Get inspired: The John Gokongwei Story
What would he do if he only had a million pesos today?
Dec 20, 2011 11:00 am
As far as rags-to-riches stories go, John Gokongwei’s is a perfect specimen. Starting out selling soap on a bike, the name Gokongwei, at that time, never even rang a bell. Now, the patriarch, philanthropist, and entrepreneurial pioneer holds the reigns as chairman emeritus and founder of JG Summit Holdings—a conglomerate that spreads across multiple industries from retail and real estate, malls and media, to airlines and phone lines. And he probably never has to ring a bell.
Entrepreneur Philippines: Can you tell us about your early years as an entrepreneur?
John Gokongwei: I was 14. I started to buy and sell. My first delivery vehicle was a bicycle. I used it for four years during the Japanese occupation; the bicycle chain would always come off. I have to patch it up every few weeks so I could go somewhere. I became an expert at fixing that bicycle because I had to fix it every few weeks.
EP: What goods did you buy and sell?
JG: Oh, anything. Basically, textiles and soap. What else? Thread. I’d travel from Cebu to towns within 40 kilometers. I sold these in the palengke or what they called tabuan or meeting place in Cebuano where I’d rent a space on a table. I’d go to towns like Mandaue, Liloan, and Talisay. I’d bike everywhere.
EP: How did you raise money for your buy-and-sell?
JG: You didn’t need money then. Ten, twenty, thirty pesos and you were okay. That’s why it’s called buy and sell. There’s no office or store. I used to put the items in the bike and go to the markets and started selling.
EP: Do you think it was easier to build a successful business in the 1950s and 60s than it is today, or vice versa?
JG: I think it was easier in the ‘40s and ‘50s. We just came out of war and everything was flat. You need more capital now. After that war, the country was devastated. But in any generation, you always have people who are outstanding. During the time of the railroad, you had the Harrimans, then the Rockefellers with oil, and then Ford with the cars. Whether it’s difficult or not, there will be a few people who are outstanding, who will rise above the rest. Nowadays, you need a lot of brainpower.
EP: When you went into manufacturing Panda corn syrup, Ludo and Luym went into a price war with you. How did you survive that?
JG: Lucio Tan sold me his plants and that’s how he started his cigarettes and became a billionaire. If he continued with the starch plant, all three of us would have been broke with the way we were competing. Ludo was ahead of us in three years. The price of starch went down by 50 percent. (Lucio Tan at the time owned a cornstarch company, Royal Corn.)
EP: What business philosophy or core values helped you get through the hard times?
JG: Especially when you start, you have nothing in your pocket; you’ve got to be frugal. If you want to make one peso and you spent two, you’ll never make it. You must be very stupid if you don’t know what you should save on. Sure, you have to eat three meals a day and wear a pair of pants and a shirt. But when you have no money and you go karaoke or disco, I would call that stupid.
EP: How do you spot opportunities?
JG: Is there a market? That’s very important. When you find out that there’s a market then you say, “Who are your competitors?” Do you have a chance against those guys if you put up your own factory or your own business? The third question, obviously, is do you have the capital? And the most important, the fourth thing is: do you know the business? If you don’t know what you’re getting into, can you get people to help you?
EP: Companies now are merging businesses and buying up others left and right. What are your thoughts on this?
JG:If it’s part of your core business and if you can make more money, why not?
EP: You think competition is good?
JG: Competition is good for business and every human endeavor. It improves everybody, improves the product, and improves the person. Without competition, you don’t improve yourself. As long as you’re making money, you think you’re okay. When you’re open to competition—especially around the world—you get to be very good.
EP: As big as the company, your empire…
JG: It’s not an empire. You know when you compare yourself to the companies in Hong Kong and Singapore, we’re very small here. The entire Philippine market capitalization is smaller than Hutchinson Whampoa in Hong Kong. They’re bigger than the entire Philippine market.
EP: Do you still consider JG Summit to be a family business?
JG: That depends on how you look at it. The majority is still held by the family. A number of family members are involved here. But as a general rule, I think by the third generation, (the corporation) is mostly run by professional managers.
EP: What to you is the value of hiring professional managers and outside consultants?
JG: To be frank about it, you’ve got to have outsiders, otherwise, you run out of relatives. We’ve hired a lot of good, young people.
EP: What are the qualities you look for in your managers?
JG: Integrity is the most important. Dedication to his work is next.
EP: What motivates you?
JG: I am competitive by nature. Competition is good for the soul.
EP: What advice can you give to young entrepreneurs?
JG: You have to love your work. You have to save money instead of spending all of it. Look for areas you can compete in. Work damn hard. Most importantly, you have to love it.
EP: If you had only a million pesos, where would you put it?
JG: You know, a million pesos now wouldn’t do you much good. Today, what kind of business will I do? Maybe I’d be a peddler again. There are some young guys now in Divisoria, Binondo and in 30 or 40 years some of them will become very big. The reason is because they will work very hard. But everyone has a chance. Every big guy started off small.