Thursday, October 20, 2005

Introductory Speech for JOHN GOKONGWEI, JR.

I have been a member of the Anvil Business Club for 12 years now. For as far back as I can remember, we have been trying to get Mr. Gokongwei as guest speaker, and so it is with no small amount of excitement and anticipation that we share the room with the man tonight. He supposedly retired two years ago, that is probably why he can finally be with us. But judging from accounts of his activities in the business sections of the dailies, you would hardly think that he has actually retired. Now I don’t have to tell you how successful our guest is, because unless you have been living under a rock for the past 40 years, you know who he is. Chances are, just today, everyone here probably consumed one of his products, went into one of his establishments, rode on one of his planes or used his cellular phone service. So I will not tell you about who the man is, but rather how the man became the living legend that he is today.
Mr. John Gokongwei, Jr. lost his dad at the young age of 13. He was a student then at the San Carlos University in Cebu when he was suddenly left with the gargantuan burden of caring for his mother and five younger siblings.
As legend has it, his first business venture was on a bicycle, when he would peddle soap, thread, candles and other goods from town to town. He was also a palengkero who made about twenty pesos a day, just enough to feed himself and buy more goods for the next day at the market. If Che Guevara of Cuba had his Motorcycle Diaries, our guest speaker has his share of fond memories in his Bicycle Diaries, early life lessons that would later shape the tycoon.
From his infamous and historic bike, at the age of 17, he shifted vessels to become a traveling merchant roaming by boat to Lucena and Manila, ferrying with him whatever goods he could sell. On one fateful day, the boat he was on hit a rock and sank, but luckily his wares for that day were rubber tires and so the crew and other traders managed to stay afloat using the rubber tires as salbabida. It was an even trade, says Mr. Gokongwei as he saved their lives, and they saved his tires. [If there’s a lesson to be learned here, it’s that rubbers save lives. It confirms something that we guys have always known, that’s why we bring rubbers wherever we go.]
It was during World War II that he once again found opportunity amidst adversity. The war had leveled the playing field, having done equal damage to all people, rich or poor. By the end of the war, the economy was heavily dependent on imported products. That was when JG set up Amasia, his first company, which was in the business of importing textile retazos, fruits, old periodicals and used clothing from America. He sold the cloth, food and old newspapers, and wore some of the second hand clothes from the US to court Elizabeth who later on became his wife. Buti na lang even then, “Big John” as became his moniker in years to follow, was fit for American sizes.
Like all eldest children of that age that were suddenly weighed down by patriarchal duties, he sacrificed and discontinued his own education so that he may send his siblings to school. In return, his brothers and sister helped him in the trading business.
But by the 1950s, it became apparent that trading had its limits, as Pres. Quirino increased tariffs on imported goods in order to encourage local businesses. Faced with this obstacle, he saw that he had to be in a business that was self-sustaining, or at least somewhat more independent of suppliers. But instead of going into the textile, paper, pharmaceutical or beverage businesses which were the fashion of those days, he utilized his foresight and instead went into the low-key and unglamorous business of cornstarch manufacture. Later on, his gambit would prove to be right and Universal Corn Products would grow to become Universal Robina Corporation, one of the biggest companies in the Philippines and Asia today.
But URC’s journey to the top was not without incident. In fact, it looked thoroughly impossible from the very beginning, as he did not have the capital to start a venture of this magnitude. Without a penny to his name, he approached China Bank, then headed by Albino Sycip and DK Chong, who saw something in the enterprising young man and decided to take a gamble on an unknown named John Gokongwei.
By 1961, the Age of Brands came, and in order to compete with giants like P&G and Nestle, JG set up CFC, the maker of the Blend 45 instant coffee that went head to head against Nescafe. They marketed it as the poor man’s coffee with Susan Roces as endorser, as opposed to the more upscale and expensive image of their competition. And again, JG bet right, by creating their own brands, studying the consumers’ needs and filling those needs, Filipinos came to appreciate Philippine-made products better.
They used the same business model and strategy with all their now highly successful household names, such as Jack and Jill, Maxx Candy and Cloud 9. And the success of URC propelled them to venture into textiles, retail sales, real estate, telecommunications, aviation, banking and petrochemicals, which are now all under the juggernaut investment holding company JG Summit Inc. Today, they have 30,000 employees in the country and JG is an Asian phenomenon that operates branded foods in Malaysia, Indonesia, Singapore, Thailand, HongKong, China, India, Korea, Taiwan and Vietnam.
Now about the genius of his business philosophy, here is my own analysis : A couple of years ago, a comparatively smaller and unknown player in the telecommunication business entered the fray. Back then it was a battle of giants, between Globe and Smart. I was sure this paltry new company called Sun Cellular was a mistake, and I wondered why a man as brilliant as JG made what I thought was a fatal error. But then I remembered reading in Sun Tzu’s Art of War : if you are at equal or greater strength with an enemy, fight. If the enemy is bigger and stronger than you, irritate him.
By the middle of this year, the once “small irritation” called Sun Cellular has all but dominated the market and changed the landscape of telecommunications monopoly once enjoyed by the warring giants. By offering the public a third option, cellphone minutes became the most affordable it has ever been, thereby creating a highly competitive environment that benefits the consumer. All thanks to Sun. In fact, so threatened are the two Goliaths now, that they are joining forces, coordinating marketing strategies to battle tiny little David. Once they even went running and crying to the NTC accusing Sun of unfair market practice. Not bad for a new player.
It is funny how we often use the analogy David and Goliath when we see a small enterprise trying to challenge the status quo, trying to overcome impossible or seemingly undefeatable obstacles. It is so easy to feel pessimistic and small when faced with gigantic challenges, that we forget the ending to the metaphorical tale of David and Goliath : David killed Goliath.
EVP Roy Chua sent Anvil members a transcript of Mr. Gokongwei’s speech three years ago, before the students and faculty of the Ateneo de Manila University. Much of the information here in my introduction is taken from that speech. There is a line there from JG that I liked so much, I paraphrased it, cut and pasted it on my desk to serve as a daily reminder that amidst insurmountable odds, comes the shining light of opportunity. He said “I chose to live my life unafraid, even during times when I was afraid. I found the best opportunities during the darkest hours of my life : First, when my father passed away, then when war came, and then marital law, then through coup de etats, countless economic booms and busts. I discovered that opportunities don’t find you, you find them in places and in times when you least expect it.”
Especially during these days of economic and political turmoil, when doing business does not seem all that promising in an environment that becomes harsher and more volatile by the day; it is important to take to heart the great ones like our speaker tonight who endured even harder business climates, harder times, wars and dictatorships, and yet came through all the turbulence that is Philippine history, achieving the impossible, becoming successful despite, and in spite of it all.
Ladies and Gentlemen, the Anvil Business Club is honored to present to you the man, the legend, Mr. John Gokongwei, Jr.
(as Mr. Gokongwei preferred to answer Anvil members' questions in lieu of a speech, a very lively, candid and informative open forum immediately followed, one hosted by the inimitable past Chairman Steve Cua)