SM Prime Holdings Inc. remains bullish on its investment ventures in China and expects to double its sales there in the next few years despite a slowdown in the world’s second-largest economy.
SM Prime president Hans Sy said in an interview with reporters that despite the weakening Chinese economy, the second and third-tier cities in which SM Prime’s shopping malls are located are enjoying growth.
China reported 6.8 percent growth in its gross domestic product for the fourth quarter of 2015, the slowest in 25 years.
“China is a very, very big country. It is almost as good as four countries combined. Beijing and Shanghai, those top-tier cities, maybe their growth is lower. But in the second and third-tier cities, the growth [rates]there are much higher,” Sy said.
“There is really no slowdown in our business. Modesty aside, even if we talk about our China malls, quite frankly I am still looking at doubling our growth in terms of sales. Of course, we may be affected a bit because of the depreciation of the yuan, but SM malls are not into financial business. We are very positive,” Sy said.
The company’s malls in China are mostly located in second and third-tier cities such as Xiamen, Jinjiang, Chengdu, Chongqing, Suzhou, and Zibo, while its mall in Tianjin has yet to open.
Sy noted that these cities have been spared from the economic slowdown observed mostly in the top-tier cities.
The Tianjin mall will be the SM group’s largest mall in China, measuring about 540,000 square meters.
Under the company’s five-year plan from 2013-2018, sales are targeted to double at the end of the plan period.
“When we did all the preparations for our five-year plan, we always do things that are sustainable. Quite frankly we are very sustainable right now . . . we are continuously moving upward,” Sy added.
SM Prime has said it is spending P20 billion a year for its Chinese operations until 2018.
The capital spending will increase its mall operations in China from five at present to nine, while expanding to other sectors such as residential and office buildings.
The company also plans to build a mall in Yangzhou City while concurrently venturing into the residential business.