The Straits Times
May 21, 2012
CapitaMalls Asia aims to double its China malls' value
Firm, with stakes in 42 operational malls, targets rise within 3 to 5 years
By Esther Teo
CAPITAMALLS Asia (CMA) plans to double the value of the malls it has in China within the next three to five years.
As of the end of March, it owned fully or has stakes in 42 operational malls in China, with another 15 being developed. These malls are valued at around $12.3 billion.
In addition to this target, CMA chief executive Lim Beng Chee, 44, told The Straits Times that this year marks an inflexion point for the firm with its Chinese business turning profitable as more malls become operational. Until now, full-year operations there had lost money.
Mr Lim, who has helmed the business since 2008, said the success of the first Raffles City mall in Shanghai was the springboard for the exponential growth of the wider business. This flagship project became its calling card in China, giving it the confidence to press boldly forward.
But copycats have emerged and the Singapore Exchange mainboard-listed firm has had to 'run faster', drawing on its international experience to keep ahead of its competition.
First-time tenants are always eagerly pursued while fresh concepts are readied to keep the fickle shopper interested. For instance, Sichuan hotpot chain Hai Di Lao Huo Guo is opening its first outlet outside China in Singapore's Clarke Quay this September.
In what he terms jokingly as a 'career hazard', Mr Lim frequently visits other malls while on personal holidays to get new ideas in the fast-evolving industry.
Teams are also sent to cities in Japan, Europe, Australia and the United States to learn from the best. He counts Westfield malls in London as one of his favourites, as they build large-scale malls well.
'As I've always mentioned, it doesn't mean that just because you're the most established today, you'll be the most established tomorrow. We need to continue figuring out what's next.'
The group shows a vital interest in constantly reinventing its malls - whether creating al fresco seating areas kept cool mechanically, rooftop gardens or a mini-amphitheatre for performances.
CMA says this enables the group to stay ahead of the competition. For instance, after years of 'courtship', American lifestyle brand Hollister opened up its first Chinese store in the Raffles City Shanghai mall. CMA plans to export its ice skating rink in a mall concept - pioneered in JCube mall in Jurong - to some of its Chinese malls as well.
Singapore retailers have also benefited, riding on the coattails of CMA to gain entry into the Chinese market.
Shoes retailer Charles & Keith, for instance, opened its first store in Raffles City Shanghai in 2010 and since then has opened about 20 others across China.
While CMA might not be as localised and flexible as some of its domestic Chinese competitors, its ability to inject an international flavour into its malls keeps it as a front runner, said Mr Lim, who visits China at least once a week.
And while he is not a keen shopper, his quest to 'shop for shopping' means his finger is kept firmly on the retail pulse.
Mr Lim reels off the names of international brands effortlessly. He would love to bring Victoria's Secret here in grand style as the current store at Resorts World Sentosa is a franchise.
'If you look at our India business today, while India can be a little bit difficult, from our perspective, we're just planting a seed so that maybe 10 years later, the next group of people can pick it up from there and run.'
To describe the growth of CMA, he uses the Chinese idiom mo zhe shi tou guo he, which literally means feeling the stones to cross the river, or learning how to do things along the way.
Still, the firm's experience in Singapore has helped by minimising mistakes and imposing discipline on the company.
Deal sizes in China have now increased by leaps and bounds, from smaller deals of about $50 million each when it started to a recent deal to develop a mall in Suzhou of more than $650 million.
Fears that the Chinese economy is headed for a hard landing are overblown, he said. Sales data from its Chinese malls showed that shoppers kept coming even through the global financial crisis, proving the malls' resilience.
Mr Lim added that despite speculation, there is 'no hurry' to sell its Chinese malls to its real estate investment trust CapitaRetail China Trust or Ion Orchard here to CapitaMall Trust as the firm still has about $930 million in cash on hand.
With such a sizeable war chest in tow, all eyes are on CMA's next step: 'We'll be keeping you posted... we have a lot to do,' Mr Lim said.
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