HENRY SY: HE PEDDLED CHEAP AMERICAN SHOES IN THE 50s

Sat, 27 Oct 2007 18:28:12 +0800

Henry Sy runs the Philippines' largest retailer, but he operates his SM Group almost as if it were a family-owned corner greengrocery. Each week, the 80-year-old (estimated net worth: $1.2 billion), sporting his trademark Hawaiian shirt, gathers his six children at the company's warehouse-style offices near Manila's waterfront, where they oversee nearly every aspect of the business, from property deals to labor negotiations. On Saturdays, family members fan out to make firsthand inspections of their SM malls, department stores and supermarkets. On Sundays, Sy insists that the family meet yet again, either at his $2 million luxury log cabin in the lush hills outside Manila or the family home in the swish Forbes Park district of the capital. Though he is one of the Philippines' richest men, Sy sometimes spends Sunday mornings shopping in Manila's seaside market for fresh fish for the family's lunch, which he cooks himself. His specialty: fish soup with noodles. Sounds like a scene from The Waltons? The Sam Waltons, perhaps. Sy's communal approach has helped him build the Philippines' equivalent of Wal-Mart: SM Group is a retail giant with 38,600 employees and annual revenues of $1.7 billion. But no matter how successful it has proved to be, Sy's children realize that this all-in-the-family management style is becoming outdated. Like so many of Asia's big business clans, a generational shift and the stresses of running an increasingly complex company are forcing the insular Sys to open up more and more to outsiders. "For my father, the organization is the family," says Sy's eldest daughter, Teresita Sy-Coson, whom the family calls "Tessie." But "in the future, you'll see more professional managers," she adds. What may appear to be a simple matter of hiring a few experts is more traumatic in Asia, where tight-knit families are sacrosanct. The issue generates plenty of controversy in the Sys' usually congenial living room. Henry Sy says he wants to go slow in hiring outsiders. After all, kin can be counted on for their loyalty not like strangers, who have their own agendas. "If I have a good manager, and someone gives him a good offer, he will leave," Sy complains, sitting in an armchair at his log cabin. But his children disagree. "That's how we used to feel," 53-year-old Tessie contends from across the room. The business "has become too large for just a few people to manage." Her brother Hans, who heads SM's shopping mall business, agrees, "Our family has been very hands-on. [But now] we've had to delegate more work, more responsibility." So, over the past two years, day-to-day management of the Sy family department stores and malls has been handed off to recruits, and professionals now assist in financial decisions. Eighteen months ago, the family instated twice-monthly executive meetings to discuss the business with its top people; before, the Sys would just meet informally for lunch at one of their homes. Certainly, complexities have multiplied since 1936, the year Sy left Jinjiang, a town near Xiamen in China, for the Philippines to join his father, the proprietor of a tiny grocery store in Manila. Dad was dirt-poor. "I cried when I first saw him," Sy recalls. Each night, the 12-year-old boy would clear the counter so that he would have a place to sleep. In the 1950s, Sy peddled cheap American shoes in his own Manila store, whose brass cash register today sits in a corner of his office as a reminder of his earlier struggles. Sy branched out into department stores in the late 1950s and supermarkets in the 1970s. But his big breakout came in 1985, when he opened his first supermall in the Quezon City district of greater Manila that was then practically undeveloped. The business community expected Sy to lose his Hawaiian shirt. Instead, his clean, air-conditioned venue introduced modern shopping to the Philippines. "We changed the lifestyles of the people here," Sy beams. Today, the empire continues to grow in size and sophistication. SM operates 17 malls in the country and expects to open two or three more each year through 2008. The company has also entered the booming China market with a mall in Xiamen, and it's opening two more malls in the mainland over the next two years. Down the road, the Sys also want to diversify into commercial real estate and tourist resorts. Having managers with personal stakes in the company's success is what gives SM its backbone, Sy maintains. Starting at age 13, each of his children was put to work stocking shelves and manning cash registers. Sy barred his children from studying overseas, fearful that they would stray too far from the business. Even today, when Tessie, Hans, and another brother, Herbert, who looks after SM supermarkets, are asked what they do for fun, all three stare nervously into their cups of coffee at a cafe in a Manila mall, then almost simultaneously mutter, "Work." But Tessie and her siblings, like many in Asia's younger generation, also want the luxury of enjoying their success. Sy's children don't put as much pressure on their own kids to join the family business. Three are currently studying in Australia. "Life and work become one. My father would love that. He hoped we would be his clones," Tessie jokes. But now "we do have our own lives. That is the evolution," she says. After their father recedes from the business, they'll run the company by committee, the children say, though many in Manila expect Tessie to take the lead. She envisions a different role for the family, in which they provide oversight while professional managers handle day-to-day operations. Then "we can sit back and relax," Tessie hopes. Still, the Sys worry that in bringing about these changes something important might get lost. The collegial atmosphere they've created can't be found in any ordinary boardroom. At one business lunch of Mexican food and salads at a hotel in Manila, the family banters happily about malls, local politics and their kids, each striving to talk over the other. When Sy declares, "I've never had an inferiority complex," Henry Jr., the eldest son, quips, "Only shopping complexes." The family bursts into gales of laughter. Tessie hopes for a "continuity of culture," in which SM keeps this family spirit even as the Sys' role diminishes. Maybe she can get some tips from the Waltons.

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HENRY SY: HE PEDDLED CHEAP AMERICAN SHOES IN THE 50s