William S. Go
Bernie Cahiles-Magkilat, Manila Bulletin
William S. Go has had sad experience with his joint venture with foreign investors but such experiences have not deterred his intentions to move forward. It's a matter of principle, he would say.
His latest battle was against giant
PSMT Philippines was organized in 2000 with PriceSmart
The company started operations in March 2001 and posted a net income of P9.87 million on its first year. The net income dropped to P1.3 million in the succeeding year before turning to a huge loss amounting to about P500 million in 2003 although sales exceeded P4.4 billion of that year.
PSMT operates 4 warehouse clubs in Alabang, Congressional Road in
Under the original joint venture agreement with PriceSmart
"While I was chairman I have no management control," he recalled.
"I know what was going on so I started asking questions on the details of the reports that were regularly submitted to me," he said.
If only he was satisfied with the management's answers, he would have stopped asking.
"But they cannot answer satisfactorily," he recalled.
From a business point of view, Go said it is crucial that you have a control on expenses, there must be no unnecessary expenses.
"Perhaps, Americans are really like that giving fat salaries and generous fringe benefits to their people," he said.
"They did not listen to me," he said.
The company president was provided a four-bedroom house in Forbes, which to Go was not necessary.
"My business sense would say this is extravagance," he said.
On the first year of operations, the company was doing okay but the financial cracks started on the second year.
Go proposed a management committee to co-manage the business but was never heard.
"So I decided to go to court," he added.
After an ugly fight, Go won saying it was a happy ending for the partnership.
But PriceSmart is the not only joint venture that Go happened to be unlucky with.
One other joint venture was with a Taiwanese group in the middle of 1980s. The Taiwanese group agreed to buy all of Go' ramie staple fiber production.
For a five-year period, Go was the country's biggest ramie fiber exporter. But when
Go blamed his failed joint ventures with foreign partners due to differences on how a business should be run.
"Filipino businessman are very conservative. We are very realistic and we don't want to rely on mere projections, we want actual figures and facts."
Another source of conflict could be the different cultures of two different investors.
Most important, Go said, a contract must be followed comma for comma.
"We have to follow the standard operating procedure and the details of the contract. There is no such things as bending a provision in the contract to accommodate a friend's request," he said.
Go, however, refused to believe that the Retail Trade Liberalization Act on which the PriceSmart of U.S. used as its entry point, is a failure. PriceSmart of U.S. was the first big foreign retailer that came into the country following the passage of the Act.
"It is not a failure of the law. In fact, that is a very good law in attracting foreign investments into the country. Look at big foreign retailers Makro and Watsons, these are successful joint ventures with local partners," he pointed out.
In all his failed partnerships, Go said he has now learned to be more careful next time he decides to forge a joint venture with a foreign partner.
He stressed transparency in business transactions. As a businessman, he said, one must be hands-on because if you have executives running the operations it is a must that you know everything is going on in the business.
After Go's successful buy-out of the majority of PriceSmart U.S. in PSMT Philippines, Go expects to turn around the losing high-end exclusive warehouse shipping outlet into a profitable venture by shifting towards the sale of more "mass- based" products in smaller packages, expanding its supply chain other than PriceSmart's and capital infusion if necessary.
"But what we are focusing in the next five to six months is to lessen the expected loses," Go Said.
To turn the company around, Go stressed the need to balance the product mix of PriceSmart from a mostly high-end imported products to include "mass-based" products to encourage more shoppers.
"We are going to make the product mix more accessible to all consumers by balancing the imports with local products and present a product mix that caters to all," Go said.
There would be a balance between local and imported products, mostly from the
Its agreement with PriceSmart
If need be, the company will have to infuse additional capital. The company plans to expand outside of Metro Manila and plans for a
The company has to maintain it's a membership shopping concept, which at present has between 50,000 to 60,000 members.
But Go, who now owns 90% of PSMT Philippines from his previous minority stake of 38%, admitted that turning the company around could be a long term goal.
In 2003, PSMT incurred P500 million and the losses for 2004 have yet to be known since fiscal year of PriceSmart ends in August 31.
The company has also to assume the loans of the former PSMT Philippines which was guaranteed by PriceSmart
The new owners of PSMT Philippines will have until 2012 to settle the IFC debt.
So far, PSMT's debt burden is placed at $15 million to $16 million.
The SGV is conducting an audit of the company. The agreement between Go and PriceSmart
Maybe it is inherent among businessmen to have that positive outlook in life. But it is not just having a positive attitude, Go believes that everything will just turn out right.
"My happy disposition towards life is my secret in business. I always believe in the positive side of things," he added.
Even in treating his 4 kids, Go is the kind of father who would spoil a kid. His 4 kids are all in the U.S. Wherever Go went, he made sure to bring home something to his kids.
"I spoiled my kids. I am a good provider and I personally bought the things they need," he said. As a friend, he is a very loyal friend.
Go learned business from his father first working as a child in the family's "Fat & Thin" enterprise where he grew up in the champoy and butong pakwan factory.
His first business was a bangus fish pond but he earned his first millions from the ramie fiber venture.
His other supermarket outlet called Cost-U-Less is undergoing an aggressive expansion program with the establishments of an express-type of store in
According to Go, each Cost-U-Less express outlet has an investment of P3 million.
"We are not thinking of competing against Rustan's. We are just doing our job," he added.
Together with PriceSmart and Cost-U-Less, Go has 700 employees. To his staff, Go's primordial concern is for them to be always honest.
Go, whose family hailed from
Had it not for the high-profile legal battle in PriceSmart, Go was not a known businessman. He was rather known for his Cost-U-Less business only. Go does not like the limelight, he would rather spend his mornings at the Cost-U-Less and the afternoons with PriceSmart, he also play golf twice a week.
Go's intensity as businessman could have been tempered by the legacy of his grandfather who served as an elder in the
Asked as to the secret of his success as a businessman, the 52-year old businessman summarized it in "hardwork, hardwork and hardwork."