Case 12
LADY DANLENE V.
ABILON Case 12 Henry Sy and John Gokongwei On July 28, 1988, Asiaweek reported on the ” mad scramble”, for land in Manila: ” At the toss of a coin, a U. S. $5 million deal was done. An unorthodox way to reach a decision about real estate, perhaps, but at least neither party could claim the other had been unduly favored. Sitting in the office of Manila property magnate Don Francisco Ortigas were two of the richest man in the Philippines. Both coveted a superbly located five hectare site at an intersection on Metro Manila’s premier avenue.
Banker – industrialist John Gokongwei and retailing tycoon Henry Sy agreed to let Don Francisco’s secretary flip a U. S. silver dollar. Gokongwei called heads and got the $95 – a – square-meter prime site while Sy got consolation prize: a nearby, but quite so strategic ten hectares, also on EDSA. Both tycoons are building multi storey commercial centers. Since that flip of fate less than a year ago, the land they bought has tripled value.
” From the foregoing account, one would be quick to conclude Henry Sy had gotten the shorter end of the bargain; that luck on the side of John Gokongwei.
But as economist Bernardo Villegas of the Center for research and Communications was quoted by the Starweek Newsmagazine last June 4, 1988, “To the entrepreneural Chinese, every peril, every threat is as good as opportunity. It is not by chance that those who are very bullish today on the Philippine economy are the Filipino Chinese , they look beyond the political risks that sorround the country. Far from ignoring the dangers… mey look into them. And what do they see? Opportunities! Villegas added that their “positive vision is long-range vision” coupled with an enduring faith in the creativity and resilience of the entire Filipino national community. The race between Henry Sy and John Gokongwei to cash in on the Philippines consumer boom was coined by the Far Eastern Economic Review in December 22, 1988 as Manila’s “Store Wars”, ringing the metropolis with vast concrete shopping malls.
They hope that peppering Manila with shopping plazas, and copying the idea throughout the archipelago, will provoke further changes in how where Filipinos do their shopping.
Henry Sy’s highly successful SM Shoemart chain of department stores and Gokongwei’s Robinson Commercial, Inc. outlets, have enticed lower and middle class shoppers away from traditional outdor markets and into massive airconditioned malls. These malls provide a welcome refuge from the oppressive heat and pollution in Manila, and once inside the shops, colorful displays give people with little money a taste of life beyond their means. Both Henry Sy and John Gokongwei are talking the concept of shopping center as community center to the extreme with their new plans.
The P2 billion Robinson’s Galleria willl vie for business in the Manila suburb of Mandaluyong with the P3 billion Shoemart Mega-Mall when both are completed sometime in 1989 to 1990. Both developments will include hotels, apartments, shops, and cinemas. Similar projects are planned by Henry Sy in Baguio, Cebu and on the Manila waterfront. Developments in Tacloban City an Leyte and Tagaytay in Southern Luzon are also in the works. John Gokongwei will do same only in Cebu, concentrating on smaller new developments and renovations in Manila.
Henry Sy and John Gokongwei have both made such good copy in media that the rest of business community have appeared as mere spectators on the sidelines waiting for next “mega-deal” to be closed by either of the two.
It is because of their respective embarkation on massive acquisition binges of real estate and designing what have now come to be known as “shopping cities” that most are quick to utter the names Henry Sy and John Gokongwei, albeit inaccurately, in the same breath.
Sifting through the voluminous articles written on them, a rough cooperative profile of the two most celebrated entrepreneurs in the Philippines in the latter half of the 1980’s was prepared. In their Origins Henry Sy and John Gokongwei were both blessed in a way that most aspiring entrepreneurs these days are not: they were both born poor, very poor. The Philippine Panorama reported in this issue last September 18, 1988, that some 50 years ago, as young lad from the South China coast, Henry Sy started on the road to wealth, shoeless and with only the clothes on his back.
Bored with tending his father’s sari-sari store in Cebu, Henry Sy dreamt of opening his own business to earn enough money to travel and see the world. The magazine pictured the future retailing tycoon looking down his unshod feet and vowing not only to get his own shoes , but sell more to others.
After the war in 1945, Henry Sy set himself in small shoe store in Carriedo, Quiapo, then the shopping area. He sold well-made shoes at good prices, preffering rapid turnover to high margins.
Eventually, the store became shoemart. Constantly pouring capital back into the business, Henry Sy expanded into textiles and household goods, and open shops in the Manila surubs of Makati and Cubao, in Cebu and in Iloilo. Millions of shoes later, he began travelling in style , in an executive Lear Jet which he used for inspection tours of his fur-flung businesses making Henry Sy the”department store king of Asia”.
The humble beginnings of John Robinson Gokongwei do not vary significaly from that of Henry Sy.
According to Philippine Panorama , he also started out peddling wares on the back of his bicycle to Cebu housewives and dreaming of building his own retailing empire. John Gokongwei retail fortune today , after 50 years, is nothing to sneeze at, However retail price are still only a very modest contributor to the Universal Robina Corporation (flagship of John Gokongwei’s empire and named after his eldest child) and Commonwealth Food Corporation and wholeselling most of the alance derived from textiles, real estate, and stock investments. It has been his multi million peso stockmarket earnings, however which have spearheaded John Gokongwei ‘s shift away from manufacturing and into banking, real estate and , to complement his core business , sugarmills . His plunge into retailling, hotels and shopping complex developments came simultainusly in 1982 with the opening of Robinson’s Midtown plaza and the adjacent Manila Midtown Hotel. A profile of their investments
It is a difficult task to prepare an exhaustive and accurate profile of the empire of Henry Sy and John Gokongwei given the limitless possibilities which their resources allow them to venture into.
A prominent component of their investment portfolios today may give way to a new corporate flagship tommorow. This is true, especially for John Gokongwei whose name has been linked to every megabuck deal that range from real estate and department stores to hotels and sugar mills, creating that the Far Eastern Economic review calls a ” vast, somewhat shapeless, empire. “
In 1987 alone, according to the Philippine Paronama, John Gokongwei invested nearly P2 billion in expanding his interest in food processing, textiles, banking and retailing. In 1988, he ruled over a business empire that had chalked up consolidated revenues of upwards of P7 billion with net profits of P640 million the preceding year coming from Universal Robina Corporation and Commonwealth Food Corporation , two of the fastest growing, most diversified conglomerates in the country, the largest producers of coffee, pork, eggs, candy, poultry, chocolate, biscuits and textiles.
In 1988 Gokongwei initiated the largest multi-functional real estate development in the Philippines, the nearby P 2 billion Galleria Robinson commercial complex in Ortigas district in suburban Mandaluyong.
The Galleria when finished, has 20 hectares of shops, and three imposing skyscrapers, a 40 storey condominium tower of 160 residential units , a 30 storey 300 – suite hotel and a 2 storey office building. There will be a parking area for 3,400 cars and he expects to open the mall by late October 1989. Going public and the issue of succession
The recent rapid expansion of the business of Henry Sy and John Gokongwei marked the start of a period of transition for the business empires built over the past three decades by the two businessmen. Both have succumbed to the pressing need to go outside their families and immediate circles to rise more substantial funding for the first time. Likewise, both will have to streamline their convoluted family-owned corporate structures to allay outside investors.
Both groups have made tentative steps towards openness. In 1986, Henry Sy purchased a closed-end investment company from Ayala Group and renamed it in the SM Fund, Inc.
According to the Far Eastern Economic Review , in the past, while hard work and a sharp eye for the bottom line had served Henry Sy well, so apparently and his development partnership with the Zobel family, primary owners of the property based Ayala Corporation. While the Zobels do not appear to have any direct holding in Henry Sy’s developments , which had helped push up the cost of Makati propert. Still Henry Sy is very much in the frontline of the Shoemart empire.
According to business world in its issue last January 5, 1989, he still puts in a 14-hour day demands the same from his employees.
He still signs company checks, and goes over all payments line by line. He still shows up in his Metro Manila stores at opening and closing time. Comparative of Henry Sy and John Gokongwei Henry Sy ? Retailing Tycoon ? Shoe mart – sold well – made shoes at good price ? Expanded into textiles ; Household Goods ? Was ridiculed for building the huge “SM CITY” in the outskirt of the city ? SM Mega Mall along Edsa measure over 600 meters w/ a total floor area of more than 33 hectares. 4500 slots for parking area.
The Tag price is 3 Billion inclusive land purchase cost of construction and interiors/furnishing. SM investment controls rid view health, multi realty, intercontinental development at its real state investment vehicles. ? According to Philippine Panorama reported that Henry Sy’s personal fortune was estimated to be around 1 billion in 1988 ?
His Real state property holdings include the Ritz towers a four 28-storey luxury condominiums. ? SM ventures include a 100 hectare shrimp pored projects in iloilo in foreign investment of its Hong Kong office such places a Brunei, Sabah, Hawaii, and Guam where there is a small SM outlet. ? Have a Pines Hotel located at baguio ? Proud that his shoe mart upgraded into commercial complex They manage without major borrowing ? Owns the Banco De Oro Savings and Mortgage bank ? Moved from San Andres bukid to Posh Forbes Park ? Dressed in elegant designer suit and tie ? Non – Smoker ? Occasionally sip of brandy or simply because he values his health like John Gokongwei John Gokongwei ? Banker industrialist ? Trading and manufacturing cornstarch in 1955 ? Robitex – One of the Philippines largest producers of fabric and yarn ? Banking, Real state, Retailing, Hotels ? 1982 Robinson’s Midtown Plaza and Manila midtown hotel ? 1987 Universal Robina sugar milling ? John Gokongwei accumulated major holdings in philex mining corp.
Far east bank and Philippine Commercial Bank and Industrial bank. ? 1987 Invested nearly 2 billion in expanding his interest in food processing, textiles, banking and retailing ? 1988 he initiated the largest multi functional real state development in the Philippines nearly 2 billion galleria robinsins ? The galleria will have 20 hectares of shops 3 imposing skyscrapers a 40 storey condominiums 160 residential units a 30 storey 300 suites hotel and 2 storey building ? Avoiding major borrowings ? Access to financing through buying local banks ? He is competitive CASE: Henry Sy and John Gokongwei
POINT OF VIEW OF HUMAN DEVELOPMENT As a child he dream of owning a business, not only to have his own shoes but to sell it also to others. Henry was not afraid to build a huge SM city in the outskirt of the city, he is a risk taken instead of afraid, he uses his skills and awareness he had the idea of having SM more convenient from shopping, food entertainment, under in one building, He succeed and because of his skills his shoe mart outlet upgraded into commercial complex like Gokongwei he didn’t borrow money for his project he relied cash by his two main holding companies he find a solution to his problem
Henry Sy doesn’t waste opportunity because for him opportunity don’t take vacation. Because Henry Sy consider his many travels in US and Europe as his vacation for him its sharpened his entrepreneur skills John Gokongwei is a competitive. In the Gokongwei family the law is still the traditional Confucian (means is a Chinese ethical and philosophical system developed from the teachings of the Chinese philosopher Confucius) respect and reverence for one’s parents and obeying their word, which is their will, their way.
We see that they all succeed in their dreams and now they had a good lifestyle, they are popular a well-known person and having a good reputable reputation. From rags to riches they are now one of the riches personality in our county. They are recognized because of what they achieved now it’s all because of there patience, skills and also they are being an employer choice. They develop their small dreams into a large accomplishments.
