Wednesday, February 6, 2008

Gokongwei's Speech

(This is a speech of John Gokongwei in the 20th Ad Congress held last November 2007. A truly inspiring one for the million of Filipino's in this country. Credits to a good friend Engr. Ricardo Abrasaldo for forwarding this one to me.)

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

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

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

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

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 serve 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

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

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

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 nervous 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

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

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

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 served
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

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 21 st 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

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

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, providing 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.

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

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 services to the world. Create world-class

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

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