Case 12

Topics: SM Prime Holdings, Philippines, Metro Manila Pages: 8 (2220 words) Published: November 23, 2010

Case 12

Henry Sy and John Gokongwei

On July 28, 1988, Asiaweek reported on the “ mad scramble”, for land in Manila:

“ At the toss of a coin, a U.S. $5 million deal was done. An unorthodox way to reach a decision about real estate, perhaps, but at least neither party could claim the other had been unduly favored. Sitting in the office of Manila property magnate Don Francisco Ortigas were two of the richest man in the Philippines. Both coveted a superbly located five hectare site at an intersection on Metro Manila’s premier avenue. Banker – industrialist John Gokongwei and retailing tycoon Henry Sy agreed to let Don Francisco’s secretary flip a U.S. silver dollar. Gokongwei called heads and got the $95 – a – square-meter prime site while Sy got consolation prize: a nearby, but quite so strategic ten hectares, also on EDSA. Both tycoons are building multi storey commercial centers. Since that flip of fate less than a year ago, the land they bought has tripled value.”

From the foregoing account, one would be quick to conclude Henry Sy had gotten the shorter end of the bargain; that luck on the side of John Gokongwei. But as economist Bernardo Villegas of the Center for research and Communications was quoted by the Starweek Newsmagazine last June 4, 1988, “To the entrepreneural Chinese, every peril, every threat is as good as opportunity. It is not by chance that those who are very bullish today on the Philippine economy are the Filipino Chinese , they look beyond the political risks that sorround the country. Far from ignoring the dangers… mey look into them. And what do they see? Opportunities!” Villegas added that their “positive vision is long-range vision” coupled with an enduring faith in the creativity and resilience of the entire Filipino national community.

The race between Henry Sy and John Gokongwei to cash in on the Philippines consumer boom was coined by the Far Eastern Economic Review in December 22, 1988 as Manila’s “Store Wars”, ringing the metropolis with vast concrete shopping malls. They hope that peppering Manila with shopping plazas, and copying the idea throughout the archipelago, will provoke further changes in how where Filipinos do their shopping. Henry Sy’s highly successful SM Shoemart chain of department stores and Gokongwei’s Robinson Commercial, Inc. outlets, have enticed lower and middle class shoppers away from traditional outdor markets and into massive airconditioned malls. These malls provide a welcome refuge from the oppressive heat and pollution in Manila, and once inside the shops, colorful displays give people with little money a taste of life beyond their means.

Both Henry Sy and John Gokongwei are talking the concept of shopping center as community center to the extreme with their new plans. The P2 billion Robinson’s Galleria willl vie for business in the Manila suburb of Mandaluyong with the P3 billion Shoemart Mega-Mall when both are completed sometime in 1989 to 1990.

Both developments will include hotels, apartments, shops, and cinemas. Similar projects are planned by Henry Sy in Baguio, Cebu and on the Manila waterfront. Developments in Tacloban City an Leyte and Tagaytay in Southern Luzon are also in the works. John Gokongwei will do same only in Cebu, concentrating on smaller new developments and renovations in Manila.

Henry Sy and John Gokongwei have both made such good copy in media that the rest of business community have appeared as mere spectators on the sidelines waiting for next “mega-deal” to be closed by either of the two.

It is because of their respective embarkation on massive acquisition binges of real estate and designing what have now come to be known as “shopping cities” that most are quick to utter the names Henry Sy and John Gokongwei, albeit inaccurately, in the same breath. Sifting through the voluminous articles written on them, a rough cooperative profile of...
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