SM Group of the Philippines sees China as ‘formidable’ market force even amid uneasy ties

The group is looking to ramp up occupancy rates in some of its retail assets and expand the floor space in its flagship shopping mall there, according to a senior group official. The mainland’s 1.4 billion population will be a powerful source of growth, he added.

“Our investments in China have been largely opportunistic,” Franklin Gomez, executive vice-president in charge of finance, said in an interview in Hong Kong on Wednesday. “We have not lost the fact that China has more than a billion consumers and they will continue to be a formidable market force.”

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The Manila-based conglomerate invests on the mainland’s property market through its 49.7 per cent-owned SM Prime, which owns eight malls in lower-tier cities, totalling 17.2 million square feet (1.6 million square metres). The occupancy rate averages about 85 per cent, Gomez said.

China’s post-pandemic recovery has been hobbled by a prolonged property crisis and an underperforming stock market, hurting investment and consumer confidence. The economy grew 4.7 per cent last quarter, slowing from an annual pace of 5.3 per cent in the January-to-March quarter.

Ties between China and the Philippines have been uneasy at best, amid territorial disputes that have dragged on for decades in the South China Sea.

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“It is best left to the experts in our government to find meaningful and peaceful solutions to ease the tensions,” Gomez said. “As far as the business community is concerned, the last thing we need at the moment is big scale disruptions,” he added, noting that it is “busines as usual” for the rest of the country.

Even so, Gomez said