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Lessons from the Late John Gokongwei Jr. on Competition and International Marketing


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.

One of the biggest things that crybabies ran by Facebook Marxists (an irony, if you ask me) and other related fools is they say competition is bad. They say that it'll ruin things eventually. Competition can be bad if it's unhealthy. Yet, a healthy dose of competition is what Gokongwei recommended. He didn't rise up without it. Instead, we start to think about what he thought. I decided to pick these quotes to discuss.

Here's a list of what Gokongwei said about the competition (I selected some but you can later read them all) from the article in Tough Nickel:
  1. "We have changed the marketplace. In the end, it is all about making life better for the consumers by giving them choices."
  2. "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."
  3. "We must create Filipino brands for the global marketplace."
  4. "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."
  5. "I am competitive by nature. Competition is good for the soul."
Competition is bad so says many leftists and socialists on social media. Yet, such statements would be laughed at by the People's Republic of China (such as Deng Xiaoping who's not honored by Filipino leftists) and Vietnam. Vietnam's late Do Muoi managed to engage in economic reforms. Do Muoi decided to follow Singapore and look at Communist Vietnam today. We could see the effect of competition when Deng decided to invite American multinational corporations (MNCs) over to China. Over time, it forced Chinese socialist production to either straighten up or be beaten. As Deng said, "Poverty isn't socialism. It's glorious to be rich."

I was thinking about how competition works. My favorite example would be on my food trips. I remembered how I had coffee shops and tea shops (read here). I wrote about how Bo's Coffee Club survived against foreign competitors (read here). Bo's is still standing up even when it had faced against Starbucks, Chatime, Jolly Bubble, Gong Cha, and other related companies. Jollibee's status as a worldwide franchise is proof that Filipino businesses can survive against multinational companies (read here). Think about that competition is what built Jollibee. Jollibee faced off against McDonald's. Now, Jollibee opens 150 branches in Communist Vietnam. We could see the power that competition brings. 

Gokongwei admits that he did fear the competition. There's always the big company. However, a quote of Gokongwei remembered this quote from his maternal grandfather. This quote would be very helpful for those who fear that Filipino businesses may get crushed by big MNCs:
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?
The answer is that protectionism has only hindered growth. Instead, allowing foreigners to own 100% shares ownership is all about helping the local economy develop (read here). FDIs will not only serve as competition to the companies but also potential suppliers, customers, and service providers. Right now, think that Grab and FoodPanda are foreign delivery services (read here). Those who were hired were locals. When I go to a multinational franchise--the employees were mostly Filipinos. Jobs are provided, new opportunities are provided, and more taxes are provided for the growth of the nation. 

Like Fidel V. Rmaos who just died at the end of last month--let's continue to honor the vision of Gokongwei for a better Philippines. 

References

Books

"From Third World to First--The Singapore Story: 1965-2000) by Lee Kuan Yew
Harpers Collins Publishers

Videos

"The Singapore economic model - VPRO documentary - 2009"  by VRPO Documentary (September 8, 2018)

Websites


"Filipino restaurant Jollibee opens 150th store in Vietnam" by Good News Pilipinas Team (March 21, 2022)
https://www.goodnewspilipinas.com/filipino-restaurant-jollibee-opens-150th-store-in-vietnam/

"How two Filipino brothers staved off competition from McDonald’s to build global fast food chain Jollibee" by Karen Gilchrist (April 30, 2019)


"John Gokongwei Jr. on Feng Shui, Opportunities and Education" by Arvnikan Abueva (March 18, 2020)

"Long overdue laws finally passed" by Andrew J. Masigan (April 06, 2022)

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