Today would've been the 96th birthday of the late John L. Gokongwei Jr. Right now, I want to write this blog entry in his honor. Once he spoke at the University of San Carlos (USC) but I never had the chance to shake his hand. I did meet Mr. Bunny Pages of Mooon Cafe during my MBA days. Now, I'd like to write some life lessons on Gokongwei. I decided to start thinking about my advocacy for economy reforms. Back then, I remembered when I asked people if they'd listen to Gokongwei or Hilario Davide Jr. Some said, "If it's business, it's Gokongwei. If it's law, it's Davide." Though, Davide Jr. had erroneously made a statement concerning foreign direct investments (FDIs). That's why I asked about Davide Jr. or Gokongwei when it's regarding business. Though, a better question to ask is if you'd listen to Davide Jr. or the other UN diplomat grandpa, Singaporean-Indian Kishore Mahbubani (read here).
One of the things I noticed in my recent adventure with indirect stock investment (via equity funds) is how the Philippine Stock Exchange Index (PSEi) tends to put companies by Gokongwei. The Philippine Equity Smart Index Fund and AXA Chinese Tycoon Fund both have JG Summit Holdings which Nikkei Asia summarizes as follows:
JG Summit Holdings, Inc. is a holding company, which engages in the manufacture and distribution of agro-industrial products, and the provision of real estate development and management services. It operates through the following segments: Food, Agro-Industrial, and Commodities, Air Transportation, Real Estate and Hotels, Petrochemicals, Banking, and Other Supplementary Business. The Food, Agro-Industrial, and Commodities segment produces snack, pre-mixed, canned, and frozen foods. The Real Estate and Hotels segment deals with the development and leasing of residential and commercial spaces. The Petrochemicals segment manufactures polyethylene and polypropylene. The Banking segment operates commercial and thrift banks. The Other Supplementary Business segment provides printing services, textile insurance brokering, foreign exchange, and securities dealing. The company was founded by John L. Gokongwei, Jr. on November 23, 1990 and is headquartered in Pasig City, Philippines.
Though, I decided to read through Tough Nickel which introduces us to Gokongwei's life lessons. There's plenty to write about so I decided to focus on two areas. The first area to talk about is competition and being globally competitive.
- "We have changed the marketplace. In the end, it is all about making life better for the consumers by giving them choices."
- "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."
- "We must create Filipino brands for the global marketplace."
- "Competition is good for the business and every human endeavor. It 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."
- "I am competitive by nature. Competition is good for the soul."
I told my maternal grandpa: Gua-kong all these big buildings, they’re so astonishing! I recall he answered me: "All of them started small. They didn’t just became big."
Those MNCs started small. Jollibee is now an MNC. Before, Jollibee used to be that little bee that could. Jollibee just started as an ice cream parlor before it became an MNC. For Gokongwei, the family was once well-to-do, lost its fortunes, and Gokongwei managed to regain the fortunes much more than what was lost. Gokongwei built several companies that are part of the PSEi's Top 30 funds. Having JG Summit Holdings as part of my equity funds is a relief. All these MNCs were once small companies that faced competition. Gokongwei, like Tony Tancaktiong, was once a small fry before creating his group of companies. Just think of what Gokongwei did to restore the family fortunes lost by his father's untimely death:
As a young boy, I sold peanuts from my backyard. Today, I sell snacks to the world. I want to see other Filipinos do the same.
I was thinking about the worldwide expansion of Gokongwei's group of companies is never surprising. It's because Gokongwei faced competition. Outside the Philippines, Gokongwei is facing competition. In Singapore, I believe a lot of local companies are competing against Jollibee. An FDI can also collapse on foreign soil if it doesn't play its game right. A local investor can beat a foreign investor fair and square if it knows how to play its game. An FDI needs to know how to deal with the local market, the local workforce, and everything local if it expects to expand. An FDI that fails to follow certain rules can face legal action. That's why I'm confident that even if we do allow 100% FDI shares ownership--Filipino businesses that do innovate will survive.
What's the purpose behind Gokongwei's being for constitutional reform? This quote by him really makes me think further about why I'm in favor of economic liberalization:
I have always wondered, like many of us, why we Filipinos have not lived up to our potential. To be a truly great nation, we must also excel as entrepreneurs before the world.
But how can more Filipinos excel before the world if there's still rampant protectionism? True, the negative list has been modified over time. The late Benigno Aquino III followed by Rodrigo R. Duterte, both former Philippine presidents, have signed several important laws. Duterte signed the Public Services Act of 2022. Economist Andrew J. Masigan had even pointed out the need for economic charter change and how some laws Duterte signed were long overdue. I personally feel that the many members of the legislature failed to prioritize laws concerning FDI. Though, decades of long protectionism whether it's Carlos P. Garcia's failed Filipino First Policy or the rampant protectionism during the reign of the late Ferdinand E. Marcos Sr. Even after EDSA, the Philippines failed to meet its potential because a total economic charter change (or better called, economic constitutional reform) hasn't happened.
Some say that certain nations protected their local industries before launching worldwide. Yet, the late Lee Kuan Yew had said otherwise. Lee had said that if they waited--the nation would've starved. If protectionism truly helped develop industries--I'd like to ask these questions:
- Why did Deng Xiaoping invite American companies to China while China was still underdeveloped?
- Why aren't we getting a worldwide release of Koryolink? Instead, Chinese electronics have become the new dominant player such as Xiaomi and Huawei--both from Communist China.
- Why aren't we getting food products made in Venezuela or North Korea?