The mind of a Taipan

Henry Sy, the founder and chairman of the SM Group of companies, not only withstands political and economic crises but also prospers afterwards. Time and again, his ability to see the long-term view and his readiness to seize opportunities during trying times have often boggled the ordinary mind.

Just a week after its purchase of a 25-percent stake in Equitable-PCI Bank, the SM Group continued its spending spree by buying an additional 4.6-percent stake in San Miguel Corp. – putting its total holdings in the food and beverage giant to 11 percent. That’s a cool P20 billion worth of acquisitions in a span of one week.

SM Investment Corp. (SMIC) acquired 143 million San Miguel Corp. class "A" shares at P63 per share for a total amount of P9 billion.

San Miguel Corp. is South East Asia’s largest publicly listed food, beverage and packaging company with over 26,000 employees in more than 100 facilities throughout the region. It has manufacturing operations in the Philippines, Hong Kong, China, Indonesia, Vietnam, Thailand, Malaysia and Australia.

Optimism Amidst Crisis

Henry Sy traces his roots from Jinjiang, China. At the age of 12, he left for the Philippines to join his father, a proprietor of a small sari-sari store in Manila. After World War II, he started the shoe business – selling and importing American shoes. His frequent travels abroad where he learned new trends and concepts in merchandising prompted him to open the first Shoemart in 1958, patterned after shoe stores in the US. He expanded to apparel and accessories leading to the opening of the first SM department store in Quiapo just after the declaration of Martial law.

More than luck, pure guts, and hard work, it was Henry Sy’s vision and timing which set him apart from the rest. When everybody’s store was still in Carriedo, he was the first to move out and put bigger stores, first in Makati, then in Cubao and afterwards in Harrisson Plaza. In the 1980’s, when the country was beset with political and economic problems, and when businessmen were holding back on investments, Henry Sy went against the tide and bought huge tracts of land in Metro Manila at bargain prices. This proved to be his biggest move which would eventually raise him into taipan status.

He then built the first shopping complex, SM City in North Edsa in 1983 following Ninoy Aquino’s assassination. Back then, everybody thought the idea was crazy because of the sheer size of the mall and its far location in a largely undeveloped part of Metro Manila. SM City, however, proved to be a big success attracting not only those residing in Metro Manila but also those residing in nearby provinces in the North. For the first time, it provided Filipino families a one-stop shopping and entertainment complex – everything under one roof.

The series of coups from 1987 to 1989 left Henry Sy unfazed as he started building SM Centerpoint in Sta. Mesa and SM Megamall in Ortigas. Even after the 1997Asian financial crisis, the taipan likewise went against conventional wisdom by fast-tracking mall expansion and building two to three new malls every year since then.

Gross Floor

List of SM Malls Opening Date Land Size Area



SM City North Edsa November-85 16.1 hectares 275,419 sqm

SM City Sta. Mesa September-90 3.0 hectares 133,327 sqm

SM Megamall June-91 10.5 hectares 331,679 sqm

SM City Cebu November-93 13..8 hectares 161,562 sqm

SM City Southmall April-95 20.0 hectares 205,120 sqm

SM City Bacoor July-97 8.8 hectares 116,892 sqm

SM Fairview October-97 20.0 hectares 130,600 sqm

SM City Iloilo June-99 17.5 hectares 101,735 sqm

SM City Manila April-00 2.5 hectares 166,554 sqm

SM City Pampanga November-00 31.6 hectares 110,650 sqm

SM Supercenter Sucat July-01 6.5 hectares 66,150 sqm

SM City Davao November-01 13.2 hectares 75,440 sqm

SM City Bicutan November-02 1.8 hectares 112,737 sqm

SM City Cagayan de Oro November-02 5.2 hectares 56,288 sqm

SM City Lucena October-03 8.0 hectares 72,057 sqm

SM City Marilao November-03 20.3 hectares 88,654 sqm

SM City Baguio November-03 8.0 hectares 105,331 sqm

SM City Dasmarinas May-04 12.7 hectares 79,792 sqm

SM City Batangas November-04 8.5 hectares 70,819 sqm

SM City San Lazaro July-05 4.0 hectares 179,000 sqm

SM Supercenter Valenzuela November-05 2.4 hectares 61,460 sqm

SM Supercenter Molino November-05 4.8 hectares 48,248 sqm

SM Mall of Asia December-05 19.5 hectares 450,000 sqm



TOTAL 3,199,514 sqm

This year, despite the political scandals, fiscal problems and poor credit ratings, SMIC was able to conduct a successful IPO and make two major investment acquisitions. The Mall of Asia, which is considered the biggest mall yet with gross floor area of 450,000 square meters, is slated to open later this year — bringing the total number of malls to 24 and the total gross floor to nearly 3.2 million square meters. If it’s any indication, SM’s aggressive expansion despite the current political crisis only suggests that the country will continue to move forward and that behind all the political noise, the economy is going to get better. This is a testament to Henry Sy’s unwavering optimism and his belief in the country’s resiliency despite being faced with one crisis after another.

Beyond The Retail Business

SMIC is currently engaged in four core businesses. Aside from owning shopping malls (SM Prime Holdings) and operating the retail business (SM Department stores), the group is also involved in banking (Banco de Oro, China Bank), and the leisure & property businesses (Highlands Prime, SM Development Corp).

SMIC registered a net income of P5.4 billion (+31.1 percent yoy) for the year ended March 31, 2005. Consolidated revenues amounted to P49.9 billion (+18.4 percent yoy) for the same period. The group’s retail business contributed 75 percent of SMIC’s revenues and 22 percent of net income. Shopping malls cornered 19 percent of revenues and 54 percent of net income. Meanwhile, financial services accounted for fiver percent of revenues and 18 percent of net income.

Looking At The Bigger Picture

With all the political noise and peace and order concerns hounding the country, people have scaled back business expansions and have been distracted by the political theatrics happening in Congress. Taipans like Henry Sy, however, have a way of looking at the bigger picture, unlike the "hot money" from hedge funds which gets out at the slightest indication of risk. Looking back at the history of the SM Group, most of their major investments were made during times of crises. They were unfazed by the façade of political noise which did not stop them from continuing their vision.

We should have more businessmen like Henry Sy whose unwavering belief in the resiliency of the Philippines allowed him to continue his vision, unfazed by the façade of political noise. His optimism, patience and readiness to act on opportunities are traits that have allowed him and his businesses to survive and come out even stronger after every crisis.

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