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JOHN GOKONGWEI'S Keynote Speech at Ad Congress

21 November 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 serve 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 paid
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 nervous 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
served 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, providing
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 serve 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 services 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."