What's your competitive advantage?

Feb 18, 2017

Sanicare is one of the most successful home grown companies in the country today, a proudly Filipino-owned manufacturer of household products that are paper-based. The man behind the company stumbled on the business by sheer fate, but he was primed and schooled in the intricacies of the paper industries most of his adult life.

The man behind the company is Mr. Renato Sia who is currently the Chairman of Sanicare. As he narrates, Sanicare was born in the golf course in 1995, but that is getting ahead of the story. He was employed in PICOP, then the top name in the paper business in the Philippines. After that, he moved toBataan Pulp & Paper Company owned by thePrieto family and partners. It was Marixi Prieto's late father who started Bataan Pulp & Paper, but when he passed on, Marixi took over the reins.

Over the years, the Prietos saw their profit margins steadily shrinking, as narrated by Rene, and while the business was not entirely in the realm of interest of Marixi, she wanted to hold on to it if only for the memory of her beloved father. What she did was to send two of her top executives to Hawaii to take up some short courses in management-the company's VP for Marketing and the VP for Manufacturing, Mr. Sia himself. Armed with the company's financial statements for the recent years, Bataan Pulp & Paper became a case study for the management school. At the end of the course, the professors came up with a verdict: the Philippines has no competitive advantage in manufacturing paper products, so why manufacture here when it was cheaper to import the paper, make the finished products here and sell to the local consumers.

Rene Sio came home and reported to Marixi on the verdict, but Marixi was lukewarm to the idea of keeping the company running. A flash of brilliance came to Rene then and he asked Marixi: would you allow me to retire now and use my retirement money to take over the business? With Marixi's blessings, the work of a lifetime was just starting for Rene who was then forty five years old.

Rene had a regular foursome at the golf course where they played religiously at least once a week. He broached the idea of starting a paper manufacturing company with his golf mates, and right there and then, Sanicare was born, in the golf course.

They started off with simple, ordinary machines but slowly upgraded to bigger, more complex and modern machineries. At that time, the price of tissue paper in the Philippines in the market was high. Rene calculated the landed cost of imported paper and saw that he could reduce the selling price by as much as forty per cent. Over a span of twenty years, the cost of tissue paper in the Philippines has gone down, thanks to Sanicare. Toilet paper back then was only at 400 sheets per roll; now they come in 1,000 sheets per roll, and at a much cheaper price.

Sanicare was officially born in 1996, and the Filipino consumer is now better off from Rene's diligent computations which dictated that paper should be imported rather than manufactured here. The Philippines simply could not compete with the larger, more modern machineries they have abroad, the quality of our paper is not as good as imported paper, and our manufacturing costs are higher. There was simply no other viable recourse but to buy from abroad. Rene merely copied from his competitors and gave a discount of forty per cent on the finished products, which gave Sanicare a huge advantage in the consumer market.

The Filipino housewife did not need any persuasion to patronize Sanicare products-the quality was good, the price even better, so in their twenty years of corporate existence, Sanicare grew exponentially to become a market leader in paper products. They started with only four basic products: toilet paper, facial tissue, table napkins and paper towels. Now they have ventured into other modern conveniences like wet wipes which they made stronger than the competition. Where the standard is 30 grams per sheet, Sanicare's is 50 grams, definitely stronger and thicker but offered at the same price as the competition.

When Sanicare first started, they had eleven employees and Rene paid more than his dues in rendering work for the company. For five years, this ardent golfer did not set foot on the golf course because of the pressing work needs for his fledgling company. Now, Sanicare has over 1,000 employees, many of them based in the provinces while the competition stayed in Metro Manila. For Rene, freight costs have a big impact on the final selling price of any commodity, so the solution was to bring the finished products to the consumers. He set up his plants in strategic places to serve the North, South, East and West. That meant setting up warehouses inCebu, Davao, Cagayan de Oro, Dagupan, Lipa, and Mabalacat, among others. They have some twenty two warehouses, seven of which have manufacturing plants. The paper they import lands directly in Cebu, or Davao or wherever they have their plants, so freight costs are eliminated. The selling price to customers in Metro Manila are the same as in the Visayas and Mindanao.

Now also, the company has the most modern machines in the industry, all fully automatic. To the environmentalists who criticize them for using virgin pulp (which has no lint), they developed a new technique where they use recycled paper inserted in between virgin pulp sheets, and they call these the eco-layer product. Thus far, they are the only manufacturer able to do this with their special machines.

To be sure, the Philippines being an archipelago poses many challenges, so Sanicare had to put up warehouses in tourist places like Boracay, Palawan and Bohol. After 20 years, Sanicare can declare that they have fully saturated the local market, so they are now looking at other island nations to duplicate their feat. That would be Micronesia, Guam and Hawaii where tissue paper is very expensive because they come all the way from the mainland. Australia is another hot prospect.

Asked what his advice is to would-be entrepreneurs, he has a simple question to ask of them, "What is your competitive advantage over others?"

And finally, for their CSR, Sanicare is working at uplifting our local schools by exposing them to culture and art like shows sponsored by CCP andBallet Philippines. They are also working with Habitat for Humanity to build houses, Their ultimate dream is to be able to provide houses for their employees.

Mabuhay!!! Be proud to be a Filipino.

For comments and inquiries (email) sunshine.television@yahoo.com


About the Author

Ray Butch Gamboa graduated from the College of Arts and Letters of the University of Sto. Tomas. It was a course that should have been preparatory to a law degree, but the call of broadcasting aborted his plans.

At the age of 16, while still a student, Butch tried his hand at disc jockeying, landing a job at Mareco Broadcasting Network's AM stations DZBM and DZLM. From there, Butch moved on with his illustrious career as a popular disc jockey, riding the airwaves of Bob Stewart's middle-of-the-road music at DZXX, and ending his disc jockeying career at ABS-CBN's DZYL and DZQL.

From there, he stayed on with ABS-CBN, covering live the proceedings at the Manila Stock Exchange and eventually entered into the world of television sales as an account manager for the premier channel of ABS-CBN Channel 2.

In the early 70's, at the outbreak of Martial Law, Butch was one of the thousands of professionals who woke up jobless when then President Marcos declared the new status of the nation. With the closure of ABS-CBN, Butch ventured into different fields outside of broadcast. He tried his hand and with ease and success at export (Costume jewelry), real estate (brokerage), and restaurants (fast food).

In 1987, after the revolution, with the broadcast industry back to its free state, and with its irresistible call ringing in his ears, Butch made his inevitable comeback and pioneered in a local motoring show, producing Motoring Today on Channel 4 and co-hosting with local motor sports' living legend Pocholo Ramirez.

After 4 years, he ventured into another pioneering format by producing and hosting Business & Leisure, which was originally aired on ABS-CBN's Channel 2. The format eventually espoused similar ones in other different channels. But the clones in due course faded away leaving the original staying on airing on Channel 4 and eventually on Shop TV on Sky Cable's Channel 13.

The following year, the pioneering spirit in Butch spurred him to produce another TV show, Race Weekend, also on Channel 4, covering circuit racing at the Subic International Raceway after the motor sport's hiatus of 17 years. But when similar shows with duplicated formats sprouted, he decided to give way and ended the program after a year, although still enjoying unparalleled viewership.

In 1998, when the local automotive industry was in a slump, Butch contributed his share to help the ailing industry by producing another popular motoring-related show, this time exclusive to the automobile and its industry—Auto Focus, which became a vehicle for local automotive assemblers and importers to showcase their products and dwell on the industry's latest technological developments.

In 2003, Butch teamed up with his brother, Rey Gamboa who was a former Shell executive and presently one Philippine Star's business columnist to co-produce and co-host the TV show Breaking Barriers on Channel 13. It is a talk show that features guests who are in the news and in the middle of controversies. The program ventures to draw deeper insights into current issues to learn how they impact to our daily lives.

Today, Motoring Today on its 28th year of service to the general motoring public still enjoys its unprecedented loyal vierwership nationwide while Auto Focus, after 16 years has firmly established its niche viewership among automobile enthusiasts and on the other hand Business & Leisure is on its 24th year dishing out current business issues and lifestyle features.

Today, aside from writing weekly columns for the Philippine Star (Motoring Today on Wednesdays and Business & Leisure on Saturdays) and executive producer / host of weekly TV shows (Motoring Today, airs Sundays on Solar Sports Channel 70, Business & Leisure, airs Tuesdays on Shop TV, Sky Cable Channel 13 and Auto Focus airs Thursdays on Shop TV, Sky Cable Channel 13, Ray Butch Gamboa is currently the Chairman and CEO of Sunshine Television Production and Marketing Services Corp., President of Gamcor Management and Development Corp., Chairman of Asia-Pacific Realty Corporation, President and Chairman of Socio-Communication Foundation for Asia and Founding Chairman of the Society of Phil. Motoring Journalists (SPMJ)