John Gokongwei , Jr.

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 se rv e 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.