What’s your competitive advantage?

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 Sio 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 to Bataan Pulp & Paper Co. owned by the Prieto 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 45 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 40 percent. 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 40 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 11 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 in Cebu, Davao, Cagayan de Oro, Dagupan, Lipa and Mabalacat, among others. They have some 22 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 and Ballet 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.

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