Mr John Gokongwei: The Business Legend
Filipino tycoon John Gokongwei Jr., who built a small trading business into one of the Philippines’ largest conglomerates, was honored on Wednesday for his contribution to supporting entrepreneurship in Southeast Asia.
Gokongwei — the founder of JG Summit Holdings Inc. and the second wealthiest man in the Philippines — was recognized by the Asean Business Advisory Council during the Asean Business Awards as one of its legacy awardees for 2017.
The 91-year-old Gokongwei is known as an entrepreneur who invested in agribusiness and the manufacturing of feeds and prime food commodities, and a visionary who channeled resources and expanded into financial services, textile and property, among other enterprises.
There are three three types of business tycoons in the Philippines:
The first type: Inherited wealth, passed on from generation to generation. (The Ayalas, The Aboitizes)
The second type: the smart "whiz kids" who have assembled a great collection of companies, not by building these companies, but by using their vast political and regional connections to their business advantage (RSA, MVP)
The third type: the Tsinoy Taipans who built their business empires literally from ground up. Best examples: "Tatang" Henry Sy and "Mr. John" Gokongwei. Their common traits: vision, frugality and hard work.
The man behind the legend:
"Mr. John", as his long-time employees call him, is probably one of the most brilliant business leaders in the country.
He is always on the look out for NEW IDEAS. In the days before the internet, he grabbed ideas from books, suppliers' business pamphlets and most importantly, from sharp observations from extensive personal and business travels.
He has a very opportunistic mindset. After a major political crisis, he felt undeterred and proceeded with his major plans ( "buy when there's blood in the streets").
He always maintained the proper work/life balance. He has always been a loving husband to his wife, Elizabeth, and a doting dad to Robina, Lance and the younger daughters.
He also preaches a balance between mental work and physical effort. ("Use your hands, Not only brains.")
He tells his managers to "save for the rainy days" ( after rewarding them with handsome "Chinese New Year" bonuses)
He is fascinated about survival ("The cockroaches will survive a nuclear attack! How about man?")
But he leaves these wise words to business associates:"You can't take it with you!"
"Long-term Vision and Risk-Taking"-From Gokongwei's humble beginnings, he grew his fortunes on hard work and frugality while taking calculated risks and embracing competition.
John Gokongwei with his parents and siblings
Big John with his wife and childrenJOHN GOKONGWEI Jr.
(Speech delivered during the launch of the Ateneo de Manila University John Gokongwei School of Management)
I am John Gokongwei, Jr. I am not an Atenean but I feel at home with you. Today, at least.
Sixty-two years ago, I could not have dreamt of appearing before the Jesuits and their students to tell the story of MY life. I was no more than a student then, at San Carlos University in Cebu, when my father died suddenly. It left me, the eldest, the responsibility of taking care of my mother and five siblings. That was tough for someone who was 13. Creditors had just seized our home and business and I had no experience with earning a living.
I somehow survived. And when I look back, I know now that I did so because I recognized CHANGE when I saw it.
The first change was war. I had turned 15. My mother had already sent my brothers and sister to China where the cost of living was lower. From Cebu, she and I had to make money to send to them.
I turned to peddling. My day began at 5 in the morning. I would load my bicycle with soap, thread, and candles, and then bike to neighboring towns to sell my goods. On market days, I would rent a stall, lay out the goods from the bike, and make about 20 pesos a day, enough for me to survive and to buy even more goods for next time. Those days, you might call my BICYCLE AGE.
After two years of biking and peddling, at 17, I entered my BATEL AGE. The batel was a small, very utilitarian boat that defied the open sea and would take me farther from Cebu and all the way to Lucena, from where I would take a truck to Manila, with companions twice or thrice my age. The sea trips could take two to three weeks depending on the weather, and the land trips another five to six hours. (I was lighter then, you can imagine.)
On the batel, I read books like Gone with the Wind under the great blue sky to pass away the time, even if we traders were always in fear of sea pirates and the bad weather.
Once, our batel hit a rock and sank. Thank heavens for my rubber tires! Those were the goods I had with me to sell in Manila. Well, we all held on to those tires, which meant I saved all those traders and those traders saved all my tires.
At that time, the War was still going on. Ironically, I look back at the War with the fondest of memories. It was the great equalizer. Almost everyone I knew had lost big and small fortunes at the time. This meant we all started at ground zero. Ground zero meant living by our wits alone; ground zero meant starting equal; ground zero was where I discovered I was an entrepreneur.
When the War ended, I was 19. Because of the war, the economy was more dependent than ever on imports. So when I set up Amasia, my first company, it was to import textile remnants, fruit, old newspapers and magazines, and used clothing from the US.
There was a side benefit to this. I would wear some of my own stock, so I would have different clothes to wear when I went courting Elizabeth, the woman who would be my wife. But at the end of it, I made some money.
The Bicycle Age was over. The TRADING AGE began.
By then, my brothers and sister returned from China. Together, we worked in the trading business I had begun: as bodegeros, clerks, warehousemen, cashiers, and collectors. And all this while they were all still going to school; me, I stopped schooling. Like most Chinese-Filipino families, we worked where we lived, and at times, we had to endure the stench of rotten oranges and potatoes filling our two-story apartment.
By the early '50s, we were importing cigarettes and whiskey as well. Business was good. But two factors made me change strategies again. First, I saw that trading would in time become a low-margin business BECAUSE we were at the mercy of our suppliers and buyers. Second, I saw that the government was working on import-substitution policies to encourage local business. President Quirino wanted to shore up the country's foreign exchange reserves that had been depleted as a result of the high importation of the post-war years.
So I decided to enter the AGE of MANUFACTURING. In 1957, I started a corn milling plant producing glucose and cornstarch. Why cornstarch? Because I thought--and it turned out, correctly--that the unglamorous cornstarch would be in great demand from better known businesses like textiles, paper, ice cream, pharmaceuticals, and beer.
Of course, the bigger cornstarch players did not give us an easy time. They engaged us in a price war. That is a nice way of saying they tried to kill us by selling low.
But we prevailed, and started to get clients like San Miguel Corporation. It was my first real taste of competition. And I liked it. I think THAT first experience prepared me for the bigger, tougher competitors in my future.
By 1961, cornstarch was becoming a commodity, and I saw that there was no future in a business where we had to keep lowering margins to survive.
It was time to get into the bigger, and riskier, game played by big multinationals like Procter and Gamble and Nestle. I saw that all they did to capture the market was to brand their products, for instance their coffee and their toothpaste. That is, give their coffee and toothpaste a name, a face, and an image that customers would instantly recognize and identify with quality. Me, I dreamt that one day I would be the Philippine Nestle or General Foods. So the Manufacturing Age for me was giving way to the AGE of BRANDS.
So, we put up CFC, and our first successful product was Blend 45, an instant coffee we put out to directly compete with Nestle's Nescafe. We positioned it as "the poor man's coffee," hired top movie star Susan Roces to endorse it, and employed Procter & Gamble marketing veterans to market it. Basically, we took a page out of the multinational book, and applied it to our business. We gave our coffee, snack food, candy, and chocolates a name, a face, an image. Today, Great Taste Coffee, Jack and Jill, Max candy, and Cloud 9 have become household names.
The success of URC opened up many opportunities for our group. We had the choice to focus on food where we were very successful-or to pursue other businesses. We decided that there were too many good opportunities to pass up, and that remaining in our comfort zone would stunt our growth. So we got into the Age of Expansion.
For the next two decades, we pursued businesses that answered positive on FOUR CRUCIAL QUESTIONS.
First: Is there a market?
Second: Could we compete against both local and foreign players?
Third: Could we find the right people for the job and did we have enough capital to pursue the business?
Last and most important: Did we have the stomach for it? That is, could we take the sleepless nights, the cutthroat competition?
Call it trite--but, believe me, success CAN BE ACHIEVED through hard work, frugality, integrity, responsiveness to change--and most of all, boldness to dream. These have never been just easy slogans for me. I have lived by them.
Lance Gokongwei, president and chief operating officer of JG Summit Holdings Corp., the holding company of the vast Gokongwei group, was groomed from childhood to take over the family business, which is among the biggest in the country.“All the lessons my dad taught us, he taught not through words, but by example. And all the lessons he taught, guide me until now,” the 49-year-old Gokongwei tells the Inquirer.
“In business, my father showed us that having the courage of your convictions is one of the most important qualities of a strong businessman. He is a true entrepreneur, with the innate energy, curiosity and competitiveness of a visionary and a trailblazer,” he says. From Inquirer