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Success stories of Filipino Entrepreneurs - Carson Tan.
AquaBest Water bottling and refilling business, CARSON TAN REMEMBERS A TIME in high school when he saw one affluent classmate's refrigerator filled with bottled water. He did not understand the need to buy drinking water then, as tap water was perfectly potable at that time. He never thought that he would one day be in the water bottling and refilling business himself.
An Economics-degree holder from the University of the Philippines, Carson was fresh from college when he began his first business, a fastfood stall called "Naka-Goto". This was when goto was a hot new concept in fast-foods. His store was doing well but since there were not enough tenants in the building where he was leasing space, the business went down due to lack of foot traffic. Says Carson:
You do need competition to make the place appealing to the public. Just like in the Banawe area, car accessories and auto supply stores are practically beside each other, yet the place is thriving. Maybe our fast-food place was mismanaged. But if you ask me, the business was making money. Unfortunately, the area became kind of sleazy, with all the drinking and bold whows. It used to be an all-food area.
Things went downhill when they changed the set-up. I even did a little extension when the stall next to me closed shop. Since few contribute to the rent, the place deteriorated and became spooky. When there are unattractive "holes" or "gaps" in establishments, why bother patronizing them?
After his first business closed, he became a salesman. He saw sales as a way of learning about business at its grassroots. He did not have the capital to put up his own so he literally peddled encyclopedias, absorbing the rudiments of sales and sharpening his skills.
During this time, he also put up another enterprise, portion-sachet packaging of sugar, coffee, and ketchup to capitalize on the requirements of other fast-food restaurants as safety in food handling was becoming an issue. Once the business took off, he left the encyclopedia business to concentrate on marketing the packaging services, eventually also supplying the disposable burger wrappers and other flexible packaging materials.
Carson was doing well in this business when globalization made his clients change their strategy. Instead of purchasing from local suppliers, multinational companies based in the Philippines opened bidding to all suppliers in Asia Pacific. As it turned out, bids from the Philippines were not competitive, so most of the business went to foreign suppliers.
Then the Asian-currency crisis of 1997 happened and Carson's loans and other businesses were affected. His interest rates zoomed to 38 percent per annum, which was too much for a businessman whose stocks were not moving. His other business, imported computer tables, affected his cash liquidity because PC sellers were holding on to their stocks in anticipation of better returns on their dollars. As a result, nobody was buying computer tables as well.
The exchange rate was only P24 per U.S. dollar, but went up to P27 and then P40. Because of the sudden increase, consumers deferred their purchasing. Computer prices soared overnight. Our sales dropped by 90 percent. I was renting a warehouse, paying interest at cost, but I didn't have sales. So to avoid bigger problems, I sold my stock even at a loss.
Though Carson tried to wait out the financial crisis, it lasted for years, longer than anyone expected. He decided to take the loss and pay up his loans by swapping his condominium investments, since he did not want to lose his good credit standing with his fellow Chinese businessmen.
If you let your cheques bounce, your credit integrity will be at stake. You'll be branded in the Chinese community with a bad credit record; you know, word spreads around quickly. We put so much value on credit integrity.
(To be continued...)
