NAPOLEON CO
Chairman
CEBU OVERSEA HARDWARE CO., INC.
CW HOME DEPOT
By Bernie Cahiles-Magkilat
Like most Chinese migrants to the Philippines, Napoleon Co’s family started as a merchandize trader. Co’s family remained largely a trader up to this time and Nap, as everybody calls him, is proud to be one.
Hardware
Co’s grandfather came to the Philippines in 1914 and established themselves in 1921 in Kinoguitan, Misamis Oriental where they put up a sari-sari store.
His father came over in 1928 at the age of 11 to join the family in Mindanao. The grandfather became sickly that in 1936 his father accompanied him back to China. While there his father was to marry a woman arranged for him by his parents.
“My dad took over the merchandize business in Kinoguitan in 1936 and in 1952 we decided to put up a small hardware in Cebu with P7,000 in capital,” recalls Co. It was small, typical of a neighborhood hardware.
All the five siblings, including the eldest Napoleon, joined the family and studied in Cebu.
“We were poor but we studied, we walked to school. Sometimes, we have allowance, sometimes none. We just have water when we’re hungry,” says Co.
He studied at the San Carlos University where he finished civil engineering. The young engineer later on engaged himself as a contractor. But Co decided to venture in Metro Manila where he put up the CW Home Depot, a one stop shop for home finishing items, such as tiles and fixtures for bathrooms and kitchens.
CW Home Depot is a joint venture of COHCI and West Point Industrial Company.
The first CW Home Depot branch was in Julia Vargas. There are now nine CW Home Depot strategically located in Alabang, Manila Bay in Pasay, San Fernando in Pampanga, Balintawak in Quezon City and in Commonwealth, Makati, Sta. Rosa in Laguna and Imus, Cavite.
As the business grew, the family decided to make it Cebu Oversea Hardware Company Inc. (COHCI) as its mother company chaired by Co.
It is one of the biggest hardware, construction and finishing materials suppliers in the Philippines with 60 years of dedicated service to the industry. It is listed in the Philippines top 1000 Corporations based on volume of annual sales.
A wide brand and product portfolio under COHCI include Spanish and Asian tiles.
COHCI is the exclusive distributor of international brands. It proudly showcases and sells products through one of its retail channels, the CW Home Depot.
CW Home Depot has made a name of its own. It is a store within store, a haven for homeowners and builders alike which provides a variety of building and construction products at the most competitive price.
Trader
Unlike some of his contemporary Chinese, who ventured big time into manufacturing and expanded aggressively, the Cebuano-speaking Co family remained conservative.
The family business was able to grow and expand but not as big and fast as the others.
“We grew, but at slower pace,” says Co.
In 1990, Co started importing cement under the Cohaco Trading because he felt there was a little tightness in domestic supply, especially during the summer months. This started his long engagement in the cement industry.
The cement industry though underwent a big transformation between 1996-1997 when the big four MNCs came in and bought out most of the local cement plants.
In 2000, the shrewd businessman was closely watching the local cement industry. He knew that local cement demand was 12 million metric tons but the capacity of plants was 18 MMT million.
Despite the local capacity, some imports continued to come in resulting in the imposition of provisional safeguard measure by then Trade and Industry Secretary Mar Roxas, but lost at the Tariff Commission. Looking back, Co acknowledged that Roxas did the right thing noting there was more than enough local production at that time for imports to come in.
According to Co, they were only investing a few hundred thousand pesos when they started importing cement, which later on expanded to steel.
Manufacturing
“Manufacturing is good,” says Co, but noted that it needs deep pocket for one to venture into it because it will take longer to recover the cost.
In fact, Co tried to venture into steel manufacturing which the family later on sold out in 2008 as they’ve decided to just concentrate on their buy and sell business.
The only manufacturing venture the Co family has maintained is a modest aqua feeds production in Cebu. The family is able to continue its feeds manufacturing because they have loyal customers. They also toll manufacture for the big feedmillers.
“Trading is more flexible,” says Co adding that if the product is not viable, a trader can just throw it away and start with another.
“But manufacturing is different, it involves big preparation. You cannot close it down or throw it away,” says Co. “Manufacturing has to be long term, but in trading you can wind it down and go to other products,” he adds.
Co prospered in the pure trading side. Its cement importation grew overtime as demand outpaced local production.
He also sells steel bars to customers and continued to sell more because his clients are expanding. That made them Co expand his trading activities in return.
Conservative
They have been conservative in their approach towards CW Home Depot.
“We are looking at one CW Home Depot every other year,” says Co, who has three children, two boys and a girl, all involved in the family business.
Co even shared that they were sued before by Home Depot US in 2008-2009 for alleged intellectual property infringement. But Co won the legal battle because they are registered with the Intellectual Property Office while the US Home Depot is not. IPO Philippines also ruled that the name Home Depot is a generic term and therefore cannot be subjected to a trademark.
Co said that even as traders, they have been very prudent in their approach to business.
They manage their loans properly and have been strategic in their approach.
They are not thinking of going public because they have to ensure first that they can be very transparent to their stockholders.
Lessons
To be a successful trader, Co said, “You must know the business you are going into and then give it time and attention.”
“Do not borrow too much from banks just to expand your business,” he adds.
“Do not borrow money for comfort like to buy a new car or a big house. Do that when you are already earning already.”
He recalled that when they were just starting in Cebu, all of them 15 people together with his uncle and his children were living on the second floor of their hardware.
“We shared in that small space with only two toilets,” recalls Co.
The family business expanded slowly but surely until they were good enough and his uncle can already afford to buy a house for his own family.
“My father told me to spend only after I’ve earned the money,” says Co.
Overall, the Co family’s business has grown to a total of 1,200 employees.
“Yes, there is money in trading,” says Co. But it is not always rosy in trading.
Co was not spared when the 1997 Asian financial crisis happened. They recovered three years later, this time a lot wiser.
As a trader, Co has always observed openness to new ideas and trends in business.
“Just open your eyes and listen and set some basic policies,” says Co “because trading is about being ahead of the trend. So, a trader must have a keen observation as to what products are likely to make money.”
As a boss, Co has been very accommodating to his people, but there is only one thing he cannot tolerate: dishonesty.
He also learned that the laws still work in this country, although nepotism has always been unavoidable in business.
Succession
At 80 years old, Co has already laid down the succession of the family business to ensure smooth transition. They also have a Family Constitution to follow to avoid conflicts among family members.
As the eldest in his generation, Co has been doing some readings because they are updating the Family Constitution’s rules and polices for the next generation.
In fact, he has already delegated most of the company’s operations to the younger generation.
“Now, we are looking at the grandchildren, you just have to expose them to the business,” he adds.
His son Ferdinand is in charge of the Manila operation while Christopher is helping the business in Cebu.
The family business has already adopted new technologies, they have computerized processes and professionalized the business by hiring outsiders to help run the business.
“The next generation must show interest because we want the business to be sustainable, but we also hire professional managers to help handle the various departments,” he adds.
“We are just overseeing the operations, give our suggestions and opinions but we let them run the business,” he adds.
He expects the family business to post the same 10 percent growth in sales this year.
Despite the imposition of the P8.40 per bag safeguard duty on imported cement, this trader vowed to continue importing because there is strong demand as demand outstrips local production.
Credibility
Co still continues to report for work, but he concentrates now on issues that affect the trading business such as cement and ceramic tiles.
As an industry elder, Co is someone who can provide perspective as to the impact to traders of some government policies on product importation.
He fully understands the role of traders in augmenting local supply and the protection of consumers.
Co is conscious that imports should not put local producers at a disadvantaged, but they are necessary when domestic production is found wanting and to provide market competition.
“As a trader, we are able to establish and introduce some products that are acceptable to the community and we are able to provide alternative products and competition in the market,” says Co.
Co would like to be remembered as the hardworking trader just like his father and uncle, who persevered to keep the business grow.
Although they no longer live in Kinoguitan, Misamis Oriental, the family feels a connection to their birthplace. Four of them were born in Kinoguitan. They donated a school and constructed houses in their birthplace in partnership with the Gawad Kalinga.
According to Co, a trader must be able to build his credibility because this would sustain you further down the road.
With his credibility, he was able to get credit lines from suppliers, banks trust him, and partners rely from them for supplies.
The best compliment he got was when his sons told him how clients immediately enter into a deal with them once they know that they are sons of Napoleon Co. His good reputation precedes him.
“I feel proud of that,” says Co.