PH companies preparing for Asean challenge

Filipino conglomerates are gearing up to compete with other big companies in the region and take on the challenge of international competition, as the Asean economic integration becomes a reality by the end of 2015.

Large local companies such as SM Investments Corp., Metro Pacific Investments Corp., Ayala Corp., JG Summit Holdings Inc. and fastfood giant Jollibee Foods Corp. have mapped out strategies and expansion plans, both in the Philippines and in Asean, to defend their market positions and seize new investment opportunities.

These companies have looked at, explored and made significant investments in neighboring countries ahead of 2015 economic integration. Early strategies have given them a head start by studying other markets and checking how they could expand to these new markets.

Conglomerates have also enriched their cash flows and strengthened their financial positions through various fund-raising activities over the past several years to build their war chest.

Some companies also underwent restructuring, while others opted to diversify into other sectors.  Others opted to stay focused on core businesses.

Core business

One company that has managed to rapidly grow its business by focusing on core strength is SM Investments Corp., which had a market capitalization of P640 billion as of end-September 2014.

SM Investments chief finance officer Jose Sio has long been preaching about the need for companies to stay focused on core businesses and prioritize investments with strong synergies in sectors where the conglomerate is currently engaged in.

Because of this strategy, the conglomerate’s subsidiaries became the market leaders in their respective industries.

SM’s banking unit BDO Unibank Inc. is now the country’s number one financial institution while property arm SM Prime Holdings Inc., following the recent consolidation, emerged as the country’s leading real estate firm in terms of net income and revenues.

SM Investments has also managed to strengthen the group synergies and added value within the core businesses by providing additional foot traffic to SM malls and stores, harnessing value of existing land assets and creating new avenues for SM’s brand franchises.

Having enjoyed market leadership in the Philippines, BDO Unibank is now looking at investment opportunities outside the country to make it a formidable regional player in the Southeast Asia.

BDO chairman Teresita Sy-Coson, who is also the eldest child of retail tycoon Henry Sy, said while the bank is still small compared to other regional counterparts, it is considering making an acquisition to boost its size.

While SM Prime already has presence in China through its five shopping malls, the group is now trying to bring its residential brand SM Development also in China to complement malls development.

Meanwhile, Jollibee and JG Summit, through its food manufacturing unit Universal Robina Corp., have long been enjoying the benefits of investing in Asean countries, which have a market base of 600 million consumers.

Jollibee, which already has presence in Vietnam, Brunei, Singapore, China, Hong Kong, Dubai and Middle East, now plans to venture into two new Asean markets over the next two years. These are Indonesia and Malaysia.

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