SM cautious on Asean, keeps focus on China expansion
MANILA, Philippines - Retail, mall and banking conglomerate SM Investments Corp. (SMIC) may be one of the most aggressive companies in the country today but when it comes to expanding to newer markets in Asean, the group is taking a more cautious approach.
SMIC chief financial officer Jose Sio told reporters in a chance interview on Tuesday that the company is shying away from expansion opportunities in Asean given its lack of expertise in this region’s markets.
Earlier, the SM Group said it was looking to put up malls in Vietnam and Indonesia.
Sio, however, clarified that those offers were for the group to manage existing malls, as the owners of these shopping centers hoped to replicate the SM Group’s successful model that has made it the Philippines’s largest mall operator today.
He said the group had to turn down some offers.
“To manage a mall, you have to know retail. If you don’t know retail, you don’t know your tenant,” Sio said at the sidelines of the launch of the Asean Corporate Governance Scorecard on Tuesday. “What I’m saying is SM knows retail in the Philippines but we don’t know the market in Indonesia or Malaysia.”
He said the group’s international strategy is still hinged on expanding in China.
The SM Group, through shopping mall arm SM Prime Holdings Inc., currently operates four malls in China, but Sio said they have yet to scratch the surface of the market’s potential there.
“China is big enough,” Sio said.
The company announced earlier that expansion efforts are set to ramp up in China, with shopping mall unit SM Prime Holdings Inc. planning to open as many as two malls per year starting 2014 from the current pace of one shopping center annually.
This is the same year it plans to open SM Zibo and SM Tianjin, which will be its biggest mall to date and will span over 530,000 square meters in floor area.
SMIC shares declined 0.07 percent to P721 each on Tuesday, giving the company a market value of P442.6 billion.