By Doris Dumlao

      JINJIANG—It’s hard to imagine that this quaint city in the southeastern Fujian, the province in mainland China where most Chinoys descended from, was once mired in scathing poverty that drove many of its people overseas.

      Like many parts of the booming mainland, the city has turned into an industrial hub these days, surrounded by factories and residential buildings that are tiled in the auspicious hues of red or old rose.

      But while Jinjiang may not be a household name in the Philippines, or maybe at least not outside of Binondo, its bleak past has changed the course of Philippine history and culture over the last 150 years. Not only was it the homeland of the ancestors of national hero Jose Rizal; it was from its little village of Hong Xi in Long Hu Town that the Philippines’ wealthiest man came from.

      Tycoon Henry Sy Sr. left his hometown when he was barely a teenager to live in the Philippines with his father, Xiu Shi Sy, who was operating a small-time grocery business. Much has been written about his early struggles especially during World War II when his family lost everything which prompted his father to go back to China. Sy decided to stay in the country, initially getting into merchandise trading and eventually striking a gold mine in retailing and shopping mall development.
Since then, he has become a legend at spotting opportunities, drawing consumers in wherever he puts up a new mall which now number 38 in the Philippines (and still counting). But even as his business grew bigger and bigger, he never forgot about Jinjiang. He opened the city’s very first shopping mall in 2005 which to date remains the only shopping mall in the city.

      Although this wasn’t Sy’s first mall in China, SM City Jinjiang is the only shopping mall in the world with a basketball stadium, also convertible into badminton courts, in support of the sport where China excels in globally. For now, these courts are offered for public use for free.

      Apart from sentimental reasons, Sy pioneered shopping mall development in Jinjiang, which has a population of about two million, to harness the growing purchasing power of the Chinese consumer.
Although the Jinjiang shopping mall is not as crowded as its sister SM mall in the nearby and more prosperous city of Xiamen, retail sales in Jinjiang do top those in Xiamen on national holidays, like the seven-day holiday held to commemorate China’s October 1 foundation day.

      The SM Group also holds in Jinjiang the Chinese version of its kiddie talent search SM Little Stars whereby the winners are brought to the Philippines as part of its cultural exchange program.

      Not coincidentally, the home city of the founder of SM or Shoemart group has become China’s “Shoe Capital” due to a yearly international shoe expo that has successfully attracted a lot of international attention. These days, Jinjiang supplies 40 percent of China’s sports and leisure footwear needs and 20 percent of the global demand.

      Sy, who himself started out selling shoes in the Philippines, has been an avid supporter of Jinjiang’s transformation into a shoe manufacturing hub. From 1999 to 2004, the tycoon hosted for free the government-organized shoe exhibitions inside the SM Jinjiang shopping mall which was not yet operational then. When the mall opened to the public in 2005, the shoe expo was transferred to SM Exhibition Center which was built by the tycoon upon the request of the city government. This exhibition center is now being leased to the city government for a minimal fee.

      Sy’s home village is more than a kilometer away from the main city road which must have made it very difficult for villagers to transport merchandise goods during the old times, especially during inclement weather. It’s now easier to reach the village as Sy, using his own money, built a road to connect Hong Xi to the main road. The road cuts through a slightly rugged terrain, passing by a quarrying site which produces granite blocks for export. Down the road lies a memorial built by the tycoon for his father, which contains some sort of a pledge that even though his father is no longer around, this devoted son would continue to show his love by caring for the village.

      Aside from building a road to the building, even the lamp posts that light up the village at dusk have been put up by Sy, according to the town mayor Wei Tan Sy.

      The tycoon’s ancestral house was built by Sy in 1952 for his parents who had gone back to China. The house was built before the first Shoemart mall opened in downtown Manila in 1958. The ancestral house is now empty but well preserved.

      Built in traditional Chinese architecture, the two-story abode is neither too lavish nor too humble. An inner courtyard is at the midst of the rectangular structure. The rooms are very modest in size, not the ones that scream a-billionaire-owns-this. The dirty kitchen is molded in terra cotta clay. Water is sourced from a deep well outside via a steel pipeline.

      A walking distance from the ancestral Sy residence is an elementary school with a student population of 600—the highest rated among the 20 schools within the area. The school, which boasts of its own soccer and track-and-field stadium, was built using contribution from overseas Chinese. Not surprisingly, Sy shelled out bulk of the expenses, the town mayor said. The school, for its part, has shown its gratitude to the tycoon by etching out his name and those of his children in one of the buildings. A boardroom at the school has also been converted into a mini-photo gallery of the tycoon. At another hall at the ground floor, portraits of the tycoon and another of his wife Felicidad Tan Sy proudly hung. Furthermore, the school also pays tribute to the tycoon’s parents—Xiu Shi Sy and Wu She Wang—by displaying their portraits at the school auditorium.

      Sy, who will turn 86 on October 15, has grown his empire to be the largest player not just in Philippine retailing and shopping mall development but also in banking.

      The SM group is also widely expected to soon become the largest player even in residential property business despite being a relative newcomer in this field. As a fifth business segment, the group has also raised its stake in Philippine tourism with the opening of the 400-room Radisson Blu Hotel, the first upscale hotel to open in Cebu in years.

      The SM group now controls over P800 billion worth of wealth listed on the local stock market, representing the combined market capitalization of five publicly listed operating units—SM Investments Corp., SM Prime Holdings Inc., Banco de Oro Unibank, China Banking Corp. and SM Development Corp.

      Like many other conglomerate that has achieved dominance in its core businesses in its home market, the next obvious step is to go global or at least regional. The dirt-poor boy who left China many years ago is now looking back at China both as a philanthropist and as an investor. His is a well-calculated strategy that seeks to replicate his success as a trailblazer in the Philippines, one Chinese city at a time, beginning with his home province of Fujian.

      He opened his first shopping mall in the mainland in Xiamen in 2001.

      Nowadays, this 126,000-square meter (sqm) mall is just as crowded as the mature SM malls in the Philippines like SM North Edsa and Megamall especially on weekends. The 170,000-sqm mall complex in Jinjiang, which opened in 2005, was the group’s second mall. The third one opened in 2006 in Chengdu, Sichuan Province with a gross floor area of 176,000 sqms. And only last year, the SM group expanded its presence in Xiamen with the opening of the upscale 110,000-square-meter SM Lifestyle Center across the street from the old Xiamen mall.

      The target is to open one brand-new mall in China each year. Soon to open are new malls in Suzhou in the province of Jiangsu (December 2010), national city of Chongquing in southwestern mainland (2011), Tianjin in northeastern mainland at the border of Beijing (2013) and Zibo in the province of Shandong (2013).

      The group is investing 3.58 billion renminbi (RMB) in these four upcoming malls, equivalent to about P21.5 billion. In general, it’s more expensive to build a shopping mall in China as provisions must be made for the winter season, which the Philippines does not have. Among the upcoming malls, SM Tianjin will be the largest in size with 530,000 square meters and will be more than twice as large as the SM Mall of Asia. This alone will require an investment of around 2 billion RMB or about P12 billion.

      SM Prime’s three malls in China contributed P600 million or 5 percent of total consolidated revenues in the first semester of this year. In terms of net income, these overseas malls contributed P100 million or 3 percent of total consolidated net income. Rental revenue of the three overseas malls continued to grow at a hefty pace of 26 percent during the first semester over a year ago on the back of improvements in the average occupancy rate, lease renewals and the opening of the SM Xiamen Lifestyle Center, which added 110,000 sqms to the Xiamen mall. The malls in China have an average occupancy rate of about 87 percent.

      Except for the upscale SM Lifestyle Center, most SM malls look pretty much like their counterparts in the Philippines, except that US retailing giant Walmart operates the grocery stores not SM itself. Having the consumer-driven Wal-mart as partner is in fact one reason cited for the group’s success in making inroads in China, says SM Shopping Centers Management Corp. president Annie Garcia. “Wal-mart wants to partner with us everywhere we go (in China).”

      The SM group is aware of the risks and rewards of investing in what could soon be the world’s largest economy.

      “We are focused in bringing Filipino mall concept to China and maybe our Filipino condominium concept in the near future,” says Teresita Sy-Coson, the tycoon’s eldest daughter who sits as SM Investments vice chair.

      Outside of its publicly listed units, the SM group has likewise pilot-tested the retailing business in its malls in China through a privately held company incorporated in Taiwan that now operates SM Laiya Department Stores, another anchor tenant in its overseas malls.

     “SM group will follow a prudent and sustainable business development in China,” says SM Investments chief finance officer Jose Sio. “SM will continue to watch the opportunities in commercial center and property development in China and at the same time mindful of any risks that might be involved,” Sio adds.