Taking a
business legacy
and changing with the times
and changing with the times
Aruna Harjani | Business | Sat, April 25 2015,
12:05 PM
Business News
Scion of an affluent business family, Lance
Gokongwei is reaching new heights with his own acumen.
There was a lot riding on the shoulders of
Lance Gokongwei when he went into the family business, fresh out of university
and still in his early 20s.
For one, his father, John Gokongwei, Jr., is one of the Philippines’ most successful businessmen and richest people. The younger Gokongwei was the second child and the only son of six children – “I grew up in Manila, as a privileged Chinese boy with a comfortable life”.
He did not choose to take the easy life. After graduating summa cum laude from the University of Pennsylvania and continuing on to Wharton, Gokongwei returned to help his father, then 61.
“My dad showed me the ropes of the business,” said the 48-year-old president and chief operating officer of JG Summit Holdings Inc (JGSHI) during a visit to Jakarta.
However, he has previously said that at the outset he did not work directly under the patriarch.
“When I first started, I did not report to my father. I worked for my uncle and another manager. If you are too close to the person, you usually won’t get good feedback. The parent might spoil the child or he may be too harsh. There is also danger of bringing issues and arguments home,” he told the Philippine Star in 2012.
Today, John Gokongwei has taken the position of the conglomerate’s chairman emeritus, and his son is charting a court to conquer Asia by flight and food: the company sells snacks, beverages and flying passengers.
“It has been a dream to have a pan-Asian company using a Filipino brand,” he said.
JGSHI consists of eight companies: Universal Robina, Robinsons Land, Cebu Pacific, UIC (37 percent stake), PLDT (8 percent), Meralco (27 percent), JG Summit Petrochemical Corporation and Robinsons Bank. The group has a total market capitalization of almost US$11 billion.
Universal Robina Corporation (food) Robinsons Land Corporation (property) Cebu Pacific (airline) and its core investments are the biggest contributors.
Robinsons Land Corporation owns 38 malls with a total of 1,056,000 sqm, 10 office buildings occupying 275,000 sqm and 12 hotels with 1,896 rooms (all of his five sisters are also involved in the businesses).
The company recognizes it also has to change with the times, and is meeting the needs of the growing middle class in many Asian cities, especially for food (it produces Piattos potato chips in Indonesia) and the growing leisure travel culture.
“In last 20 years we changed our portfolio, focusing on the middle class, particularly in Southeast Asia, where there are aspirations for better brands, quality and lifestyles,” he said.
“We opened factories in Vietnam, Malaysia, Thailand, Indonesia and Singapore to continue our presence. We operate 22 factories internationally.”
He would rather have the factories produce the snacks and beverages locally rather than exporting from the Philippines due to issues of shelf life and export costs.
Today, 25 percent of Universal Robina’s revenues come from sales outside the Philippines, and Association of Southeast Asian Nations (ASEAN) sales of food and beverages have reached close to $2 billion per annum.
“Ten years ago, Universal Robina had only one third of our sales today,” says the executive, adding that it recently acquired the 150-year-old New Zealand brand Griffin’s Foods, with plans to export its products to ASEAN and China.
Sky high
For one, his father, John Gokongwei, Jr., is one of the Philippines’ most successful businessmen and richest people. The younger Gokongwei was the second child and the only son of six children – “I grew up in Manila, as a privileged Chinese boy with a comfortable life”.
He did not choose to take the easy life. After graduating summa cum laude from the University of Pennsylvania and continuing on to Wharton, Gokongwei returned to help his father, then 61.
“My dad showed me the ropes of the business,” said the 48-year-old president and chief operating officer of JG Summit Holdings Inc (JGSHI) during a visit to Jakarta.
However, he has previously said that at the outset he did not work directly under the patriarch.
“When I first started, I did not report to my father. I worked for my uncle and another manager. If you are too close to the person, you usually won’t get good feedback. The parent might spoil the child or he may be too harsh. There is also danger of bringing issues and arguments home,” he told the Philippine Star in 2012.
Today, John Gokongwei has taken the position of the conglomerate’s chairman emeritus, and his son is charting a court to conquer Asia by flight and food: the company sells snacks, beverages and flying passengers.
“It has been a dream to have a pan-Asian company using a Filipino brand,” he said.
JGSHI consists of eight companies: Universal Robina, Robinsons Land, Cebu Pacific, UIC (37 percent stake), PLDT (8 percent), Meralco (27 percent), JG Summit Petrochemical Corporation and Robinsons Bank. The group has a total market capitalization of almost US$11 billion.
Universal Robina Corporation (food) Robinsons Land Corporation (property) Cebu Pacific (airline) and its core investments are the biggest contributors.
Robinsons Land Corporation owns 38 malls with a total of 1,056,000 sqm, 10 office buildings occupying 275,000 sqm and 12 hotels with 1,896 rooms (all of his five sisters are also involved in the businesses).
The company recognizes it also has to change with the times, and is meeting the needs of the growing middle class in many Asian cities, especially for food (it produces Piattos potato chips in Indonesia) and the growing leisure travel culture.
“In last 20 years we changed our portfolio, focusing on the middle class, particularly in Southeast Asia, where there are aspirations for better brands, quality and lifestyles,” he said.
“We opened factories in Vietnam, Malaysia, Thailand, Indonesia and Singapore to continue our presence. We operate 22 factories internationally.”
He would rather have the factories produce the snacks and beverages locally rather than exporting from the Philippines due to issues of shelf life and export costs.
Today, 25 percent of Universal Robina’s revenues come from sales outside the Philippines, and Association of Southeast Asian Nations (ASEAN) sales of food and beverages have reached close to $2 billion per annum.
“Ten years ago, Universal Robina had only one third of our sales today,” says the executive, adding that it recently acquired the 150-year-old New Zealand brand Griffin’s Foods, with plans to export its products to ASEAN and China.
Sky high
He learned from his father how to roll with
the punches when a business deal falls through.
The family had once been interested in acquiring Philippine Airlines, but lost their bid to well-to-do businessman Lucio Tan in1995. Like any successful businesspeople, they dusted themselves off and looked for the next opportunity.
Later, during a trip to the US, the family patriarch read an article about new low-cost budget airline Southwest.
“My father came back and asked me if I want to assist him to open up a low cost budget airline. I said yes,” he said.
From a fleet of a few aircraft in 1996, Cebu Pacific Air has now flown close to 100 million passengers – living up to its slogan “Why everyone flies”. In 2010, Cebu Pacific raised over $600 million in its initial public offering; it is the largest carrier in the Philippines and flies to 28 destinations.
In 2014, its 55 aircraft ferried almost 17 million passengers – a 17 percent rise from passenger numbers the year before.
“Our airline holds over 60 percent of the domestic market share in the Philippines but 40 percent of the revenues of the airlines comes from the international routes,” he said.
He is also focusing on its petrochemical enterprise. The first of its kind in the Philippines, the company will make integrated polyethylene (PE) and polypropylene (PP), the basic building blocks for plastics.
He may seem to have enjoyed a charmed life, but there were difficulties, too. His eldest sister, Robina, was briefly kidnapped in 1981, and he and his sisters were sent to the safety of Singapore for high school.
But Lance Gokongwei obviously learned many lessons under his father; in the 2012 Philippine Star interview, he talked about his father’s “10 unwritten commandments”, including no moonlighting, no conflicts of interest, no pay for no work, regeneration and always having one boss in control for decision-making for his children and other relatives.
After a privileged childhood, his father’s family also fell on hard times in China, and the teenage John Gokongwei hawked goods on the street.
Lance Gokongwei no doubt grew up hearing those stories of his father’s determination against the odds. He advises the young generation to work hard and maintain persistence and grip when challenges arise.
“Life is full of problems. Never give up!” he said. (Aruna Harjani)
The family had once been interested in acquiring Philippine Airlines, but lost their bid to well-to-do businessman Lucio Tan in1995. Like any successful businesspeople, they dusted themselves off and looked for the next opportunity.
Later, during a trip to the US, the family patriarch read an article about new low-cost budget airline Southwest.
“My father came back and asked me if I want to assist him to open up a low cost budget airline. I said yes,” he said.
From a fleet of a few aircraft in 1996, Cebu Pacific Air has now flown close to 100 million passengers – living up to its slogan “Why everyone flies”. In 2010, Cebu Pacific raised over $600 million in its initial public offering; it is the largest carrier in the Philippines and flies to 28 destinations.
In 2014, its 55 aircraft ferried almost 17 million passengers – a 17 percent rise from passenger numbers the year before.
“Our airline holds over 60 percent of the domestic market share in the Philippines but 40 percent of the revenues of the airlines comes from the international routes,” he said.
He is also focusing on its petrochemical enterprise. The first of its kind in the Philippines, the company will make integrated polyethylene (PE) and polypropylene (PP), the basic building blocks for plastics.
He may seem to have enjoyed a charmed life, but there were difficulties, too. His eldest sister, Robina, was briefly kidnapped in 1981, and he and his sisters were sent to the safety of Singapore for high school.
But Lance Gokongwei obviously learned many lessons under his father; in the 2012 Philippine Star interview, he talked about his father’s “10 unwritten commandments”, including no moonlighting, no conflicts of interest, no pay for no work, regeneration and always having one boss in control for decision-making for his children and other relatives.
After a privileged childhood, his father’s family also fell on hard times in China, and the teenage John Gokongwei hawked goods on the street.
Lance Gokongwei no doubt grew up hearing those stories of his father’s determination against the odds. He advises the young generation to work hard and maintain persistence and grip when challenges arise.
“Life is full of problems. Never give up!” he said. (Aruna Harjani)
