John Gokongwei comes home
CEBU City—He has lived through the American colonial era and the Japanese occupation in World War II, navigated the country’s tumultuous economic and political cycles as an entrepreneur and since then built a thriving conglomerate with expansive footprint across the Asia-Pacific. He has been called the “industrialist challenger,” unafraid to venture into highly competitive new sectors like telecoms, or dipping into untested waters, like petrochemicals, and nurturing them no matter how long it takes to achieve profitability. Most of all, he is a visionary who plans decades ahead, such as when he planted the seeds for overseas diversification long before the creation of a unified Southeast Asian economic bloc.
Tycoon John Gokongwei Jr., who is turning 90 by August next year, has made his mark in corporate Philippines as the founder of JG Summit Holdings, a conglomerate seen to have benefited and yet to benefit further from favorable demographics in the country and the region through its food and beverage, airline and property businesses.
A man his age could only wish “to be healthy and alive,” he says. Asked what else he’d like achieve for JG Summit, it’s to “make sure the company is in good hands, will do good for the country, good for the family, good for the stockholders.”
Gokongwei has long passed on the baton to son Lance and brother James Go. Yet, he still attends Friday top-level meetings and is consulted when making “super big” decisions. He intends to fully retire at 90 and just focus on philanthropical activities under the Gokongwei Brothers Foundation.
He was once quoted as saying that the happiest point in his life was when Lance was born, the heir who has lived up to expectations. “Lance is doing a very good job,” he says.
Once a year, he visits his hometown Cebu and last week was a particularly special homecoming.
JG’s property arm Robinsons Land Corp. (RLC) inaugurated a big and attractive shopping mall in Cebu City, the group’s largest shopping complex outside Metro Manila to date. He is particularly proud of this mall as he personally picked the location and sealed the acquisition from the city government three to four years ago.
“Frederick and his people did a fantastic job here,” he said, referring to nephew Frederick Go, president of RLC.
“In the last 10 years, growth in Cebu has been fantastic. I can’t even recognize it anymore,” he says.
Gokongwei tells a group of Manila-based journalists that he’s a true-blue Cebuano, having left this city for Manila only when he was 22.
It was here where he grew up as a child during the Second World War. It was also here where he traded basic goods on a bicycle and on board a small boat off the pier of Cebu to support his family.
“My great grandfather, Pedro Gotiaoco was one of the richest men in the 19th century,” he says. “The Gaisano family, the Gotianuy family, our family—they are all his children.”
Representatives from these clans were present during the inauguration of the new mall in Cebu. The Gaisano matriarch is the daughter of Pedro Gotiaoco while Gokongwei’s grandfather was the eldest son. Augusto Go of the Gotianuy clan is the second son of Pedro.
He recalls Pedro Gotiaoco came to the Philippines from China in 1870. “I was one year old when I came [to the Philippines]. My father and mother are Filipinos but they got married in China and they stayed there for one year,” he says. He says the family has been here for four generations.
Gokongwei lost his father during the tough colonial years, which forced him to become the breadwinner.
The rest, as they say, is history.
JG Summit is now a regional player in food and beverage production (Universal Robina Corp. or URC), one of the leading players in property development, a leader in local aviation (Cebu Air), a pioneer in petrochemical business and a strategic investor in two of the country’s utility crown jewels— Manila Electric Co. and Philippine Long Distance Telephone Co.
The group also has interests in banking. Retail arm Robinsons Retail Holdings Inc., which is outside of the JG Summit group and run by daughter Robina, is a leading retail player. The Gokongwei group also came back to the spotlight when it sold its stake in Digital Telecommunications in exchange for a stake in PLDT in Oct. 2011.
“From Mr. Gokongwei’s roots as a trader in the 1950s, JG Summit expanded into the snack foods, property, telecoms and air transport sectors buoyed by the market’s increasing demand for more options. This opportunistic business principle has enabled JG Summit to be the giant that it is today, extending its service market beyond the Philippines to its Association of Southeast Asian (Asean) neighbors,” investment house CLSA said in a report in 2012, when it issued a buy recommendation on JG Summit that was then trading at only P31 per share. As of Friday’s close, JG’s stock was at P72 per share, giving it a market capitalization of P504 billion.
CLSA said Gokongwei’s early experiences as a trader/importer in the early 1950s “forged the underlying principle of JG Summit’s time-tested formula for success: Challenging the incumbents of an underserviced market and bringing into them the ‘Gokongwei brand’ of operational efficiency and synergy.”
Such operational efficiency is practiced not only at the corporate level but is reflected in the lifestyle of the Gokongweis. The tycoon says he does not like buying things for himself.
Flying back to Manila last week after the inauguration of the new mall in Cebu, the tycoon and some other family members, including daughter Robina, took the budget flight operated by the group’s carrier, Cebu Air.
URC, to date, is one of the country’s best bets in the highly-competitive Asean integration. In the Philippines, it is the market leader in the snacks division and competes with Liwayway (snacks), Monde Nissin Philippines (biscuits) and Prefetti (candies).
“We already talked about integration 10 to 15 years ago and so after that, we came in. And we’ve been building it (regional business) 10 to 15 years ago,” he says.
The group is now present in six other Asean countries—Thailand, Malaysia, Singapore, Vietnam, Indonesia and Burma (Myanmar). “We’ll have to expand our factories,” he says. The group has a presence in Cambodia and Laos too, but has no manufacturing capabilities there.
The group is likewise present in mainland China and recently ventured elsewhere in the Asia Pacific by buying Griffin’s, an iconic biscuit-maker in New Zealand. The group intends to distribute Griffin’s products to the region, beginning with Hong Kong and Singapore.
“Asean is big enough,” he says, when asked if the group was looking at other regions.
One of the countries where the group has performed well is in Vietnam, where URC’s ready-to-drink brand, C2, has gained a strong following. “The country is doing well, run well. We’ve been there for more than 10 years and it’s treating us very well,” he says.
Besides its strong lead in Vietnam, URC is also the market leader in biscuits and wafers in Thailand.
The group also has real estate interests in Singapore “but not as big as our food [business],” he says. JG Summit has a 37 percent stake in upscale property developer UIC Ltd., which owns majority of Singapore Land Ltd. (SingLand), developer of some of Singapore’s best known commercial and retail landmarks as well as residential projects in prime and suburban areas. SingLand’s projects include Singapore Land Tower, Clifford Centre, SGX Centre, The Gateway, Abacus Plaza and Tampines Plaza, West Mall as well as Marina Square.
Is he happy with the group’s investment in PLDT? Gokongwei says: “In Meralco, we’re very happy. In PLDT, the [stock] price dropped. But in PLDT, we’re trying our best and we have recovered.”
Is he worried about the prospective entry of a new player in the telecom industry? He says the PLDT group has been preparing for the entry of Australian telecom firm Telstra, which is expected to partner with San Miguel Group.
“I think MVP (referring to PLDT chair Manuel V. Pangilinan) will do a good job there,” he says.
Words of Wisdom
Gokongwei is also optimistic of the country’s future. “The momentum is there,” he says.
“Now we do what we like to do and where we do best but we have to compete in industries and tourism. We’re good in BPOs (business process outsourcing) and [sending] workers outside, but in the industry and tourism, [we have to do better]. In tourism, we’re catching up, but in industry, we’re still weak,” he says.
As to whether he’s worried about foreign competitors in the manufacturing business, he says: “In business, we’re always worried but we just have to prepare. We have to plan ahead of what will happen.”
He says the group still has “many plans.” These may include bidding for infrastructure projects offered by the government under the public-private partnership program.
What advice can he give to young people aspiring to be like him, Gokongwei says: “Dream big, focus and work very hard.”
In the US, he notes that many young people like Mark Zuckerberg and Google founders Larry Page and Sergey Brin have become big business tycoons.
He says many other young people could be just as successful. “You have to choose to work where you think you’re good at and be consistent.”
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