Carlos Chan: Mr. Oishi EMOTIONAL WEATHER REPORT By Jessica Zafra | Updated March 18, 2012 - 12:00am

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In 1989 Carlos Chan, the eldest son of immigrants from Fujian province, found himself alone on a flight to

Shanghai. After the events at Tiananmen Square no one wanted to come to China. Except for Mr. Chan, whose

company Liwayway Marketing manufactures the popular Oishi snack foods. He had had his eye on the China

market for a long time, and Shanghai in particular.

Its the economic center of China, Mr. Chan explains. May kasabihan sa Chinese: If you can penetrate the

Shanghai market, you can succeed in China.

The big population meant a huge market. Starting in the mid-80s I was coming to China to learn their system.

Its very different from ours, says the businessman and Philippine Special Envoy to China, who is well known

for declining interviews. He keeps a low profile and sometimes introduces himself as the brother of Ben Chan

(the popular founder of Bench). The occasion for this talk is a dinner at one of Mr. Chans favorite restaurants

in the fashionable Xintiandi area of Shanghai. The Philippine STAR was invited to meet the

unassuming taipan and tour the vast Oishi plant, the companys first in China.

This rare occasion comes shortly after Oishi launched the first brand-centered ads in its 38-year history.

Through the years the Oishi product line has grown and evolved, explains Sheraleen Tiu Shera

Liwayway vice president for marketing. Within Liwayway Marketing Corp., Oishi has come to mean creativity

and meaningful product innovation although it was just understood but not written down on any official

document. An Oishi product has to be special; it has to have that wow factor.

For the past years, our marketing has been focused on our products ergo the success of Prawn Crackers,

Pillows, Bread Pan, Martys, etc., Shera continues. Now is as good a time as any to tie it all together and

share the Oishi brand story on top of sharing the Oishi experience through the products people enjoy. An

attitude of being open to new ideas, to inspiration, to the consumers is what makes creativity and product

innovation possible. That same attitude in our consumers enables them to appreciate everyday surprises like

Oishi products. Oishi has a positive message that were excited to share.

Present at the dinner are four of Mr. Chans six children: Carlson, the eldest, who heads and oversees the new

businesses; Archie, who heads product development and is chairman of Liwayway International; Larry, who

heads operations in China and chairs Liwayway China; and Shera, Mr. Chans youngest child, who is in charge

of marketing. (Not present: Rinby Lao, who heads the design team and focuses on packaging, and Oszen,

president of Liwayway Marketing in Manila, who also heads operations in Vietnam, Myanmar, Thailand and

Indonesia.)

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In conversation Mr. Chan constantly deflects attention from himself by serving the guests more food. I had

friends in China whom I would ask about the latest developments, the procedures for applying for a business

permit, he recalls. They werent businessmen; at the time every company was state-owned. Then in 1992

Deng Xiao Ping came to Shanghai. The market opened. I had been waiting for that door to open.

Carlson explains that until Deng instituted the open market policy, private manufacturers could do business in

China provided they exported the same amount of product they sold in China. This rule was lifted in 1992. If

you look at the products in groceries, they were all made in China starting in 1993, Carlson points out.

According to the Chinese people Mao solved the problem of oppression while Deng solved the problem of

poverty. Deng was a pragmatist, Mr. Chan says admiringly.

Liwayway China launched its operations in Pudong, leasing two plants with a staff of 400 workers from a state-

owned company. A small contingent of Filipino expats including Mr. Chans sons Carlson and Archie moved to

Shanghai to set up the new company. Shanghai in the early 90s bore little resemblance to the gleaming,

sprawling megalopolis of today.

Twenty years ago, would you believe, I would not take evening flights to China, Mr. Chan laughs. Ang dilim-

dilim, baka hindi makita ang runway.

Liwayway Marketing was started in 1946 by

Carlos parents Chan Lib and See Ying, two immigrants from a small village in Fujian province. The

name of their company, which is Tagalog for dawn, expressed their optimism in the postwar

Philippine economy.

Only Nanjing Road was brightly-lit with fluorescent bulbs, Carlson adds.

It was not as beautiful as it is today, says Mr. Chan. The first Oishi team in China found themselves leading a

monastic existence in the dorms within the factory complex. There was no indoor plumbing and no heating in

the factory; winters were especially punishing. They were pioneers, literally. Carlson remembers how during

trips to Manila he would tape (this was the era before DVDs) comedies like Ace Ventura, Pet Detective to help

the Pinoy expats ward off the winter blues.

Adjusting to the weather and the primitive living conditions was the minor hurdle. The main difficulty,

compounded by cultural differences and the language barrier, was acclimating to the Communist Chinese

workers mindset and overcoming their prejudices towards capital.

You have to understand that under Mao Tse Tung the workers were used to certain privileges, Carlson

explains. The state had to provide for everyone, so a company could have 8,000 employees but only 2,000

would be working at a time. Driving motor vehicles was a specialized skill, so drivers were held in higher regard

than managers.

Gestures such as installing heating in the factory kitchen helped soften the workers attitudes towards their

Filipino employers. Larry sums up the difference in Filipino and Chinese work styles thus: Filipinos are more

conciliatory and sympathetic. The Chinese are more by-the-book, disciplined.

Larry was in fourth year high school when he was told that he was going to work in China. He learned the

language on the job, and according to his father is the most fluent Mandarin speaker in the family. (Like 95

percent of Filipino-Chinese families, the Chans speak Fookien.) Mr. Chan describes his own Mandarin

proficiency as Okay lang.

During our tour of the Oishi Shanghai factory complex, pioneer Carmela Dujalig, production planning manager,

recalled keeping a notebook in which she wrote down everything the locals said phonetically so she could build

a Chinese vocabulary.

In nine months the Oishi plant in Shanghai was up and running, producing five product lines including their

classic snacks, Oishi Prawn Crackers and Kirei Yummy Flakes. At the time the Chinese had no notion of

snack foods, Carlson notes.

Between meals they munched on watermelon seeds, sunflower seeds, champoy. We had to introduce the

concept of snacking.

Clearly they did something right, because Oishi (Oishi Shanggaojia in China) now has 100 product lines with

an estimated US$250 million in annual sales in China. It is one of the top-selling snack brands in that huge

market; the Chinese have such affection for Oishi, they assume it is a Hong Kong or Shanghai brand.

In addition to the four Oishi plants in the Philippines, there are 14 factories in 10 Chinese provinces, serving

550 distributors and 150 direct retail customers. The Oishi plant in Imus, Cavite, which sits on a 40-hectare lot,

remains their largest manufacturing facility.

In a presentation before President Benigno Aquino III and his official delegation during the presidential visit to

the Liwayway factory in Shanghai, Larry explained that although their first factories in China were established in

big cities, Oishi has started setting up plants in smaller cities. Apart from being able to provide the necessary

infrastructure, the local governments of these smaller cities are more aggressive in attracting well-known

brands that could enhance their reputations. To compete with the bigger cities, they offer free land and interest-

free financing for the cost of building the factory. Some even offer to build the factory to the investors

specifications so the investor only has to move their equipment in. Offers continue to arrive from Chinese cities

hoping to share in Oishis success.

Mr. Chan has a simple explanation for this success: Were lucky. We arrived early. Chinas economy took off

like a rocket, and as a pioneer in the new economy Liwayway was perfectly situated to reap the benefits.

It helped that we were bringing our open market experience to China, which had just opened its market to the

world, Larry adds.

When we arrived in 1994 from Manila, Shanghai was very backward, Carlson recalls. By 1998 the gap had

closed and in 1999, pantay na! By 2000, lampas na!

Of course it takes a lot of work to get that kind of luck, and the Chan clan put in the hours. When we started in

China 18 years ago it was tough and very lonely. They had to be patient, Mr. Chan says. The Chan work ethic

was instilled in the children from birth, practically they grew up in a household where both parents worked.

For as long as I can remember our mother has always worked, taking care of the accounts, says Shera. This

is her first trip to Shanghai in three years; the demands of motherhood caused her to miss the annual Chan

clan gatherings in different provinces of China. Shera is married to Jasper Tiu, whose family owns Champion,

the eco-friendly detergent brand; they have two kids. We had known each other for years before we realized

that my parents knew his parents, she laughs.

A family with a

remarkable work ethic: Carlos Chan (second from right) with children Carlson Chan, Larry Chan, Archie

Chan, and Shera Tiu

They could not avoid being exposed to the business, Carlos points out. How did he train his children to run

the family company? Give them responsibilities.

We were given enough room to gain experience, says Larry. When I started working I was assigned to take

charge of Chan C. Brothers, which is a 200-employee operation. The six Chan children were allowed space to

find the management styles that worked for them.

Our father is very generous to us, not only in terms of pay but in time, declares Archie, who in January took

over as chairman of Liwayway.

As chairman emeritus Mr. Chan remains actively involved in the family business; the day after this conversation

he flew to Vietnam to meet a delegation from Cavite. His new projects include a partnership with the Jin Jiang

Hotel group, whose properties include the Waldorf-Astoria as well as mid-range and budget hotels. Initially Jin

Jiang will build budget hotels in Ortigas and on Pasay Road, Makati.

Studies show that the Philippines needs hotels in the budget category, Carlson points out. Hotel occupancy

in Manila right now is 80 percent. Hopefully the Jin Jiang Hotels can bring in the Chinese community.

The Liwayway group is also bringing the Indonesian doughnut brand J Co to Manila. Mr. Chan had

encountered the brand on his trips to Jakarta, and believes the concept would click in the Philippines. When his

talent for spotting market potential is remarked upon, Mr. Chan simply says, Im adventurous.

Liwayway Marketing was started in 1946 by Chan Lib and See Ying, two immigrants from a small village in

Fujian province. The name of their company, which is Tagalog for dawn, expressed their optimism in the

postwar Philippine economy. Initially they bought coffee and starch from wholesalers and repackaged them into

consumer-friendly sizes (the ubiquitous Liwayway Gawgaw). Their children incorporated and expanded the

family business. In 1963 they put up Chan C. Bros, the manufacturer of lighting solutions, kitchen and

bathroom fixtures and acrylic novelties.

In the early 70s my third brother, Manuel, proposed that we swap shares in the family companies, Mr. Chan

recalls. I got his shares in Chan C. Brothers, he got my shares in Liwayway. In 1975 he started the prawn

cracker business. The prawn crackers were made with Japanese technology, hence their Japanese brand

name, Oishi. In the early 80s he thought of migrating to the US so he sold Liwayway to me.

Family is the cornerstone of the Chan business, and the six Chan children manage the ever-expanding

business empire. Whenever an Oishi factory opens overseas, one of the Chans moves to that country to

launch operations. You cant run a business by remote control, Mr. Chan says; you have to be physically there.

It makes a difference that the owner is present in China.

The children picked up the precepts of the trade by watching their parents. They learned to be considerate

towards the people they work with. In the early days of the business, my father was his own collector, Shera

says. He had to travel around the country, collecting payments. To this day he doesnt like to keep collectors

waiting, because he knows how they feel. He was that guy.

Like their father, the Chans are exceedingly modest and unassuming. Getting them to talk about themselves is

a challenge.

Having established their business in China, the Chans looked to Southeast Asia. Liwayway entered the

Vietnam market in 1997 and now has four factories there. They have also embarked on manufacturing in

Myanmar, Thailand and Indonesia.

Our advantage is that we build on experience and continually invest on improving our production facilities,

Larry says. They certainly know their plants inside out Archie gave us a tour of the very clean and efficient

Oishi factory in Shanghai, describing every aspect of the production process. That kind of enthusiasm cant be

faked: the man loves his work. Hes literally lived in that factory, in the workers villas at the back of the

compound.

The Oishi brand is recognized as the leading innovator in snacks and beverages. These innovations include

their wide range of snacks with zero trans-fat, the first vegetarian chicharon, gourmet chips in kimchi and

wasabi flavors, and Smart C+, the vitamin drink.

Our Baked Porky Pops chicharon is made of lean skin and its fat content is 20 percent lower than

otherchicharon, Archie points out. It is air-popped rather than fried in oil. Natural ingredients are used as

much as possible.

For the prawn crackers we buy fresh shrimp and process it into shrimp powder so theres no need for much

flavoring, Larry adds. We develop new products depending on the possibilities offered by new technology,

Shera notes. It takes about one year for a product to go from concept to store It helps if the product has a

champion, she smiles.

Oishi has developed a range of products that suit the specific tastes of its overseas markets. Many of its

products sold in China, such as the excellent soft candies, are not even available in the Philippines. When we

started selling in China the locals assumed it was a local brand, Larry recalls. During the Shanghai Expo in

2008 they were surprised to find that these are Filipino products.

Larry adds that the Philippines remains a mystery to most Chinese. Awareness of the Philippines has been

heightened with the rise in the number of Chinese tourists to Boracay and other attractions. Four years ago

Oishi produced a series of TV ads with tourism and culture themes to introduce the Philippines to that market.

At Mr. Chans prompting, these commercials featured Chinese of different ethnic backgrounds coming together

to enjoy Oishi snacks.

Apart from promoting Philippine tourism, Liwayway supports cultural projects such as the Loboc Childrens

Choir from Bohol, which has gone on tour in China, and the Shanghai Oriental Little Companion Art Troupe.

After a big earthquake in China in 2009, Liwayway extended an invitation for 100 children affected by the

disaster to visit the Philippines. Among the highlights of their tour were a courtesy call at Malacaang Palace,

and a trip to the beach. The children came from a landlocked province in China and theyd never seen the

ocean before, Shera recalls. In their excitement they just walked into the water wearing their shoes.

What is next for Carlos Chan, the Filipino visionary who foresaw the China economic boom? Fresh ventures

such as Jin Jiang Hotels and J Co doughnuts, for one, and more investments in the Philippines Mr. Chan

expressed optimism for our countrys economic prospects during President Noynoy Aquinos administration. He

guides his children in navigating the challenges of running a Filipino multinational company with a growing

presence in Asia.

Would you believe that with a population of 1.3 billion there is a labor shortage in China? he asks. Apparently

the current generation prefers to take white-collar jobs. Also, with rural areas developing rapidly, there are

fewer migrants in need of work. The labor shortage is compounded by the rising cost of labor in China. Vietnam

has a similar situation.

Liwayways chairman emeritus faces challenges with good cheer; at 71 Mr. Chan is in fine health, playing a

round of golf every morning in Manila. Before we forget: How does he feel about snacks like Oishi being

referred to as junk food?

Sagutin mo yan, he tells Carlson.

Weve come to terms with that, says Carlson, who sees the junk food label as a marketing issue snack

foods are not taken seriously.

Were changing the way people view snack foods, Shera adds later. For instance, our Pea Snack is 75-

percent peas, which has a higher protein content than wheat. Mr. Chans favorite Oishi snacks? Lahat, he

replies, but especially Oishi marshmallows, popcorn, and multigrain chips.

By the way, everything we talked about is off the record, Carlos Chan says as our dinner comes to an end.

Everyone laughs. I hope hes kidding.