Raul Anthony ‘Ton’ Concepcion, President of Philippines-based refrigerator company Concepcion Durables Incorporated (CDI), believes there are hidden gems to be found in weaknesses. When the company first entered the refrigerator sector, Ton recalls hearing sentiments such as ‘Local manufacturing is dead’ and ‘How could you compete with China!’ but that didn’t stop him working hard to see it succeed.
“I always say our perceived weakness is our strength,” Ton tells The CEO Magazine. “And as a local company, we can be more flexible, more innovative, and can make decisions faster. To me, being Filipino is an advantage. I know the people. And being a family business is very important because you can think long-term and make strategic decisions while still being local.”
“I always say our weakness is our strength.”
CDI is a subsidiary of Concepcion Industrial Corporation (CIC), one of the largest air conditioner and refrigerator companies in the Philippines. The parent company was formed by Ton’s grandfather, Jose Concepcion Sr, but initially Ton had no plans to join the family business.“As the youngest, I’ve always wanted to blaze my own trail,” he says. “I’ve always wanted to own my own business.”
After completing his studies, Ton became an entrepreneur and set up several businesses including a Jollibee franchise – a popular Filipino quick service restaurant. But he says the obligation to the family was always there. “The age gap between my father and me is about 40 years,” Ton explains. “So when he asked me to join the company, he was already in his late sixties and I felt it was my duty to help him.”
Ton Concepcion describes what it means to be a good leader:
“I used to be the superhero president before – the guy who saved the company. Now I have to be the coach. I need to get other superheroes to do what I did and make sure I have that group of leaders. Sometimes it’s hard to be the coach when you still want to shoot the ball. That’s not just for me, but for all my people. I have to keep reminding them, ‘If you don't transfer to this role, how can we reach PHP8 billion in revenue?’”
Around the time of his father Raul’s request, US company United Technologies Corporation entered a joint venture with Concepcion Industries, forming the Concepcion Carrier Air Conditioner Company (CCAC). This was where most of the resources from Concepcion Industries went. “My brother Jojo and all the top executives went to CCAC,” Ton says. “So what was left in the parent company were the refrigerators.” Thus, CDI was born.
Making the impossible possible
With the joint venture underway, CDI was “deeply in the red” and, despite Ton’s reluctance, he decided to help his father. He chose to see the business as an opportunity. “I really love challenges,” he muses. “I’m an entrepreneur at heart and I like making the impossible possible.”
Ton joined the struggling business with his cousin Renna Hechanova-Angeles and together with his father, they managed to turn the company around. “In 10 years, we increased our sales almost 10 times,” says Ton. “From 50,000 units, we now make almost 400,000 units. Our revenues were PHP500 million then and now they’re PHP5 billion.”
Another major success is CDI’s own brand of refrigerator solutions, Condura. A combination of the words ‘Concepcion’ and ‘durable’, the product line is made in the Philippines and has held a strong position in the country’s refrigerator industry. “We’re very proud of Condura because it’s open competition here – there are no tariffs,” Ton highlights. “There are many foreign brands that are already here or are coming in, and yet Condura is able to maintain the number one position. We’re very confident of the competitive position we’re in.”
Timeline of Concepcion Industries
1962: Concepcion Industries is formed
1987: Condura brand is introduced
1997: Concepcion Carrier Air Conditioner Company joint venture is started
2013: Concepcion Industries is publicly listed, and its name is changed to Concepcion Industrial Corporation
Ton attributes the company’s prosperity in part to its strong knowledge of the Filipino market. It is something he considers very valuable as it led to the creation of CDI’s iconic Negosyo fridge. “It came from an insight from our service department,” Ton recalls.
“We got feedback that the warranty of a refrigerator would be void if it was used for business. That struck me because I didn’t know people used refrigerators for business. It turned out that a lot of our customers were convenience stores and small entrepreneurs that want a sideline using a refrigerator.
“With that insight, I said, ‘Why don’t we build a refrigerator just for the Filipino market and design it for business?’ So we were able to make a refrigerator that had more storage space, faster cooling, and more durable wires and plastic parts.” Despite the fridge being positioned at a premium price, Ton adds that it was accepted in the market because of its many features.
Blue ocean strategy
“Competitors were wondering how our prices could be 10 to 20% more and yet we were outselling them,” he continues. “To me, it’s always about innovation and providing solutions. I don’t compete in red oceans like the mass market. I focus on blue ocean strategies.”
The ‘blue ocean strategy’, a term coined by W Chan Kim and Renée Mauborgne, is the idea of developing new, uncontested markets that give new value to consumers. This is contrasted with ‘red oceans’ that are saturated with competitors. “The key is the ability to know your market, which I believe we do,” Ton continues. “When I eat, breathe, sleep and take a shower, all I think about is a refrigerator.”
“I don’t compete in red oceans like the mass market. I focus on blue ocean strategies.”
In the long-term, the company is set on making its Condura brand the number one home appliance brand in the Philippines, as well as forging a regional presence in South-East Asia.
Looking back over his years at CDI, Ton reflects on whether he could have taken a different career path. “Sometimes you read magazines and you see all these billionaires who have made it on their own,” he muses.
“And then you think, ‘What if I had gone on my own, would I have been that guy?’ But then again, maybe not. All I know is I’m here. I made my dad happy and I have no regrets.”