How SM malls are faring in China

by Jeff Canoy, ABS-CBN News

Posted at Apr 24 2015 12:47 PM | Updated as of Apr 24 2015 08:47 PM

QUANZHOU, China -- A monument to Philippine national hero Jose Rizal stands here in the city of his ancestors, Jijiang, Quanzhou City.

Chinese and Filipino historians have traced Rizal's roots to the Ke family in Shang-guo Cun in Jinjiang county.

The monument was built in 2003, a symbol of what the city calls a "deepening friendship" between China and the Philippines.

But the similarities don't stop there.

Filipinos who visit will feel at home because they'll find the all-too familiar business chain -- SM Mall.

So far, the SM Group operates five malls in China, while four more are under construction.

The biggest one? The SM Mall in Xiamen.

It resembles the SM Megamall in Ortigas, but beyond that it is a completely different market.

SM Supermalls assistant vice president Ronald Brosas says earning loyalty from Chinese customers proved more difficult.

That's because SM is trying to catch up with bigger competitors like Wanda, one of China's biggest real estate developers.

SM is also competing against the booming online shopping industry in China.

"It's more difficult here. In the Philippines, we are all familiar with SM. We grew up with it. Here, nobody know what SM is...We need to give reasons for customers to come and visit us," Brosas said.

SM City Xiamen opened its doors in 2001 as a modest department store. It has since been marketed as a lifestyle mall, dealing with upscale brands, high-end stores and customer aspirations.

"They actually aspire more. The power of spending is really high. They're brand conscious and they really look for good brands, that's why you really need to adapt," Brosas said.

SM also plans to expand in areas being developed.

SM China CEO Gary Yeo says SM China is choosing second and third-tier cities because it is costly doing business in major ones like Shanghai and Beijing.

"SM Xiamen is one of the big examples of that trend. And all our malls are not in the city but in the outskirts and we develop together with the city," Yeo said.

The SM Group is one of the biggest investors from the Philippines in cities like Xiamen.

According to the Xiamen Commerce Bureau Office, the Philippines is listed among Xiamen's nine priority countries for cooperation, which also includes Malaysia, Thailand, Vietnam, Singapore, Indonesia, India, Iran and Sri Lanka.

Amid territorial disputes, China believes it can share something even bigger possibilities with the Philippines -- beyond Jose Rizal and the SM brand.