Corporate Watch
By Amelia H. C. Ylagan
The richest man in the Philippines
He always sat in front of the cash register. “Cabisé, wala bang size 4, children’s, nito (don’t you have size 4, children’s, of this style)?” the young mom would ask. Unspeaking, he would almost lazily lift the shoes to eye-level of the lady sitting on a high stool near the opposite wall. The lady-barker would nod to him in acknowledgement while chanting an endless staccato of something like: 4, 4-? B232; 6, 6-? A101; 5, 5-? C323; etc. as other customers asked for sizes. Then shoeboxes would intermittently drop from the open hole in the ceiling like presents from heaven. The awed little girl stood from the low-slung fitting-stool to find out — how does that happen? Is there a Wizard of Oz up in that ceiling, magically dropping the new shoes requested?
It was in the late 1950s, and Henry Sy’s small shoe retail store named Shoe Mart on Carriedo St. in Quiapo, Manila, was bustling with mothers jostling for black school shoes for their children at the nearing schoolyear-opening day. His no-frills, very basic made-in-Marikina shoes were cheaper than those of genuine-leather Gregg Shoes in San Juan. Besides, Mom says to her little kid, your feet grow so fast, you would need a size bigger come Christmas. “Tama na ’yang (that will suffice) Shoemart [brand].”
“Cabisé” roughly means “the head” or “the manager,” or in current slang, “Bossing.” Now, six decades after his humble beginnings, Henry Sy, the small-time “Cabisé” in white camisa-Chino (a cotton-knit undershirt) is the richest man in the Philippines. Sy has a net worth of $20 billion (P1 trillion), nearly double from last year’s $12.7 billion, and ranked 52nd worldwide. Sy has led the country’s billionaires for 10 years in a row, according to Forbes magazine (ABS-CBN News, March 7, 2018).
Henry Sy is known as the “Father of Philippine Retail” (pinoybusiness.com, Feb. 13, 2015). His first department stores (he expanded from shoes to clothing and houseware) in the 1960s to the 1970s were in Quiapo and then in Cubao and Makati City, where he competed in these locations with other department stores — C.O.D. (owned by Alex del Rosario), Assandas (owned by the Jethmal family) and the “classier” Aguinaldo’s (owned by Leonardo Aguinaldo). These department stores are down now, while Sy’s SM Prime Holdings has 67 malls located across the country, with about a dozen more scheduled to open by 2018. It also has seven malls in China, including SM Tianjin which is the second largest in the world. SM Supermalls has become one of the biggest mall operators in Southeast Asia. Combined, the company has about 9.24 million square meters of gross floor area (GFA) (Investors Kit — SM Prime Holdings, October 2017). The Sys also have a 34% stake in CityMall, a subsidiary of DoubleDragon Properties, which runs a chain of community shopping malls across the Philippines.
How could the poor 12-year-old little boy-immigrant from China have strategized and grown his fortune to such dizzying heights? With just a two-year Associate in Arts degree in Commercial Studies from the Far Eastern University (1950), he planned his conglomerate. He knew he needed a bank to provide cash management to suppliers and marketers, and in 1967 he bought Acme Savings Bank, which he then renamed Banco de Oro (BDO). With total assets of $46.8 billion, BDO is now the largest bank in the Philippines, 15th largest in Southeast Asia, 116th largest in Asia, and the 234th largest bank globally as of March 31, 2016 ( Forbes G2000, May 26, 2017). His smaller bank acquired China Bank with 295 branches (plus 72 China Bank Savings).
The SM Group has indeed focused on the Filipino consumer. As of end-2016, SM Development has 43 residential projects, six office buildings, and six hotels. The group has investments in gaming through 28% of Belle Corp., and in logistics with the acquisition of a 34.5% stake in Negros Navigation Co., Inc., the parent company of 2GO Group, Inc. It also has a 29.3% stake in Atlas Consolidated Mining and Development Corp., the 3rd largest copper producer in the world with its Toledo copper mine in Cebu (Rappler, June 28, 2017).
In education, SM Investments owns a 51.8% stake in Asia Pacific College (Ibid.). Business departments of schools and colleges have received donations from the SM Group. Miriam College, on the occasion of its 90th anniversary, received P100 million for an “innovation center” (Philippine Daily Inquirer, Sept 7, 2016). The University of the Philippines, Bonifacio Global City — built at a cost of around P400 million — was donated by the SM conglomerate led by Henry Sy, Sr. (Philippine Daily Inquirer, March 1, 2016). A business building was likewise donated to Assumption College, finished just this year. A 15-storey building for De La Salle University was built in 2012 at a cost of P1.4 billion (The Manila Times, March 1, 2016). To acknowledge Henry Sy’s dedication to education, he was conferred the degree of Doctor, honoris causa, by De La Salle University (bloomberg.com/research/stocks/people).
A doctorate, indeed. Those who earned their doctorates through the tears and fears of two years of academics plus two years of research and dissertation might look down at an honorary Ph.D. — but the claim to the honor must be in the doing and not in just knowing theoretically. But how has Henry Sy done this superman-size feat of rags-to-amazing-riches? He has rightfully identified what consumers want, and cashed in on that. Consumerism urged on by effective marketing and availability. Even pricing — Sy knows well the attraction of cheap items (mostly now imported from China) that by SM’s sheer volume of sales and economies of scale in supply can draw the crowds during the malls’ almost 12 hours of daily operation.
Perhaps Filipinos have become inured to the sight and fact of having an SM mall or an SM development (condominium, convention center, casino, whatever else) on every other block (exaggerating, but getting close to the truth). Even outside of Metro Manila, there is hardly a city without an SM presence. But should we get alarmed? No, contemporary Filipinos, old and young, like the malls — there is free air-conditioning, a clean and beautiful space to stroll, meet, eat, entertain, and shop, shop, shop. Some balikbayan vacationists note that there are hardly any families now who observe the de rigueur Sundayfamily lunch and togetherness of old — families now spend Sundays at the malls, eating at the array of mostly fast food offerings, hardly talking to each other because of the distractions and the noise. Games and recreation at the malls consume the attention of people, crowding out close interpersonal sharing and exchange of thoughts and experiences. Malling is the new bonding.
The negative social effects of spending too much time and money (on credit mostly!) at the malls are further emphasized by the subtle changes in religiosity and discipline. Going to Mass has become secondary to enjoying oneself at the malls. The Catholic Church and Christian groups have relented by holding Holy Mass and prayer meetings at the malls on the argument that considering the attraction of the malls, it might be the lesser evil to hold the “prayerful” crowd there than to lose them altogether if they prefer to go to the malls and later, if there’s time, to the churches.
So Henry Sy is the richest man in the Philippines. He is also the only Filipino who broke the top 100 of the world’s billionaires. Filipinos might not begrudge him his wealth from profits, from efficiency in honest enterprise. But perhaps there is something a little worrisome in the Marxian aphorism about the capitalist system: the rich get richer and the poor poorer. In the simple arithmetic of social economics, one takes from the other.
Amelia H. C. Ylagan is a Doctor of Business Administration from the University of the Philippines.
