SM takes secondary cities route in China expansion

ABS-CBN News

Posted at Oct 19 2016 12:17 PM

MANILA – SM Supermalls hopes to slowly introduce mall culture to China by expanding in second-tier cities, a company official said Wednesday, as President Rodrigo Duterte’s visit to Beijing this week is expected to rekindle ties that have been strained by a maritime dispute.

SM Supermalls Tianjin, the company’s seventh in China and the biggest in its portfolio including the Philippines, will open in December, said senior vice president Steven Tan.

“Here in the Philippines I see that if you build it they will come. There, you really have to also educate them, the malling culture,” Tan told ANC’s “Market Edge with Cathy Yang.”

Tan said SM has increased the number of restaurants in its malls to 30 percent of total stores to create a malling “lifestyle” and wean consumers away from “high street” shopping.

“I think SM will be facing challenges as they will have to educate the Chinese market as to how they would be enticed to go into the malls,” said Regina Capital analyst Paul Angelo.

Given the company’s resources, Angelo said, “I believe they can push through with that.”

SM opened its first mall in China in Xiamen in 2001, followed by Jinjiang, Chengdu, Suzhou, Chongqing and Zibo. Tan said opening in cities othern than Beijing and Shanghai is cheaper and will allow SM to establish itself as the market leader in the area.

“That’s why we go into slowly but surely,” Tan said, citing a similar strategy in the Philippines where the second supermall after SM North Edsa opened in the late 1980s did not come until several years later.

SM is controlled by the country’s richest man, Henry Sy, who hails from China.