MANILA - The two biggest shopping malls in the world are in China.
But China does have a rival in the business of destination shopping - the notion that a shopping centre should not be simply a place to purchase life's necessities, but should be big and spectacular, a source of day-long entertainment.
If you think it is the United States, the country where the shopping mall probably originated, think again.
On a promontory of reclaimed land jutting into Manila Bay is the sprawling Mall of Asia. It is a testament to the Filipino love of shopping. At 407,000 sq m, it is the third biggest mall in the world, according to data compiled by Eastern Connecticut State University.
It doesn't stop there. The Philippines, one of the lowest-ranked countries in the world on the United Nations human development index, has four of the world's 11 biggest shopping malls.
All of them are owned by a company that was started 50 years ago by Mr Henry Sy, a Chinese immigrant who founded a shoe shop. The company that began as Shoemart in a provincial town outside Manila is now the country's biggest mall operator, SM, and the Sy family has become the second wealthiest in the Philippines, according to Forbes magazine.
'Filipinos have a passion for shopping,' said Ms Teresita Sy, who, with her four brothers and sister, run a vast conglomerate that also has investments in banking, real estate and tourism.
'We don't have a lot of purchasing power, but we love to shop.'
On the back of the rapid growth of its shopping mall and department store business in the Philippines, SM has set its sights on a potentially richer prize. This year, the publicly listed SM Prime Holdings, which controls the retail assets, bought three malls in China that had been privately held by the Sy family.
It is the first step in an ambitious plan to establish a nationwide network of SM malls in China.
'We would like to think we can grow 100 units in China - that is still the dream,' said Ms Sy, who is vice-chairman of the family holding company, through which her family owns about 60 per cent of the retail business.
But SM plans to move cautiously in the first phase of its expansion in China, opening one to three new malls a year.
When the company started building malls in the Philippines in the 1980s, it took them 10 years to expand from one mall to five. It now has 30 malls spread across the country.
For now, it is focused on tapping the growing disposable incomes of consumers in China's second-tier cities. In addition to the three malls already operating in Xiamen, Chengdu and Jinjiang, 83-year-old Henry Sy's birthplace, the company has one mall under construction and another being planned.
The markets SM is entering in China are in many ways not dissimilar to the customer base it has tapped in the Philippines.
With anchor tenants like Wal-Mart and its own SM-Laiya department store brand, the company is aiming at people in China who want to go to a mall for an experience but who demand value at the checkout line.
Mr Andrew Ness, head of Asian research at the commercial real estate firm CBRE, said the markets SM is entering in China tend to be 'middle-class and not very prosperous'. It is a 'high risk, high return strategy', he said. But he added that the large malls SM builds in these areas help drive local economic activity.
The springboard enabling SM to take on the increasingly affluent Chinese shopper is the surprising strength of consumerism in the Philippines, where per capita gross domestic product for its 89 million people is about US$1,700 (S$2,314). Individually, Filipinos might not be big spenders, but they flock to the malls and purchase relatively cheap, low-margin goods in huge quantities.
On weekends at the Mall of Asia, which opened in 2006, crowds jostle in a vast expanse of retail arcades, cinemas, food halls and restaurants, and entertainment venues like an ice-skating rink, a bowling alley and a science expo. Up to a million people pass into the air-conditioned comfort of the mall on a Saturday or Sunday, escaping Manila's heat with their families.
It is a similar story a short distance away at SM City North Edsa, the world's sixth-biggest mall, and at two other malls in the Philippines, SM Megamall, ranked No. 7, and at SM City Cebu, No.11.
Domestic consumption has been the key driver of the Philippines' recent economic growth. Last year, the economy expanded by 7.3 per cent, the fastest rate in three decades.
The national spending spree has been fuelled by transfers from overseas Filipino workers, which have risen from US$6 billion in 2001 to US$14.5 billion last year. The flood of money has been spent on everything from basic necessities to luxury items. Automobile sales jumped by 18.5 per cent last year. Remittances have also contributed to a boom in residential housing construction.
