SM Prime unveils 'Chao Block' to win over China's experience-first shoppers

SM Prime is expanding its flagship retail development in China with a new commercial concept designed to appeal to Gen Z consumers, as the Philippine property giant continues to evolve its malls into lifestyle destinations that compete with one of the world's most advanced eCommerce markets.

The company will invest 1.5 billion pesos (US$24 million) in Chao Block, a 19,403-square-metre extension to SM Xiamen City in Fujian province, marking its latest effort to reposition physical retail around experiences, community and culture rather than traditional shopping.

The first phase is scheduled to open in September, with the second phase expected in the fourth quarter of 2027.

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The move comes as SM Prime marks 25 years since entering China with SM Xiamen City, its first overseas development. Since opening in 2001 as a conventional mass-market shopping centre, the property has expanded twice - first into an upscale lifestyle mall in 2009, before adding a third phase in 2022 focused on younger consumers and experiential retail.

The upcoming Chao Block represents the next stage of that evolution.

Described by the company as a "neo-urban block", the development will bring together independent founders, local entrepreneurs, cultural curators and first-to-market brands. Rather than simply operating retail outlets, tenants will be encouraged to host workshops, exhibitions, product launches, community events and brand collaborations to drive repeat visits.

According to SM Prime, the name "Chao" is inspired by the idea of a fourth state beyond water's conventional forms of liquid, solid and gas, symbolising openness, fluidity and collaborative commerce.

The concept reflects a broader shift in China's retail landscape, where shopping centres increasingly compete by offering experiences that cannot be replicated online.

SM Prime president Jeffrey Lim said China has become an important source of retail innovation for the group.

"We used to send our people to the United States, or even to Europe and London. But over the last five years, instead of sending them there, we've sent them to China because there have been a lot of advanced developments here, especially in the shopping centre industry," Lim said.

The company's China portfolio illustrates how that learning extends beyond retail formats.

Across its Fujian properties, SM Prime has introduced pet-friendly facilities including dedicated pet restrooms where owners can wash and groom their animals, alongside cat cafés designed to attract animal lovers.

The malls have also embraced China's rapidly expanding electric vehicle ecosystem by hosting showrooms from brands including BYD, Tesla, Xiaomi, Huawei and Geely. At SM Jinjiang, for example, shoppers can browse Xiaomi smartphones before viewing or test-driving the company's electric vehicles in the same location.

The additions reflect SM Prime's strategy of positioning malls as mixed-use lifestyle hubs that combine retail, entertainment, hospitality and emerging consumer trends.

Lim said SM Xiamen City has continued to play a strategic role for the company since becoming its first overseas investment.

"SM Xiamen City holds a distinct place in our company's history. Being our first overseas investment, it has served as a long-term platform for learning, expansion and growth in China. As Xiamen continues to develop, we intend to keep strengthening the property and the local entrepreneurs so it remains an important part of the city's commercial landscape," he said.

Today, the development spans more than 500 stores, including international brands such as Apple, Sephora and Lululemon, alongside Walmart, restaurants and cafés.

Looking ahead, Lim said the company remains focused on reinventing the shopping centre experience rather than relying on its established position in the market.

"China's commercial real estate market is highly competitive, but the support of our tenants and customers has kept SM Xiamen City relevant. As we mark our 25th anniversary, we look forward to bringing a new commercial format to the next wave of consumers, entrepreneurs and brands," he added.

From AI-powered marketing and the friction economy to retention-led growth, DMA Philippines 2026 on 29 September in Manila will bring together marketers to tackle the opportunities and challenges shaping the next phase of digital transformation.

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