MANILA, Philippines - SM Investments Corp. and Jollibee Foods Corp. (JFC), two of the country’s largest family-controlled companies in their respective segments, see opportunities to further grow their businesses in China.
Top officials from both companies said in a business forum on Thursday that growth plans are on track despite tensions between the Philippine and Chinese governments over islands in South China Sea.
In the case of SM Investments’ shopping mall unit SM Prime Holdings Inc., there are even plans to accelerate expansion given its defensive nature targeting China’s massive consumer market, chief financial officer Jose Sio said in a CFO forum organized by ING Bank and Financial Executives of the Philippines. “What is happening in Scarborough Shoal, we don’t feel it affecting our business in China,” he said.
JFC chief finance officer Ysmael Baysa agreed, stating that the company’s China strategy is based on of acquiring local brands. JFC now operates three China brands with a combined 368 stores across 22 cities and plans to open 100 more this year.
Reports showed that Chinese president Hu Jintao is seeking a meeting with President Aquino, with the issue on territorial disputes to be possibly discussed.
SM Prime operates four malls in China, which contributed 9 percent of total consolidated revenues of P14.57 billion in the first half.
At the current pace, SM Prime opens one mall per year but it plans to accelerate this to two malls per year starting 2014, Sio said. This is the same year it plans to open SM Zibo and SM Tianjin.
Sio reiterated a plan to list SM Prime’s China malls either in Hong Kong or Singapore through an initial public offering or real estate investment trust issuance. This, after its portfolio grows to 10 shopping malls, which could happen in three to four years, Sio said.
The deal is estimated to raise $500 million for the company, which can be used to further accelerate expansion efforts there.
For JFC, Baysa said there is still room for expansion in China. JFC may be the Philippines’s biggest fastfood company but in China it is considered “very small in a very large market”, he said.
He cited US-based Kentucky Fried Chicken chain which operates 4,000 stores in China. Despite this number, Baysa said its market share is only equivalent to less than 8 percent.
He said this only underscores the massive growth potential there, given that JFC’s brands are categorized under “Chinese cuisine,” which dominates 80 percent of the market.
“Looking at it, we are very small but we are in the fastest-growing segment,” Baysa said. JFC operates Hong Zhuang Yuan, San Pin Wang and its flagship Yonghe King. It also recently signed a joint venture agreement with a Taiwanese company to operate the 12 Sabu restaurants in China, Hong Kong and Macau.