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How SM malls conquer China

Its Chengdu mall will undergo a facelift for its 10th year, while SM City Tianjin, said to become the largest in China, will fully open in 2017.
By Lynda C. Corpuz |

 

SM City Chengdu facade

10TH YEAR. SM City Chengdu will undergo a facelift on its 10th anniversary this year. Photo by Lynda C. Corpuz / Entrepreneur Philippines

 

Homegrown SM supermalls of Henry Sy—the richest man in the Philippines—is not stopping in its plan to become a household name in China.

 

SM supermalls under SM Prime Holdings (SMPH) is setting another record to open what would be one of the world’s largest malls, and to date, would be the largest (in terms of gross floor area) in China: SM City Tianjin, the ninth mall, with three floors above ground; a land area of nearly 440,000 square meters; and over 1,000 stores and 8,000 parking slots.

 

In March this year, China Daily reported that SM City Tianjin customers will enjoy its standard Olympic-size ice-skating rink; science discovery center; concert hall that can accommodate over 900 people; and an 8-story IMAX screen, considered to be the largest in the world.

 

As SM City Tianjin is gearing up for its opening, other SM malls in China are continuing to exert efforts to become more endearing to the Chinese market, especially with the stiffening competition and the slowing economic growth of the country. Other SM malls in China (in order of establishment) include Xiamen, Jinjiang, Suzhou, Chongqing, and Zibo. Chengdu was the third mall in China which opened in October 2006, while upcoming malls are also to be located in Yangzhou and Changzhou.

 

Related: Why Chengdu is a beautiful, rich, well-planned city

 

“We’re still looking toward to [opening] our 9th mall. Like SM malls’ goal in the Philippines, we’re really trying to [be located] in areas that are hard to reach,” said Catherine Ingles, a Filipina assigned to oversee SM City Chengdu operations told Entrepreneur.com.ph during its visit on April 6. The visit is part of Huawei’s invitation to select Philippine media and bloggers delegation to visit the model city of Chengdu and the company’s campus in Shenzhen.

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Related: Why China's Huawei is ambitious  

 

 

Catering to the aspirational lifestyle

SM Store Chengdu
FLAGSHIP STORE. SM Store, of course, is the mall's lead anchor tenant. Photo by Lynda C. Corpuz / Entrepreneur Philippines

 

 

So how SM malls are exactly penetrating the Chinese market?

 

Not really by competing head on with homegrown mall chains there, but by catering to the aspirational lifestyle of the Chinese people, who are willing to spend more and are looking for quality brands.

 

For SM City Chengdu (located at No. 29, Dong Er Duan, Erhuan Road, Chengdu, 61008), business is doing well so far. The third SM supermall in China has 170,000-square meter (with about 90,000-sq. m. leasable area); five floors; and 170 long-term tenants (those with 8-10 years leasing contract with the mall). “We try to have more international brands here to attract more and more customers,” said Natalie Wong of SM malls – China operations in Chengdu. Competition these days come from Wanda mall chain, owned by Wang Jianlin, one of China's richest men, according to Forbes magazine.

 

Walmart SM City Chengdu
US BRAND. Walmart is also located in SM City Chengdu as one of its anchor tenants. Photo by Lynda C. Corpuz

 

SM City Chengdu, with an average of 15,000 foot traffic daily, of course has SM Store, the brand’s lifestyle store as its lead anchor tenant. It also has US’ Walmart. Japan’s fast fashion brand Miniso and Uniqlo are also popular in the mall. China’s homegrown My Style (like global brand H&M) also occupies a significant leasable space in SM City Chengdu. KFC, McDonald’s, Starbucks, Watsons are also the mall’s anchor tenants. Homegrown clothing brand Bench is also located in this mall, and elsewhere in China.

 

China's My Style
FASHION. China's MyStyle is like H&M, also located in SM City Chengdu. Photo by Lynda C. Corpuz / Entrepreneur Philippines

 

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Miniso
JAPANESE BRAND. Fast fashion brand Miniso offers cheap, great finds. Photo by Lynda C. Corpuz / Entrepreneur Philippines

 

“The area we have is good. We also have a bus terminal here. We have a university near here. We have a lot of residential areas [nearby], so the foot traffic is increasing yearly,” Ingles said.  

 

 

From Philippines to China

SM City Chengdu facade
GROWING PRESENCE. SM Development Corporation has already inaugurated its first residential development in China, just at the back of SM City Chengdu.  Photo by Lynda C. Corpuz / Entrepreneur Philippines

 

While there are not so many Filipinos in Chengdu, SM malls start to put up Christmas décor and play Yuletide songs like in its Philippine-based malls around November, Ingles added. Its mall hours are also from 10 am to 10 pm, like its Metro Manila malls’ operating hours. Its talent pageant for children, SM Little Star, has also been warmly received in China, she said.

 

She added that SM Development Corporation has already inaugurated its first residential development in China, just at the back of SM City Chengdu. Most of the big malls like Wanda and Japan’s Ito Yokado have residential developments along with their mall chains.

 

But while SM malls are heavily promoting its activities on Facebook and other social media platforms, its branches in China like in Chengdu have to rely on government-approved channels like WeChat and Weibo (Facebook is still blocked in China). It also relies on traditional marketing, like posting on local newspapers for its major mall activities.

 

Most customers are also paying via WeChat’s e-wallet function or Alipay, something that Ingles wishes that the Philippines could emulate to improve e-commerce transactions in the country.

 

SMPH President Hans Sy is also hands-on with the developments in China, and visits the sites at least once a year along with other SM malls’ executives, said Ingles.

 

Whatever best practices the mall chain is implementing in the Philippines, it also applies such in China. For instance, SM City Chengdu has a standby generator in case of a power interruption, something that was unheard of then. So when it happened, the mall was able to continue with its operations, Ingles shared.

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SM City Chengdu is set to undergo a facelift in time for its 10th anniversary this year, per government’s ruling that establishments refurbish their facades within a certain period of time and update them with more glassy, modern, texturized designs and themes.

 

“We’re undergoing renovation. We’re dependent on the government requirement. From posting a single poster to replacing a single bulb, we have to ask the planning, commercial bureaus (of China). Then (our renovation) has to be in pattern with their colors and designs. We can’t just post anything red (because every section of development here in Chengdu has its own theme),” Ingles explained.

 

Ingles said SM malls in China are more of a community. “We have to cater to the needs of the community. But hopefully we can expand, because we’re becoming a household name here. Especially in Chengdu, you just tell the taxi driver, ‘SM’ and they’d [drive you to here],” she said and laughed that the name is so ubiquitous that it is not difficult for Chinese and non-Chinese to remember SM malls.  

 

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Lynda is the editor in chief of Entrepreneur.com.ph. Follow her on Twitter, @lyndaccorpuz and LinkedIn, https://ph.linkedin.com/in/lyndacorpuz.

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