Monthly Archives: January 2016

Stories of famous Filipino entrepreneurs

MANY attempts have been made to profile the Asian entrepreneur. But I found an easier way to spot them — just check their family name.

The fact is, enterprises and entrepreneurship in the Asian context is usually tied up with kin or family.

In the Philippines, the term “Asian entrepreneur” has not been around for long but trading is nothing new. The Chinese and Malay traders have made their presence known throughout Philippine history even before the Spanish came.

Their trading continued even in the presence of the Spanish conquistadores. The Spanish officials’ aristocratic lifestyle was completely dependent on the galleon trade for hundreds of years.

This galleon trade brought Chinese silk and porcelain to Europe via Mexico and European luxury goods and Mexican silver via Manila.

Getting to know the Filipino-Chinese entrepreneurs

The Chinese in the Philippines make up only 20 percent of the country’s total population but they are a force to be reckoned with.

Most Chinese in the Philippines are business owners and their lives center around the family businesses that are usually small and medium enterprises. These family businesses play a significant role in the Philippine economy. A handful of these entrepreneurs run large companies and are respected as some of the most prominent business tycoons in the country.

Chinese Filipinos attribute their success in business to frugality and hard work, Confucian values and their traditional Chinese customs and traditions. They are very business-minded and entrepreneurship is highly valued and encouraged among the young.

We can trace the roots of the Chinese in the Philippines to either the Fujianese or Cantonese dialect groups of the Han Chinese ethnicity. Most pure-blooded Chinese in the Philippines come from the province of Fujian in China and are called Fujianese or Hoklo.

Mixed Chinese people who have either Malay or Spanish (or both) ancestry are called Chinese mestizos. During the Spanish times, they were legally classified as Mestizo de Sangley, as printed on their community tax certificates.

A number of Chinese mestizos have surnames that reflect their heritage, mostly two or three syllables that have Chinese roots. They use the full name of a Chinese ancestor and provide a Hispanic phonetic spelling.

The Chinese mestizos are sometimes called Chinoy or Tsinoy, although this term is more accurate for pure-blooded Chinese-Filipinos. However, the Chinoy is not to be mistaken for chinito, a term used to describe physical characteristics — slanted eyes — rather than describing ethnic origin or cultural orientation.

In contrast, with the mixed blooded Chinese mestizos, few Chinese Filipinos are plantation owners. This is partly due to the fact that it was only until recently that the Chinese in the Philippines became Filipino citizens. The law prohibited them from owning land.

These days, most Chinese Filipinos are urban dwellers. At least 50 percent of them live within Metro Manila, while the rest reside in the major cities of the Philippines such as Cebu, Iloilo and Davao. They can be found everywhere.

Famous Filipino entrepreneurs are mostly Chinese

Eight out of the most famous Filipino entrepreneurs are businessmen whose families emigrated from Mainland China to the Philippines before World War II when the economy was strong.

Some sought out regular employment and others set up small businesses. Although each took a different approach, there is one common denominator among them before they became famous Filipino entrepreneurs — unparalleled work ethic.

While there are other factors that contribute to their achievements, such as being frugal, a good financial sense, and a strong network of fellow Chinese businessmen for support, the collective image of these famous Filipino entrepreneurs working hard and diligently has stuck in the minds of budding entrepreneurs in the Philippines. Indeed, if one wants to be a successful entrepreneur, there is much to learn from the Chinese-Filipino entrepreneurs.

In my next article, I will provide an overview of the most famous Filipino entrepreneurs, mostly Chinese with a few mestizos. We have a lot to learn from these icons of the local business scene.

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Ensuring the family business legacy: my second book

THAT’S the title of my second book. After three years and three copy editors, my book is now available.

To give you an idea on how this book was conceptualized, let me share with you two distinct reasons for writing it. First, the family business in Asia has grown considerably in the past decades. It has made an impact on China, India, the Philippines, Singapore, Malaysia, Japan, Indonesia, Taiwan and Hong Kong.

In the Philippines, there are quite a number of family businesses that are at least 100 years old such as the Ayala-Zobel and Aboitiz clans. I can mention a friend and former neighbor, Dr. Vivian Sarabia, whose family business, Sarabia Optical, is way past its centennial mark. (The family has been making the eyeglasses of all Philippine presidents since the time of Commonwealth President Manuel L. Quezon. Dr. Sarabia herself made a new pair for President Aquino to wear during his oath-taking ceremony last June 30, 2010.) Those that have reached the third generation are generally more structured as their organizations naturally evolved.

The second reason has something to do with my experience as mentor and business consultant. I was deluged with cases and stories from clients and students about their family business, and most importantly, about the issues and problems related to business succession. Majority of these businesses are still in their first or second generation and managed by founder-owners or sibling-partners. In these firms, one witnesses the struggle between maintaining family harmony and gaining respectable profits. The family business ownership group is the real engine for long-term success and yet we invest so little time in keeping it healthy. Somehow, we assume it will naturally stay strong with a unified vision for the future.

The need for a book on Asian family businesses really struck home. Almost every member of a family business is interested in continuing the life of his or her business as an innovative and successful endeavor until the third generation and beyond. It was then that I realized the imperative of writing a book about the Asian family business.

The stories of successful Asian business tycoons and their succession problems can encapsulate everything a client or student engaged in a family business needs to know.

Today, business successors are more inclined to shift from the founder’s patriarchal perspectives to a more corporate style of management. This book fits as a quick but comprehensive reference for understanding what it takes to continue a family business across generations.

Moreover, one of my basic aims as an author is to provide a book that every reader would be able to take something from, whether he or she is a business founder or successor.

Of course, the main benefit for the reader is the variety of Asian family business stories and complexities shared here. Most of the stories contain timeless business insights, inspiration and advice for both the patriarch/business founder and the younger successor.

These business tips and insights are products of my years of consultancy work and experience with various companies:

a. As chair of the marketing cluster and family business professor at the Ateneo Graduate School of Business;

b. My experience as part of the executive committee of the Unilab Group’s property arm, Greenfield Development Corp.;

c. Working and reporting directly to Andrew Tan as president and chair of several companies under his group. Noteworthy was my being handpicked to mentor his eldest son Kevin from day one until he became vice president;

d. Working as group chief executive officer (CEO) of Belo Medical and mentoring Dr. Vicki Belo’s daughter, Cristalle Henares;

e. Family business mentoring is a core service of Wong and Bernstein Business Advisory Group where I mentored and still mentoring several family-owned businesses — initiating a shift from family-owned and managed to family inspired;

f. Doing advocacy and turnaround strategies for small and medium enterprises (SMEs) and family businesses and mentoring young entrepreneurs and students at the Ateneo Graduate School of Business.;

g. Doing receivership of and initiating rehabilitation of distressed family-owned companies; and

h. Being a strategic advisor to the JG Summit Group and its affiliates

To further compliment the chapters of the book, I included a powerful bonus feature about the phenomenal rise of Andrew Tan, the challenges and adversities he faced and his climb to being the country’s third wealthiest Filipino.

It is reassuring to know that the vibrancy of the Asian family business has been captured in this book. Thus, we can look around and realize that Asia is at par with its western counterparts in terms of successful management succession planning as far as family businesses are concerned.

Husband and wife behind Forever 21’s global success

OUR life is what our thoughts make it.” That’s a powerful quote by Marcus Aurelius.

According to writer Alyssa Sparacino, New Year’s resolutions are a bit like babies: They’re fun to make but extremely difficult to maintain.

But I want to resonate the eight powerful words above that might just change your life forever. And that, my dear readers, connects me to the story of Forever 21, the fifth largest specialty retailer in the United States that was started by a simple Korean immigrant with a dream.

The average Forever 21 store is 38,000 square feet; the largest is approximately 162,000 square feet.

It all began in a 900-square ft. shop on Figueroa St. in Los Angeles on April 21, 1984. Forever 21 did not start off as Forever 21, but instead, Fashion 21. Founded by South Korean husband and wife team Do Won Chang and Jin Sook, Fashion 21 was launched in Los Angeles in 1984. Back then, both of them were immigrants to the States.

Forever 21 has seen some remarkable accomplishments over the past 30 years.

With a goal to become an $8-billion company by 2017 and open 600 stores in the next three years, it’ll be exciting to see the company achieve in three years what it initially took 30 years to do.

Forever 21 has expanded to an international brand, with 480 stores worldwide that generates around $3 billion in sales every year. What’s the story behind it?

In 1981, Jin Sook and Do Won “Don” Chang, both 26 at the time, emigrated from South Korea to California penniless, speaking broken English, and without college degrees.

For three years, Don worked as a janitor, pumped gas, and served coffee to make ends meet. Then, a simple observation sparked a monumental shift in their direction, which would eventually make them billionaires.

“I noticed the people who drove the nicest cars were all in the garment business,” Don told the LA Times in a 2010 interview.

This realization led them to open a 900-square-foot clothing store in LA in 1984. They called it Fashion 21. Unlike the three failed businesses that had previously occupied the space, they raked in$700,000 in sales in the first year. After this initial success, they began opening new stores every six months and eventually changed the name to Forever 21.

Since launching and working on Forever 21, the husband and wife team’s personal net worth has been estimated by Forbes to be over $4 billion. The role is complemented perfectly between the both of them: Mrs. Chang approves the designs of the company’s merchandise, while Mr. Chang focuses on turning Forever 21 into the fastest fast-fashion chain in the business, and in the process he has made the company widely successful.

In an age where innovation is more than ever about being fastest to market, the Changs are faster than anyone.

What keeps Forever 21 going?

Do Won Chang replies, “We keep changing. We are always thinking about the customer, not just for the company. That’s why we are successful. Women’s fashion is very difficult because it is changing every day. Fashion changes so fast, so time is the most important thing. If you are too late, you are too late. If you are too early, you are too early. So timing is very important.”

Why is Forever 21 so successful?

“The company keeps its prices low. It lives up to its motto, “Shop Chic Styles for Less,” by continually updating its merchandise to remain fashion forward”, replies Chang.

Even with the company’s tremendous growth, it still remains a family owned business.

Daughter Linda Chang, the chain’s marketing manager says, “The great thing about this being a family business is that we all care so much. The stressful thing is that my mum and dad are also my bosses. I don’t have a personal life. We don’t stop. We talk about business over dinner. We go on mission trips [to Afghanistan, India and Pakistan] instead of vacations.”

Her parents, who are born-again Christians, go to church at 5 a.m. every morning. Mrs. Chang has been quoted as saying that when they came to America, she went to the top of a mountain to pray – God told her she should open a store. Today, Mr. Chang is famous for keeping a Bible open on his desk, and the bottom of every Forever 21 carrier bag reads “John 3:16”, the core Christian message. Does their Christian faith jar with the ethics of selling fast fashion? How will British customers feel about the brand’s religious tilt? “There is no religious tilt,” answers Linda firmly. “The faith of the founders is separate from the brand – the bag is simply a statement of faith.”

Are New Year’s resolutions and Confucian values still relevant?

Succession is a process and must be planned

One of the thorniest and often times, an extremely unpleasant topic, is the issue of succession. It is not only isolated to the founder and the successor but a complex process that involves all actors both inside and outside the family business. Resistance to succession comes from multiple levels, including individuals (founder-entrepreneur, successor, siblings), groups, the non-family employees, the family business organization and its external environments. Senior generation leaders contemplating of retiring in five years must start the planning process.

Uncertainty over who will succeed

Ownership issues are often generational and lead to conflict between parents and their children. If the senior generation is not prepared to give a definite call on when they intend to retire, the result can be frustration among the successor generation about their lack of control over the operations and direction of the business.

Confucian orientation can be a Catch 22 scenario

Chinese family businesses are heavily influenced by traditional Confucian ideology and are currently facing more challenges in succession and human resource management. The general success of Chinese overseas business firms has raised interest on the influence of Chinese ethnicity on business performance and many government officials and academics attribute the success to Confucianism.

Confucianism is a way of life propagated by Confucius in the 6th to 5th century BC and followed by the Chinese people for more than two millennia. Although transformed over time, it is still the substance of learning, the source of values, and the social code of the Chinese. Its influence has also extended to other countries, particularly Korea, Japan, and Vietnam.

Confucianism teaches that the family is the basic unit of all social organizations and the core of society is not the individual, but the family (Hofstede, 1991). The business is considered a family property. Moreover, it is claimed that individuals are indistinctly connected with and embedded in a family, a group or social organizations so that they do not exist as a separate entity (Krug, 2004).

Following the value of Chinese collectivism, family members cannot do anything that will facilitate the success or the achievement of an individual to disturb the harmonious settings within the family, thus, under the circumstance of collectivism culture, individual desires are always repressed.

The Confucian value of caring for older parents reduces fear of losing financial support. This value is a very important lesson on filial piety that is taught from childhood. One of the most famous stories about filial piety teaches how children should sacrifice themselves for the sake of their parents.

The story tells how a son used his body heat to melt the ice on a river to get fish for his sick mother. In general, Confucian ideology contributes to factors that promote successful succession. Confucianism supports cooperation, mutual trust, harmony and obedience to senior leaders’ decisions. When conflicts are not resolved, piety precedes all other virtues.

Confucianism criticized

In South Korea, there has long been criticism of Confucianism. Many Koreans believe Confucianism has not contributed to the modernization of Korea. For example, South Korean writer Kim Kyong-il wrote an essay entitled “Confucius Must Die For the Nation to Live”. Kim said that filial piety is one-sided and blind, and if it continues, social problems will continue as government keeps forcing Confucian filial obligations onto families.

Corporate succession scandal

Such dilemma came to light late last year in South Korea involving the hotel and retail giant, Lotte Group. It was a corporate succession scandal involving the intense rivalry between the two sons that led to the younger one turning against the 92-year-old Mr. Shin, his father and founder, and ended up ousting him as the general chairman.

Strait Times highlighted in its report that “while corporate succession battles are not unusual in South Korea, a son overthrowing his aged father is almost unheard of in a Confucian society where respect is valued.” This is what a catch 22 is all about, a dilemma or difficult circumstance from which there is no escape because of mutually conflicting or dependent conditions.

From poor migrant to house cleaner to owner of 52 properties

THE greatest failure is never to attempt at all. Those words still resonate among rags-to-riches migrants. There was a study done in the United States about people who have become millionaires on their own. It aimed to find out common characteristics among these successful millionaires in an attempt to find out what made them successful. The findings revealed that the common denominators were hard work and poverty. They all came from very poor families and they worked and continue to work hard for more than eight hours a day. As most of them concurred, “Working eight hours is for survival; beyond eight hours is for success.”

One such success story that fits this research model is that of Mila Ferrer, a Filipina who hails from Alcala, Pangasinan. She migrated to the United States some 40 years ago as a dirt-poor orphan with barely $20 in her pocket. She was fresh out of college upon landing on American soil. Her English was broken, but not her spirit. Living out of a mobile home, she pursued her American Dream with determination.

Her job hunt proved an uphill climb. After 17 job interviews, she was still jobless, and had to resort to cleaning houses to eke out a living.

Eventually, her luck began to turn, and she landed a job that helped her maximize her potential. She took on a clerical post in a financial company, and later transferred from one banking institution to another. Ferrer became a loan manager, thanks to her hard work. From a struggling employee, she holds the title of regional vice-president for an international investment company.

She recalled the early years of living in America: “I learned how to make my own money. I was cleaning houses, working in the bank, doing real estate, working as personal assistant to doctors, and being a mom,” she said.

Ferrer was one of four siblings, orphaned and struggling to survive. She vowed to herself that her own family would not know the suffering and hardship she had to endure.

Although she’s a tough mom (a single mom to five children), she vowed, “I will never have my kids go through the life that I went through as a kid.”

She quickly adds, “I don’t believe that you can be poor in America. If you want to work hard, there is work.”

On investing, her advice: “You have to find a mentor. If you invest your money, you’ll be able to make it.”

At 61, from a meager trailer home, she now owns 52 land properties (including the house that she used to clean) and lives on a three-acre lot with a 6,000-square-foot house.

She credits hard work and passion as the secrets to her incredible success story. As Michael John Bobak, digital artist and singer/songwriter said, “All progress takes place outside the comfort zone.” (It’s a fancier way of saying, “No pain, no gain.”)

Ferrer has not only succeeded in a tremendous way; her story reminds us how challenges can be overcome. Her passionate approach toward her goals has turned into a fruitful journey. She now finds herself in a position to help others succeed, as well.

“I love what I do. I help people. I can do this wherever I go,” she said. Mila currently resides in Plano, Illinois.

Sometimes the inspiration you need to achieve your dreams can be found in a few simple words of wisdom. From Mila Ferrer’s story, one thing is certain: to be successful, one must follow the law of cause and effect. For every action, there is an equal reaction. Financial success is the result of doing specific things repeatedly until you achieve your financial goal. This just shows that everything is possible and we shape our own future. It is not about where you are right now, but about what you are going to do to achieve your success.