grandparents. And they knew the ways of the palengke
far more than a boy of 15, especially one who had never worked before.
But being young had its advantages. I did not tire as
easily,
and I moved more quickly. I was also more aggressive. After each day, I
would make about 20 pesos in profit! There was enough to feed my
siblings and still enough to pour back into the business. The pesos I
made in the palengke were the pesos that went into building the business
I have today.
After this experience, I told myself, "If I can compete with
people so much older than me, if I can support my whole family at 15, I
can do anything!"
Looking back, I wonder, what would have happened if my father
had not left my family with nothing? Would I have become the man I am?
Who knows?
The important thing to know is that life will always deal us a
few bad cards. But we have to play those cards the best we can. And WE
can play to win!
This was one lesson I picked up when I was
a teenager. It has
been my guiding principle ever since. And I have had 66 years to
practice self-determination. When I wanted something, the best person to
depend on was myself.
And so I continued to work. In 1943, I expanded and began
trading goods between Cebu and Manila . From Cebu , I would transport
tires on a small boat called a batel. After traveling for five days to
Lucena, I would load them into a truck for the six- hour trip to Manila
. I would end up sitting on top of my goods so they would not be stolen!
In Manila , I would then purchase other goods from the earnings I made
from the tires, to sell in Cebu .
Then, when WWII ended, I saw the opportunity for trading goods
in post-war Philippines . I was 20 years old. With my brother Henry, I
put up Amasia Trading which imported onions, flour, used clothing,
old
newspapers and magazines, and fruits from the United States . In 1948,
my mother and I got my siblings back from China . I also converted a
two-story building in Cebu to se rv e as our home, office, and warehouse
all at the same time. The whole family began helping out with the
business.
In 1957, at age 31, I spotted an opportunity in corn-starch
manufacturing. But I was going to compete with Ludo and Luym, the
richest group in Cebu and the biggest cornstarch manufacturers. I
borrowed money to finance the project. The first bank I approached made
me wait for two hours, only to refuse my loan. The second one, China
Bank, approved a P500,000-peso clean loan for me. Years later, the
banker who extended that loan, Dr. Albino Sycip said that he saw
something special in me. Today, I still wonder what that was, but I
still
thank Dr. Sycip to this day.
Upon launching our first product, Panda corn starch, a price war
ensued. After the smoke cleared, Universal Corn Products was still left
standing. It is the foundation upon which JG Summit Holdings now stands.
Interestingly, the price war also forced the closure of a third
cornstarch company, and one of their chemists was Lucio Tan, who always
kids me that I caused him to lose his job. I always reply that if it
were not for me, he will not be one of the richest men in the
Philippines today.
When my business grew, and it was time for me to bring in more
people- my family, the professionals, the consultants, more employees- I
knew that I had to be there to teach them what I knew. When dad died at
age 34, he did not leave a succession plan. From that, I learned that
one must teach
people to take over a business at any time. The values of
hard work that I learned from my father, I taught to my children. They
started doing jobs here and there even when they were still in high
school. Six years ago, I announced my retirement and handed the reins to
my youngest brother James and only son Lance. But my children tease me
because I still go to the office every day and make myself useful. I
just hired my first Executive Assistant and moved into a bigger and
nicer office.
Building a business to the size of JG Summit was not easy. Many
challenges were thrown my way. I could have walked away from them,
keeping the business small, but safe. Instead, I chose to fight. But
this did not mean I won each time.
By 1976, at age 50, we had built significant businesses in food
products anchored by a branded coffee
called Blend 45, and agro-
industrial products under the Robina Farms brand. That year, I faced one
of my biggest challenges, and lost. And my loss was highly publicized,
too. But I still believe that this was one of my defining moments.
In that decade, not many business opportunities were available
due to the political and economic environment. Many Filipinos were
already sending their money out of the country. As a Filipino, I felt
that our money must be invested here. I decided to purchase shares in
San Miguel, then one of the Philippines ‘ biggest corporations. By 1976,
I had acquired enough shares to sit on its board.
The media called me an upstart. "Who is Gokongwei and why is he
doing all those terrible things to San Miguel?" ran one headline of the
day. In another article, I was described as a pygmy going up against
the
powers-that- be. The San Miguel board of directors itself even aid for
an ad in all the country’s top newspapers telling the public why I
should not be on the board. On the day of reckoning, shareholders
quickly filled up the auditorium to witness the battle. My brother James
and I had prepared for many hours for this debate. We were ne rv ous and
excited at the same time.
In the end, I did not get the board seat because of the Supreme
Court Ruling. But I was able to prove to others-and to myself-that I was
willing to put up a fight. I succeeded because I overcame my fear, and
tried. I believe this battle helped define who I am today. In a twist to
this story, I was invited to sit on the board of Anscor and San Miguel
Hong Kong 5 years later. Lose some, win some.
Since then, I’ve become known as a serious player in
the
business world, but the challenges haven’t stopped coming.
Let me tell you about the three most recent challenges. In all
three, conventional wisdom bet against us. See, we set up businesses
against market Goliaths in very high-capital industries: airline,
telecoms, and beverage.
Challenge No. 1: In 1996, we decided to start an airline. At the
time, the dominant airline in the country was PAL, and if you wanted to
travel cheaply, you did not fly. You went by sea or by land.
However, my son Lance and I had a vision for Cebu Pacific: We
wanted every Filipino to fly.
Inspired by the low-cost carrier models in the United States ,
we believed that an airline based on the no-frills concept would work
here. No hot meals. No newspaper. Mono-class seating. Operating with a
single aircraft type.
Faster turn around time. It all worked, thus
enabling Cebu Pacific to pass on savings to the consumer.
How did we do this? By sticking to our philosophy of "low cost,
great value."
And we stick to that philosophy to this day. Cebu Pacific offers
incentives. Customers can avail themselves of a tiered pricing scheme,
with promotional seats for as low a P1. The earlier you book, the
cheaper your ticket.
Cebu Pacific also made it convenient for passengers by making
online booking available. This year, 1.25 million flights will be booked
through our website. This reduced our distribution costs dramatically.
Low cost. Great value.
When we started 11 years ago, Cebu Pacific flew only 360,000
passengers, with 24 daily flights to 3 destinations. This year, we
expect to fly more than five
million passengers, with over 120 daily
flights to 20 local destinations and 12 Asian cities. Today, we are the
largest in terms of domestic flights, routes and destinations.
We also have the youngest fleet in the region after acquiring
new Airbus 319s and 320s. In January, new ATR planes will arrive. These
are smaller planes that can land on smaller air strips like those in
Palawan and Caticlan. Now you don’t have to take a two-hour ride by
mini-bus to get to the beach.
Largely because of Cebu Pacific, the average Filipino can now
afford to fly. In 2005, 1 out of 12 Filipinos flew within a year. In
2012, by continuing to offer low fares, we hope to reduce that ratio to
1 out of 6. We want to see more and more Filipinos see their country and
the world!
Challenge No. 2: In 2003, we established Digitel
Mobile
Philippines, Inc. and developed a brand for the mobile phone business
called Sun Cellular. Prior to the launch of the brand, we were actually
involved in a transaction to purchase PLDT shares of the majority
shareholder.
The question in everyone’s mind was how we could measure up to
the two telecom giants. They were entrenched and we were late by eight
years! PLDT held the landline monopoly for quite a while, and was first
in the mobile phone industry. Globe was a younger company, but it
launched digital mobile technology here.
But being a late player had its advantages. We could now build
our platform from a broader perspective. We worked with more advanced
technologies and intelligent systems not available ten years ago. We
chose our suppliers based on the most cost-efficient hardware and
software.
Being a Johnny-come- lately allowed us to create and launch
more innovative products, more quickly.
All these provided us with the opportunity to give the consumers
a choice that would rock their world. The concept was simple. We would
offer Filipinos to call and text as much as they want for a fixed
monthly fee. For P250 a month, they could get in touch with anyone
within the Sun network at any time. This means great savings of as much
as 2/3 of their regular phone bill! Suddenly, we gained traction. Within
one year of its introduction, Sun hit one million customers.
Once again, the paradigm shifts - this time in the telecom
industry. Sun’s 24/7 Call and Text unlimited changed the landscape of
mobile- phone usage.
Today, we have over 4 million subscribers and 2000 cell sites
around the archipelago. In a
country where 97% of the market is
pre-paid, we believe we have hit on the right strategy.
Sun Cellular is a Johnny-come- lately, but it’s doing all right.
It is a third player, but a significant one, in an industry where
Cassandras believed a third player would perish. And as we have done in
the realm of air travel, so have we done in the telecom world: We have
changed the marketplace.
In the end, it is all about making life better for the consumer
by giving them choices.
Challenge No. 3: In 2004, we launched C2, the green tea drink
that would change the face of the local beverage industry — then, a
playground of cola companies. Iced tea was just a sugary brown drink se
rv ed bottomless in restaurants. For many years, hardly was there any
significant product innovation in the beverage business.
Admittedly, we had little experience in this area. Universal
Robina Corporation is the leader in snack foods but our only background
in beverage was instant coffee. Moreover, we would be entering the
playground of huge multinationals. We decided to play anyway.
It all began when I was in China in 2003 and noticed the immense
popularity of bottled iced tea. I thought that this product would have
huge potential here. We knew that the Philippines was not a traditional
tea-drinking country since more familiar to consumers were colas in
returnable glass bottles. But precisely, this made the market ready for
a different kind of beverage. One that refreshes yet gives the health
benefits of green tea. We positioned it as a "spa" in a bottle. A drink
that cools and cleans.thus, C2 was born.
C2 immediately caught on with
consumers. When we launched C2 in
2004, we sold 100,000 bottles in the first month. Three years later,
Filipinos drink around 30 million bottles of C2 per month. Indeed, C2 is
in a good place.
With Cebu Pacific, Sun Cellular, and C2, the JG Summit team took
control of its destiny. And we did so in industries where old giants had
set the rules of the game. It’s not that we did not fear the giants. We
knew we could have been crushed at the word go. So we just made sure we
came prepared with great products and great strategies. We ended up
changing the rules of the game instead.
There goes the principle of self-determination, again. I tell
you, it works for individuals as it does for companies. And as I firmly
believe, it works for nations.
I have always wondered, like many of us, why we Filipinos have
not lived up to our potential. We have proven we can. Manny Pacquiao and
Efren Bata Reyes in sports. Lea Salonga and the UP Madrigal Singers in
performing arts. Monique Lhuillier and Rafe Totenco in fashion. And
these are just the names made famous by the media. There are many more
who may not be celebrities but who have gained respect on the world
stage.
But to be a truly great nation, we must also excel as
entrepreneurs before the world. We must create Filipino brands for the
global market place.
If we want to be philosophical, we can say that, with a
world-class brand, we create pride for our nation. If we want to be
practical, we can say that, with brands that succeed in the world, we
create more jobs for our people, right here.
Then, we are able to take part in what’s really important-giving
our people a big opportunity to raise their standards of living, giving
them a real chance to improve their lives.
We can do it. Our neighbors have done it. So can we. In the last
54 years, Korea worked hard to rebuild itself after a world war and a
civil war destroyed it. From an agricultural economy in 1945, it shifted
to light industry, consumer products, and heavy industry in the ’80s. At
the turn of the 21st century, the Korean government focused on making
Korea the world’s leading IT nation. It did this by grabbing market
share in key sectors like semiconductors, robotics, and biotechnology.
Today, one remarkable Korean brand has made it to the list of
Top 100 Global Brands: Samsung. Less then a decade ago, Samsung meant
nothing to consumers. By focusing on quality, design, and innovation,
Samsung improved its products and
its image. Today, it has surpassed the
Japanese brand Sony. Now another Korean brand, LG Collins, is following
in the footsteps of Samsung. It has also broken into the Top 100 Global
Brands list.
What about China ? Who would have thought that only 30 years
after opening itself up to a market economy, China would become the
world’s fourth largest economy? Goods made in China are still thought of
as cheap. Yet many brands around the world outsource their manufacturing
to this country. China ’s own brands-like Lenovo, Haier, Chery QQ, and
Huawei-are fast gaining ground as well. I have no doubt they will be the
next big electronics, technology and car brands in the world.
Lee Kwan Yu’s book "From Third World to First" captures
Singapore ’s aspiration to join the First World . According to the book,
Singapore was a trading
post that the British developed as a nodal point
in its maritime empire. The racial riots there made its officials
determined to build a "multiracial society that would give equality to
all citizens, regardless of race, language or religion."
When Singapore was asked to leave the Malaysian Federation of
States in 1965, Lee Kwan Yew developed strategies that he executed with
single-mindedness despite their being unpopular. He and his cabinet
started to build a nation by establishing the basics: building
infrastructure, establishing an army, WEEDING OUT CORRUPTION,providin g
mass housing, building a financial center. Forty short years after,
Singapore has been transformed into the richest South East Asian country
today, with a per capita income of US$32,000.
These days, Singapore is transforming itself once more. This
time it wants to be the creative hub in Asia , maybe even the world.
More and more, it is attracting the best minds from all over the world
in filmmaking, biotechnology, media, and finance. Meantime, Singaporeans
have also created world-class brands: Banyan Tree in the hospitality
industry, Singapore Airlines in the Airline industry and Singapore
Telecoms in the telco industry.
I often wonder: Why can’t the Philippines , or a Filipino, do
this?
Fifty years after independence, we have yet to create a truly
global brand. We cannot say the Philippines is too small because it has
86 million people. Switzerland , with 9 million people, created Nestle.
Sweden , also with 9 million people, created Ericsson. Finland , even
smaller with five million people, created Nokia. All three are major
global brands, among
others.
Yes, our country is well-known for its labor, as we continue to
export people around the world. And after India , we are grabbing a
bigger chunk of the pie in the call-center and business-process-
outsourcing industries. But by and large, the Philippines has no big
industrial base, and Filipinos do not create world-class products.
We should not be afraid to try-even if we are laughed at. Japan
, laughed at for its cars, produced Toyota . Korea , for its
electronics, produced Samsung. Meanwhile, the Philippines ‘ biggest
companies 50 years ago-majority of which are multinational corporations
such as Coca- Cola, Procter and Gamble, and Unilever Philippines , for
example-are still the biggest companies today. There are very few big,
local challengers.
But already, hats off to Filipino entrepreneurs making
strides
to globalize their brands.
Goldilocks has had much success in the Unites States and Canada
, where half of its customers are non-Filipinos. Coffee-chain Figaro may
be a small player in the coffee world today, but it is making the leap
to the big time. Two Filipinas, Bea Valdez and Tina Ocampo, are now
selling their Philippine-made jewelry and bags all over the world. Their
labels are now at Barney’s and Bergdorf’s in the U.S. and in many other
high-end shops in Asia , Europe , and the Middle East .
When we started our own foray outside the Philippines 30 years
ago, it wasn’t a walk in the park. We set up a small factory in Hong
Kong to manufacture Jack and Jill potato chips there. Today, we are all
over Asia . We have the number-one-potato- chips brand in Malaysia and
Singapore . We are the leading biscuit
manufacturer in Thailand , and a
significant player in the candy market in Indonesia . Our Aces cereal
brand is a market leader in many parts of China . C2 is now doing very
well in Vietnam , selling over 3 million bottles a month there, after
only 6 months in the market. Soon, we will launch C2 in other South East
Asian markets.
I am 81 today. But I do not forget the little boy that I was in
the palengke in Cebu . I still believe in family. I still want to make
good. I still don’t mind going up against those older and better than
me. I still believe hard work will not fail me. And I still believe in
people willing to think the same way.
Through the years, the market place has expanded: between
cities, between countries, between continents. I want to urge you all
here to think bigger. Why serve 86 million when you can
sell to four
billion Asians? And that’s just to start you off. Because there is still
the world beyond Asia . When you go back to your offices, think of ways
to sell and market your products and se rv ices to the world. Create
world-class brands.
You can if you really tried. I did. As a boy, I sold peanuts
from my backyard. Today, I sell snacks to the world.
I want to see other Filipinos do the same.
Thank you and good evening once again
