By Ian Johnson. Wall Street Journal. (Eastern edition). New York, N.Y.: Apr 30,
1997. pg. A.10
Credit: Staff Reporter of The Wall Street Journal http://proquest.umi.com/pqdweb?did=47203495&sid=7&Fmt=3&clientId=68814&RQT=3
09&VName=PQD
Abstract (Document Summary)
It isn't that First Pacific Co. is pulling out of Hong Kong or has anything against China.
Backed by Indonesian money and led by a workaholic Filipino, the $7 billion hong, or trading house, still calls Hong Kong home, relying on this commercial hub for half its profit last year. In China, First Pacific has invested in cellular-phone services it hopes to link with Hong Kong and Taiwan operations.
But on its way to blue-chip status, symbolized by its inclusion last year in the Hong Kong stock exchange's Hang Seng index, First Pacific has shifted emphasis elsewhere.
Without the historical ties to China of Hong Kong's great trading houses, 19th century holdovers such as Jardine Matheson and Swire Pacific, it is seeking profits in emerging countries with a faster-growing middle class. In the process, it has become Hong Kong's first true multinational conglomerate.
First Pacific's rise is as sudden as it is unorthodox. Founded 16 years ago by the Salims, an ethnic-Chinese family from Indonesia, management was turned over to professionals headed by Manny Pangilinan, a Filipino investment banker who enjoys great autonomy.
That means no aging founder to ease out of power and none of his kids to work up the corporate ladder. "First Pacific is unique because the culture of family control isn't as strong as in similar Asian companies," says Mr. Pangilinan.
Full Text (821 words)
Copyright Dow Jones & Company Inc Apr 30, 1997
HONG KONG -- As most of this colony's conglomerates prepare for Chinese rule this summer by courting the mainland, its newest has taken a different approach: putting its money in Southeast Asia.
It isn't that First Pacific Co. is pulling out of Hong Kong or has anything against China.
Backed by Indonesian money and led by a workaholic Filipino, the $7 billion hong, or trading house, still calls Hong Kong home, relying on this commercial hub for half its profit last year. In China, First Pacific has invested in cellular-phone services it hopes to link with Hong Kong and Taiwan operations.
But on its way to blue-chip status, symbolized by its inclusion last year in the Hong Kong stock exchange's Hang Seng index, First Pacific has shifted emphasis elsewhere.
Without the historical ties to China of Hong Kong's great trading houses, 19th century holdovers such as Jardine Matheson and Swire Pacific, it is seeking profits in emerging countries with a faster-growing middle class. In the process, it has become Hong Kong's first true multinational conglomerate.

First Pacific's rise is as sudden as it is unorthodox. Founded 16 years ago by the Salims, an ethnic-Chinese family from Indonesia, management was turned over to professionals headed by Manny Pangilinan, a Filipino investment banker who enjoys great autonomy.
That means no aging founder to ease out of power and none of his kids to work up the corporate ladder. "First Pacific is unique because the culture of family control isn't as strong as in similar Asian companies," says Mr. Pangilinan.
That freedom is reflected in the company's well-decentralized structure. Its Hong Kong headquarters, with only 45 people working out of rented offices, oversees 53,000 employees as far afield as Europe and the U.S. Managerial latitude is tempered only by strict financial controls and Mr. Pangilinan's cellular phone; more than 20 managers report to him, and thanks to a 100-hour workweek, he seems to talk to almost all of them every day.
There was a time when Mr. Pangilinan's free hand worried investors. Conceived as an outside window for the Salims' Indonesian chemical, food and construction businesses,
First Pacific branched out on its own in the mid- and late 1980s, acquiring a reputation for churning its way through a series of tactical acquisitions and sales. "We didn't know what we were doing. We were trying to find ourselves," says Mr. Pangilinan.
In 1991, profit fell 10%, and the share price plunged. But First Pacific's new strategy of concentrating on four core areas -- real estate, trading, banking and telecommunications
-- soon began paying off. Riding the back of the cellular phone's popularity in Hong Kong and a world-wide economic pickup, First Pacific's revenue has tripled since 1991, while profits have risen sixfold.
During this period, First Pacific also began aiming investments at Southeast Asia. Using the stable cash flow of its trading wing, Netherlands-based Hagemeyer NV, the company set up cellular-phone projects in the Philippines, Indonesia, India, Taiwan and southern
China. It also owns a trading company in Thailand and banks in Hong Kong and
California.
Yet for some investors, the contrast to Hong Kong's more predictable China-oriented conglomerates still rattles nerves. Its foray last year into the Philippines property market, taking on a 25-year project to develop a former military base into Manila's new business center, caused the stock to plummet. Another major concern: Its Hong Kong cellularphone business, once its bedrock, has seen market share and profit slip as deregulation increased the number of providers to eight from three. From a high of 13 Hong Kong dollars (US$1.68) last August, the stock has bounced around the HK$9 range this year.
The stock closed Tuesday at HK$9.15, down five Hong Kong cents.
But investment analysts still like the shares, precisely because the company is so diversified geographically. Says Anil Daswani of Salomon Brothers Inc.: "With the
Jardines or Swires, you're mainly buying into Hong Kong's property market. With Hong
Kong now getting into a more mature market phase, you're not getting the earnings growth that First Pacific offers."
First Pacific's diversity has meant, for example, that growth in the Philippines can offset losses in Hong Kong. While the number of First Pacific's cell-phone subscribers in Hong
Kong has stagnated this year at 240,000, the number in the Philippines should double to
500,000.

The goal, says First Pacific Executive Director Thomas Yasuda, is to mass-market cellular technology. Instead of making cell phones a luxury, limiting their appeal to wealthy areas like Hong Kong, North America and Europe, the company wants to make them cheap enough so they are widely available in Asia's newly industrializing nations.
Ultimately, China looms. For now, the company has started operations in Taiwan, in
China's Fujian province and in two Chinese cities adjacent to Hong Kong. Further investments will link these networks into a "Greater Southern China" cellular phone network, Mr. Yasuda says.