Does the name Willie Tan ring a bell?
http://www.pacificislands.cc/pm82003/pmdef...larticleid=0010Empire In The Sun
Willie Tan's $250M Success-And What's Next
By Giff Johnson
He is today arguably the most successful entrepreneur and locally based corporate executive anywhere in the Pacific Islands. But Willie Tan started out hustling on the streets of Manila, earning a buck or two from selling fish that he could scrounge with friends. He then spent his teen-age years in Hong Kong before moving to Guam at age 17. Growing up with what he describes as "the poorest people in the world" was the real world equivalent of a college degree (which he would get later at the University of Guam).
Photo: Floyd K. Takeuchi -(click story for picture of Willie Tan)
From that humble beginning, Tan parlayed street-savvy, Island roots and business training into Tan Holdings, Ltd., which last year posted $250 million in gross revenue earned from operations in Saipan and Guam alone. However, the company is far bigger than those operations on Saipan and Guam. It has a significant presence in a number of Asian nations.
Tan Holdings may be modest by mega-multinational corporation standards. But for Saipan and Guam, and indeed for the Pacific Islands, Willie Tan is a huge, dominating business force. In fact, with his myriad family ties and business deals in Asia and elsewhere, Tan has clearly outgrown Saipan in business vision, to say nothing of size.
But Saipan is where he got his launch and, he says, it's where he intends to stay, despite speculation about closure of the Commonwealth of the Northern Marianas' garment industry in 2005. That's when new free-trade rules go into effect for garments exported to the U.S., eliminating many of the advantages Saipan now holds over garments produced in non-U.S. areas.
"We have a commitment to the CNMI," he says of his three garment factories and the challenges that face this industry post-2005. "And I hope I can overcome all kinds of difficulties we will face," Tan told Pacific Magazine in a rare and wide-ranging interview.
Still, to find a way to make the private sector prosper in the economic environment that's shaped the fate of the islands since the late 1990s, it's going to take a revolution in thinking and action on the part of both government leaders and local business executives-and a public-private partnership that currently does not exist, he says. The question is whether anyone is listening?
Tan helped launch the garment industry in Saipan 20 years ago, and in those days the Saipan factories deserved to be labeled as "sweat shops." Tan's-and other companies'-factories were hot, full of fabric dust and crowded. In recent years, however, the three Tan Holdings factories have cleaned up their act: They are mostly air conditioned and no longer fodder for New York Times' exposés about the exploitation of Asian workers.
Aside from moving his factories off the U.S. Occupational Safety and Health Administration's "hit list," Tan also quickly learned the number one business lesson of operating in a small Pacific Island: If you don't do it all yourself, it doesn't get done. The logistical nightmare of supply and delivery in remote islands, where just one minor hiccup in a chain of supply can be ruinous, has been the death knell of countless business ventures in the region.
Tan sorted that one out soon after launching his garment factories, a venture that required importing vast quantities of fabric and other garment supplies and equipment from multiple locations, and getting finished product to customers on schedule in the U.S. and Europe. He established CTSI Logistics, a Tan Holdings company that handles every phase of moving cargo. Then came Marianas Express Lines, a shipping company that operates between Asia and Guam and Saipan. More recently, Tan formed Asia Pacific Airlines, a freight carrier that supports multiple Tan Holdings operations, including hauling fresh tuna to the lucrative sashimi market in Japan.
These days, Willie Tan is at his own mercy, so to speak, not dependent on others.
The business climate in the Western Pacific is the toughest it's been in 20 years, what with fierce tourism and investment competition from Asia and the long-term declines in the Japanese and South Korean economies, historically two of the largest markets for tourism and investment. Yet for most countries and territories in this region, including Saipan, governments and the local business communities have been slow to respond to this dramatically altered landscape. That is despite the fact that many island economies are literally crumbling at their foundations, with large-scale layoffs looming or already happening, government tax revenue falling and a sense of pervasive gloom hanging over nearly every discussion.
What's also changed is the fact in the new global economy, many Asian countries, but particularly China, are now competing directly for investors with these small countries and territories in the Western Pacific. That's the case in garments, in tourism, on nearly every level that has the potential for substantial foreign investment.
"The present investment [in Guam and Saipan], of course, would love to stay to the point it doesn't run negative cash flow," Tan says. "But new business won't come in, unless we develop a new environment, develop a reason why they should invest in the region. Partnership is lacking between private sector and the government."
Nowhere is that lack of vision more clear, Tan says, that in the regional response to sagging visitor industries. This is an issue of keen interest to Tan, given his recent acquisitions of the Guam Dai-Ichi and the Dai-Ichi Saipan Beach hotels. The answer isn't about price, the usual response in the region, he says. "If we offer a package to Japanese for, say, $350 for three days stay in Saipan, another destination will offer $300. There's a lot of price pressure."
In fact, it's not just price competition that's shrinking Saipan's and Guam's share of the regional tourist market. "I think we are badly behind," in both the physical attractions and vision in the two islands, he says.
"We have wonderful beaches. But it's not good enough today. Tourists are much more sophisticated at the same time as they are simple. They want to get the value of their money; they're very careful before they spend. And information is available through Internet. Whoever knows how to market themselves better will win," says Tan.
Which brings him back to his cry for a greater government-business partnership to give the islands more clout in battling Asian destinations for a share of the tourist dollar, as well as to make the Northern Marianas and Guam more attractive for investment.
But Tan believes that no one's listening to this message, at least on Saipan. The week after this interview was conducted in mid-June, Tan was off for a meeting with Philippines President Gloria Macapagal-Arroyo to discuss garment industry issues.
The difficulty is that "the governments are not ready, they don't have a package for investors," Tan says, adding that the Northern Marianas is still offering the same incentives that it promoted 20 years ago. "Investors today are much smarter than in the late 1980s. And bank financing is more complicated. So we have to be very creative to develop something. It's not like you can show them three sheets of paper and you can get a $20 million investment to come in."
Who has the most business friendly environment today? "China, Singapore, the Philippines," he replies without hesitation.
Tan Holdings is a 100 percent family-owned business. His father, Dr. Tan Siu Lin, is chairman of the board of Tan Holdings and also Luen Thai, the Hong Kong-based parent corporation. Tan's older brother Henry is vice chairman of Tan Holdings and president of Luen Thai. Younger brothers Jerry and Sunny head CTSI Logistics and management of the two Dai-Ichi hotels, respectively. The two youngest, Raymond and Lilly, are not corporate officers, but are on the Luen Thai board.
Although Willie Tan has been a major force in building this dynamic family business empire, he is just 47. Despite his youth, he says that he aims in the next five years to reduce his involvement in the day-to-day affairs of the corporation. He'd like to remain active on the board, but have more time for being a philanthropist through his Tan Holdings Foundation.
Tan sees younger members of the family taking on an increasingly visible role in operations and decision-making. The demands of a corporation with 17,000 employees in 12 countries and 14 different industries have of necessity tamed Tan's aggressive, go-for-broke nature.
"In the old days, I made a lot of decisions on my own," he says. "Today, I don't do that." Decisions now involve the board, company executives and sometimes outside consultants, and "we're very selective" on investments today, he says. "What I did 20 years ago wouldn't apply in today's environment."
However, some things haven't changed, including Tan's guidelines for successful investing: He'll invest only if the company can be number one or two in its market. He tries to avoid competing with established local businesses, preferring instead to bring new value to a market. And he almost always expects that investment to have immediate synergy with existing Tan Holdings operations.
Perhaps the only departure from his checklist of business criteria before investing is the Saipan Tribune, a daily paper established to counter negative reporting he felt he was being subjected to in the 1990s, largely focused on his garment industry operations. The Tribune isn't the Tan public relations tool that it was when it started in the mid-1990s, but it remains undeniably a Tan Holdings publication.
While he talks of retiring in a few years, it is clear that Willie Tan isn't slowing down. Shortly after speaking with Pacific Magazine, an interview that focused heavily on his future and that of his many companies, Tan spent nearly two hours with his vice president for corporate marketing to map out opportunities and vision.
It seems likely that tourism will play a key role in those plans. Tan is energized by his recent acquisitions in major resort hotel properties, and says it's the one area where he will consider expanding into other Pacific Island countries and territories, including Hawaii. If his Saipan and Guam hotel moves are any indication, Tan is looking for resort properties that are under-performing, located in markets with reliable transportation links, that can be acquired below market value.
And while he insists he intends to remain a player in the Northern Marianas, it is obvious that Willie Tan is frustrated by what he considers parochial attitudes toward investment. A likely scenario: Tan maintains a presence in a scaled back Saipan garment industry, but puts most of his energy (and financial resources) into investments in other locales.
Given his wealth and success, it is no surprise that Willie Tan is viewed with suspicion and envy on Saipan and Guam. He knows that, but figures it is the price of being successful in small island markets.
Still, he seems genuine in his call (a plea, really) to the governments in the Northern Marianas and on Guam to get ready to truly compete as players, albeit smaller ones, in the larger Asia-Pacific economy. His advice is simple: know who the competition is; have a clear vision of where you want to go; and, organize a public-private partnership to get there.
The truth is that, at this point, Willie Tan and Tan Holdings do not need Saipan or Guam to be competitors in that market in their own right. The Tan group is already deeply involved, and apparently succeeding nicely, thank you. The truth is, those governments need Tan if they expect to play in the big leagues. Whether they are willing to accept that truth, let alone make the other significant decisions that are required, is what's now at stake.
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Tan Holdings - Saipan and Guam
Tan Holdings Corp.
Parent company headquartered at Saipan's Lower Base.
www.tanholdings.com
Asia Pacific Airlines
Air cargo carrier serving the Pacific Islands.
www.flyapa.com
Baskin Robbins
Exclusive operator for premium ice cream and yogurt franchise
on Guam, Saipan.
CTSI Logistics
Global company that provides logistics services for Asia-Pacific firms.
www.ctsi-logistics.com
Century Hotel
Small business hotel on Saipan; Tan Holding's first hotel property.
Century Insurance Co., Ltd.
Offers non-life insurance products in CNMI.
Century Travel Agency, Inc.
Travel agency serving Saipan market.
Cosmos Distribution Co. Ltd.
Wholesalers of general merchandise and food items, serving Guam, Saipan and Micronesia.
Dai-Ichi Hotel Saipan Beach
One of Saipan's largest resort hotels located on island's best beach.
www.daiichi-saipan.com
Guam Dai-Ichi Hotel
Large resort hotel in Tumon, now undergoing major renovations.
www.guamdaiichi.com
Luen Thai Fishing Venture
Operates the largest fishing fleet in the Pacific, also provides base operations and marketing.
www.ltfv.net
Marianas Express Lines
Offers sea freight service from Guam, Saipan to Far East.
www.mariana-express.com
Pacific Oriental Inc.
Provides aircraft ground-handling operations at Saipan International Airport.
Pacific Publication & Printing
Publishes Saipan Tribune, a 5-day-a-week community newspaper.
www.tribune.co.mp
Realty Management Services
Manages Tan Holdings' Saipan properties, along with sister company offices and staff housing.
Tango Inc.
Owns and operates 10-screen Micronesia Mall Theatre complex on Guam.
www.tangotheatres.com
Unity Development Corp.
Operates two bowling centers, a game arcade, and manages retail and office space in Century Building on Guam.
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Willie Tan is DeLay's friend. Follow the money!
KT