While a Pacific Plans official told the ABS-CBN News Channel the Yuchengco Group of Companies will help Pacific Plans if only to keep the integrity of the other business units intact, he was unclear what form the assistance would take. It seems nothing short of direct infusion of fresh funds would be required to bail out Pacific Plans. While using resources of RCBC, for example, is not legally possible, nothing should stop the Yuchengcos from using family resources to rescue family honor that is now at stake.
Forget the legal aspects of the case for the moment. Forget even the money aspects in the short term. This is a public relations catastrophe, with very serious marketing implications moving forward. Pacific Plan itself is not as important as the Yuchengco brand name.
I am reminded here of the Tylenol case, a classic PR and marketing crisis management case study. Some psycho poisoned some Tylenol tablets and planted the product in a drugstore in the American Midwest some decades ago. I don’t remember the specifics of the case but I recall that there were at least one, maybe two deaths as a result of the adulteration.
Johnson and Johnson, disregarding the amount of money involved, ordered the recall of all Tylenol products still in the market all over the United States. This dramatic show of concern for the welfare of the consumer won it the respect of the public and eventually helped Tylenol recover as a brand. Money is not the issue. Lawyers are not the issue. Consumer safety is.
In the same way, the Yuchengcos must be aware by now, that at stake in this crisis is not Pacific Plans but their very ability to remain in a business that demands the total trust and confidence of consumers. For all we know, Pacific Plans may have followed the right legal procedures in filing for rehabilitation, but the public will judge the Yuchengcos based on how they take care of their clients. This is what the crisis is all about.
There is no doubt that Pacific Plans is a Yuchengco company. Its logo is the familiar logo shared by Yuchengco companies, like the very profitable and very solvent RCBC, Malayan Insurance, Great Pacific Life and a host of other companies. The trust and confidence the Yuchengco brand name enjoys was built through the years and its market value must certainly exceed the P300 to P600 million that is being quoted as the funds Pacific Plans need to get back on track and fulfill its obligations to clients.
It is also clear that in the case of education plans Pacific Plans promised to pay the cost of education, whatever it might be at the time the planholder needs it. So Pacific Plans as with CAP and many other education plans made some very wrong assumptions. Who could have predicted the Asian financial crisis? Who could have thought that government would deregulate tuition fees? But all that is beside the point. A promise was made and it must be fulfilled.
Making good on the promise is also socially important because the planholders are essentially from the middle to lower classes of society and have no other alternative to finance their educational needs but those easy to pay plans. A default has adverse impact on the trust our common people would have on our financial institutions and government.
If the Yuchengcos know what is good for them in the long run, they would make good on the promise, no matter what it would cost them now. That’s the only way they can protect the Yuchengco brand name, on which in turn, depends their bread and butter businesses in banking and insurance.
As it is, there seems to be an ill-advised concerted action to precipitate a withdrawal of confidence on their other businesses through text messaging. If text messaging can bring down the Erap administration, it can bring down a business empire. The argument seems to be, if the Yuchengcos appear to have financially mismanaged Pacific Plans, how sure are we that the banking and insurance businesses are not in the same predicament? Only decisive action from the Yuchengco Group can save the entire conglomerate from the after effects of this crisis.
I see the Yuchengcos with having more to lose in a failed Pacific Plan than the Sobrepeñas in a failed CAP. The Yuchengcos, unlike the Sobrepeñas, have a record of financial success and public service. It would be a pity to see all that hard work of the venerable Al Yuchengco and his ever dependable daughter Helen, go down the drain. I am sure the value of what they have accomplished is worth more than P300 or even 600 million, specially in terms of future value.
The other thing I worry about is the loss of confidence people would have on investment instruments in general. Pinoys have a low savings rate and for some reason, education plans are just about the only formal savings and investment plans that ordinary Pinoys have put their trust on.
If they cannot trust the respected Yuchengco name, how can they trust any of the others? In fact, some of the planholders are saying they bought their education plan from Pacific Plans precisely because of the seal of guarantee the Yuchengco name offers. Itaga mo sa bato, so to speak.
This crisis of confidence, first with CAP and now with Pacific Plans, could make it more difficult to develop a capital market here with broad based participation, a pet dream of top RCBC official and former Prime Minister Cesar Virata. That would set back our economy’s ability to finance its growth through domestic capital formation.
I hope the taipan and statesman Al Yuchengco sees the big picture here and does what is right to protect his legacy, his brand name and the Philippine financial market. Masakit man, kailangan panindigan. It’s that simple, assuming of course, they still plan to do business in this country.
Mr. Chanco, I follow your column. I am a regular. I feel I even know you having had your father as a teacher. You are also a friend of a few of my relations.........or so I have been told.
In reference to your recent article about promotion of the Philippines for tourism, I even agree with most of your remarks about the good and the bad things about the RP.
I remember reading about your awful experience in Bohol. I have been there, done that.
But let us be honest with each other and share this... not that it is any earthshaking info. My friends, both Americans and Filipinos go to Manila on golf trips, regularly, yearly. They love and enjoy the experience... the golf, the caddies and the umbrella girls and the flirting that goes with all of that, the service, the attention they get.
But you don’t need me to tell you that what they really go there for is the easy, cheap sex they can get. That is what they all talk about when they get back and entice others to book passage for next year’s trip.
Sad, quite sad, even embarrassing... but true.
I know it. You know it.
Solution? I don’t have the least idea.
With best regards.
One day Mr. Smith, the president of a large corporation, called his vice-president, Dave, into his office and said, "We’re making some cutbacks, so either Jack or Barbara will have to be laid off."
Dave looked at Mr. Smith and said, "Barbara is my best worker, but Jack has a wife and three kids. I don’t know whom to fire."
The next morning Dave waited for his employees to arrive. Barbara was the first to come in, so Dave said, "Barbara, I’ve got a problem. You see, I’ve got to lay you or Jack off and I don’t know what to do?"
Barbara replied, "You’d better jack off. I’ve got a headache."
Boo Chanco’s e-mail address is bchanco@gmail.com