TOKYO -- The Philippines is Southeast Asia's fastest-growing economy, and SM Investments is no stranger to rapid expansion. Through its retail and property development arms, the country's largest conglomerate by market value has tapped the power of the consumer sector -- now the main driver of the overall economy. How did SM Group do it, and how does it plan to ward off competitors as the nation's middle class grows? The Nikkei Asian Review spoke with Teresita Sy-Coson, the holding company's vice chairperson, to find out.
Q: How did SM become such a massive enterprise?
A: We have been working on this for a long time -- more than 50 years. When we opened the first Shoemart -- the original name of SM -- we were a shoe store. Then we expanded into a department store, and it was a natural evolution to become a mall.
After that, we [went into] other property development. SM snowballed into a bigger company.
Q: But what propelled that growth?
A: It's just a matter of investing and reinvesting. There's no rocket science. It's just like a snowball -- as you reinvest, it will always add up. And we were expanding consistently throughout.
Q: What is next for SM?
A: [We want] to be able to reach as many consumers as we can. The Philippines is expanding rapidly. The middle-class market is expanding, so they'll be buying more things. We would like to be able to serve them. We also want to reach the market that is coming up.
Q: SM is very focused on its core retail, property and banking businesses. How much does being a family-run conglomerate contribute to your ability to focus?
A: It is not so much whether it is family-run or not. In any company, one of the majority shareholders would be looking at the business on a long-term basis. Looking at returns over the long term, we take risks and innovate as we go along. We don't have a short-term vision.
Q: SM is a household name in the Philippines. To a large extent, you have successfully captured the middle class. Do you still see untapped opportunities?
A: We are very focused in terms of retail, mall operations, and property development. We are putting all of that together to create integrated commercial properties. That is our main focus and we are not deviating from that.
Q: SM is not the only one pursuing that strategy of blending retail and property development. How do you respond to those who say the market is on the brink of saturation?
A: The Philippine consumer market is not nearing saturation. There are a lot of underpenetrated markets outside cities. Plus, middle-class income is rising, and once [gross domestic product] per capita reaches $3,000, you know it will just go up. We are near that level, and I am very optimistic about our purchasing power in the years to come.
Q: You have talked about synergy within the group. Can you elaborate on that?
A: There are a lot of things that we can still do in the consumer area. In our group, if we constantly innovate with technology, you can shop with us, you can bank with us, you can stay with us, you can dine with us. We have an integrated operation where most things that consumers want can be provided.
Interviewed by Nikkei staff writer Cliff Venzon