The Henry Sy Playbook: 9 lessons from Philippines' richest man | Inquirer Business

The Henry Sy Playbook: 9 lessons from Philippines’ richest man

SM Investments Corp. chair Jose Sio shares life, business lessons learned from the retail tycoon
/ 10:47 AM January 19, 2019

SMIC chair Sio (fifth from left) receive a plaque from FFCCCII officers led by president Domingo Yap

[Note: This news feature was originally posted on March 19, 2018. Today, January 19, 2019, Henry Sy Sr.passed away peacefully in his sleep.]

MANILA, Philippines–From a small shoe store called Shoemart that started operations on Carriedo in 1958, the empire of SM group founder Henry Sy Sr. has expanded exponentially over the next 60 years to include over 200 companies in the Philippines today.


These companies that operate in crucial sectors include three of the most valuable companies in the Philippines: Flagship conglomerate SM Investments Corp. and SM Prime Holdings Inc., which are valued by the stock market at over P1 trillion each, and BDO Unibank, valued at around P635 billion. Combined, these three account for around 4 percent of the Philippines’ gross domestic product.

The stellar performance of these and other companies under the SM umbrella contributed to make tycoon Henry Sy the richest man in the Philippines.


Based on the 2018 Forbes World’s Billionaires list, Sy has an estimated net worth of $20 billion or over three times larger than the fortune of the next richest tycoon from the Philippines.

He is also the world’s 52nd richest person, richer than 46-year-old South African-born Canadian-American tycoon Elon Musk—who founded electric car maker Tesla, solar energy giant Solar City and spacecraft-maker SpaceX—who is valued at $19.9 billion. He is also richer than businessman-turned-US president Donald Trump, who is valued at $3.1 billion.

Recipe for success

With the tycoon turning 94 years old this year, leadership at the SM group has successfully transitioned into the second generation, with all six children (by order of birth): Teresita (Sy-Coson), Elizabeth, Henry “Big Boy” Jr., Hans, Herbert and Harley working just as hard to expand and future-proof the business empire.

But instead of electing one of them to succeed their father, the-second generation Sys chose Jose Sio—SM Investments’ long-time chief finance officer and a trusted adviser of the family—to be the new chair of the conglomerate.

In a recent forum with the Federation of Filipino-Chinese Chambers of Commerce & Industry (FFCCCII), Sio shared the factors behind the SM group’s success as a conglomerate.

1. Set a long-term vision


“We don’t do things six months, one year ahead. We always look at what can be five years from now,” Sio said.

The group knows that in the years ahead, e-commerce will pick up pace and gnaw on revenues from traditional retailing.

This is why it has invested in 2GO Group Inc., the country’s largest integrated supply chain operator. It is also investing in digital platforms to prepare for a boom in online shopping.

When the group started investing in mainland China at the turn of the millennium, the strategy was to be there for the long haul. If China is 10 times bigger than the Philippines in terms of consumer base, then there’s a big room to set up new malls, but the group’s strategy has been to target third-tier cities rather than slug it out in the biggest ones.

SM’s first mall in China opened in Xiamen in 2001, then privately owned by the Sy family, with a gross floor area (GFA) of 128,000 square meters (sq m), almost similar in size to SM City Sta. Mesa. By 2007, there were three malls in China—Xiamen, JinJiang and Chengdu—and these have become mature enough for the Sy family to fold the business into SM Prime.

2. Think big, start small, move fast

Sio said Sy had often advised: “Don’t be afraid to think big, start small and move fast. If you don’t do that, others will just be ahead of you.”

Being a family-led corporation has given the SM group the leeway to move fast.

“Decisions can be made in one hour, even in one minute. If I have an opportunity worth looking into, I discuss it with the family board. That time, a decision is made: To go or not to go,” Sio said. “In government, it takes one year before a decision is made, and in a professional organization, it also takes time, you have committee here, committee there (deliberating on it). Before you know it, somebody already got the business.”


“This is how the Chinese community shines in the Philippines: We make decision fast.”

In other fora when he was still CFO of SM, Sio also talked about the importance of keeping enough liquidity in the war chest. In a world where cash is king, having the cash to put on the table is seen crucial to closing deals swiftly.

3. Work hard

Sio cited a study that showed that the first generation Chinese family-owned corporation is usually the fastest growing while growth typically plateaus during the second generation and finally collapses during the third generation.

He said the first generation, usually coming from poor families, knows the value of working hard while the succeeding generations are typically used to easier lives.

But in the case of the Sy family, the second generation that now runs the business isn’t just resting on their laurels.

“I told Mr. Sy, you’re lucky not only in business. You’re lucky with your children, because now you have six children working as hard,” Sio said. “It’s part of the story of how we grow.”

“We all started working when we were teenagers. We were expected to work on Saturdays when most of our classmates were often out having fun. We had fun too, working, because we did not know any other kind of fun,” daughter Teresita Sy-Coson recalled, in a speech delivered when she received the “Management Man of the Year” award in 2016.

After graduating from college, all Sy siblings were expected to continue working full time in the family business.

“During those days, my dad, who was demanding, was always driving us to work hard, and to do our best. While we were not expected to do our best in school, once out of school and into the real world, we were taught to aspire to be the best in any endeavor we are actively involved in,” Sy-Coson said, noting that she and her siblings were trained to think creatively, stay disciplined and be productive.

“It took us a long time to understand my dad’s drives and his teachings. We learned a lot though, amid all the arguments, hard feelings and complaints. We could not understand then why our lives and our discussion are all about business. When we think we did something right and expected his congratulations, he would just say ‘not bad,’ but thought that we could do better. But we now see the wisdom of his demanding character. My siblings and I continue to grow and enhance the business based on his guidance and principles of business leadership,” she said.

4. Think outside the box

Sio recalled what the street-smart SM founder often tells him: “I’m just a college graduate but I always think out of the box, because Harvard theory may not always be the best theory. You’ve got to find better ways than Harvard (formula).”

This brings to mind an old tale about Sy’s purchase of a big parcel of land for future shopping mall development.

Several property developers had looked at the same lot, conducted market studies and concluded that it’s not feasible to build on as it was too faraway from the urban center.

Then came Sy, who didn’t think twice in developing the same property, trusting only his guts.

Multiply this “build it and they will come” formula and you now have the largest property developer in Southeast Asia.

5. Be ambitious: Go for the large scale, be willing to be bold

Sy founded his first shoe store called Shoemart in 1958 on Carriedo. In the 1960s, he opened Shoemart Makati and Shoemart Cubao.

In 1972, Shoemart Manila on Calle Echague was transformed into the first of Sy’s department stores.

SM Makati was also transformed in 1975, accompanied by a dramatic corporate rebranding where Sy’s stores were rechristened SM. The Cubao store likewise underwent such transformation in 1978.

But Sy officially joined the big leagues when he started building those massive one-stop shopping malls, notwithstanding the challenging political and economic environments.

He opened his first mall on Edsa in November 1985. At 125,000 square meters, it was then the biggest of its kind, and it opened its doors during one of the most turbulent periods in Philippine political history. This has since then expanded into a 424,691-sq m mall, one of the largest in the Philippines and in the world, attracting half a million people on a typical weekend.

The SM group scaled up further in the 1990s, opening one new mall after another. From the group’s perspective, this was the decade when the malling phenomenon started. SM opened SM City Sta. Mesa in 1990, SM Megamall in 1991 and SM City Cebu in 1993.

In 1994, SM Prime Holdings Inc. was incorporated to become the vehicle for SM’s mall operations and went public on the same year.

6. Be customer-focused

“We are basically a retail group, so he (Sy) always says: Focus on what customers need, focus on where customers need. It is not we, it’s not you who will determine what they want. You should not determine what price you want to sell. Look at the customer: What they need, how much they can afford, and it’s our responsibility to make those things for them,” Sio said.

As consumers became more affluent, SM’s malls have evolved as well. From old big-box type malls, its design has evolved to incorporate more sustainability features, greenery, open space, entertainment areas and cater to more discerning consumers. Amid the dearth of open parks and plazas in the metropolis, people can now go to SM not just to shop and eat but to renew driver’s license, have a haircut, see the doctor, have a massage, learn ice skating or even hear mass on Sundays.

7. Seek market leadership

“We should focus on things that we know, where we have competitive advantage and target to be the market leader of that business,” Sio said, explaining why BDO is the country’s biggest bank, SM Prime is the country’s (as well as Southeast Asia’s) biggest property company and SM Retail the biggest retail group.

He noted that Sy had targeted to be the biggest bank when BDO was just a savings bank and to be the biggest in property when SM Development Corp., the residential development arm of SM Prime, was still a fledgling company.

“If you are the leader of that industry, the first three words that a newborn baby in the Philippines will say are: Papa, mama and SM,” Sio said in jest.

In the case of BDO, the bank entered into a series of mergers and acquisitions (M&As) at the turn of the millennium. There was a time when it was buying a bank, big or small, almost every year.

BDO became a major player starting 2006 when it realized a two-year aspiration to acquire Equitable PCI Bank, a bank bigger than itself at that time.

Sio also stressed the importance of focusing on core businesses.

“If you don’t know that industry, don’t go into that industry. You’ll be eaten alive, specially if you’re competing in mainland China,” he said.

8. Go public

A big part of SM’s success can be attributed to going public. SM Prime was the first to go public in 1994, followed by BDO in 2002 and SM Investments in 2005.

Sio joined at the time when the flagship conglomerate SM Investment was to go public and was instrumental in convincing the Sy to take the plunge.

He had told Sy: “If you want to move ahead, let’s go public. Use other people’s money. By going public, you can get at much as 30 times of your income. Use that money and go public, then you can move faster.”

Listing the group’s crown jewels is also a big part of why Sy is deemed as the wealthiest person in this part of the world: The stock market has unlocked the value of his assets and provided real-time price discovery. The capital market has given the group the option to raise capital for fund expansion opportunities, whenever needed.

9. Set good governance

Public listing also commits any company to a higher standard of corporate governance, transparency and accountability.

Good governance is good business, Sio said. “Compliance to government requirements, paying the right taxes is good for business. If we want a peaceful environment, if we want a clear road, if we want a clean life, then we must pay the right taxes,” Sio said.

Just like paying taxes, Sio said businesses must not be afraid to pay a high salary to competent people.

At the same time, he said a corporation must make sure it would deliver on what it promises investors.

“If you say you’re going to build 10 malls a year, make sure you open 10 malls a year, because investors, especially the foreign investors, they’re not here. They don’t know what’s going on. They only believe what you say. But if you fool around, that’s the end. Nobody will believe you, nobody will invest,” he said.

RELATED STORY: Henry Sy Sr. — PH’s richest man and philantrophist — passes away at 94

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