“If you keep a good reputation, work hard, be nice to people, keep your promises, your business will be much easier”
— Li Ka-Shing to Forbes magazine
Seven decades ago, on a breezy moonlit-night in a village of the Canton province of China, the family of a Chinese school teacher carrying its only worldly possessions in cloth bundles, furtively slipped into a small ferry bound for Hong Kong. It was the year 1940. Only a week before, fighter planes from Imperial Japan had bombed the village’s only school, robbing the livelihood of the teacher.
Amidst the uncertainties, the teacher counted on his luck to reach Hong Kong, then a British Colony. For good fortune, he looked to his 12-year old son Li Ka-Shing, who was curled up in one corner of the boat. Young Li was born in the auspicious year of the dragon. As it turned out, luck indeed helped the family make it to Hong Kong. And it did play a part in 12-year old Li’s bloom over the following 70 years into Asia’s richest man, now personally worth $24 billion.
Through his lifetime though, Li was forced to create his own destiny. Within three years of reaching Hong Kong, Li’s father succumbed to a bout of tuberculosis forcing his son to drop out of school and take up the responsibility of looking after the family. The young Li scoured the streets of Hong Kong before his uncle gave him a job in a plastic factory that made artificial flowers. This was the first of the many breaks that would make Li the tycoon that he today is. Through diligence, Li not only won the confidence of his uncle, but also that of the heart of his uncle’s daughter.
As Li’s uncle bequeathed him the small plastic factory, he went on to secure a tiny loan from his mother-in-law and infused new energy into the plastic factory. He found new immigrants, just like himself, to work in the factory. Every morning housewives from the surrounding poor neighborhood would visit Li’s factory to pick up a bunch of brightly colored flowers, take them home to bind them and return to the factory in the evening to deliver a colorful bouquet. An elderly woman recalling her experience working for Li told the Financial Times, “It wasn’t good pay, just a few dollars, but then costs were very low back then and people didn’t have much else to do…” Li too fondly recalls the period in which Hong Kong moved around in bicycles at a much slower pace.
As he tapped the area’s low-cost labor force, Li warmed up to successful industrialists and businessmen from the U.S. and Europe. He expanded his factory to make toys for Western firms such as Hasbro, the toy behemoth. Alan Hassenfeld, the company’s Chairman, who slurped noodles with Li Ka-Shing’s family when he contracted Li’s factory to make G.I. Joe toys in the 60’s, was particularly impressed. “K.S (Ka-Shing) almost took me in as part of the family. When I did business with K.S. we didn’t need a contract. All it was was a handshake.”
The next step was to secure the land on which his plastic factory stood. But the landlord refused to sell it. This was an eye-opener for Li, teaching him a valuable lesson: in a dynamic place like Hong Kong it was land that was gold. In the late 1960’s, the communist-inspired Cultural Revolution from mainland China spread to Hong Kong and riots ensued. Many businessmen ran for cover, thinking Hong Kong as a British Colony was finished. Li did not buy this argument. As his scared brethren sold their land at throw-away prices, Li instead lapped property up. When the dust eventually settled, Li was the man standing tall. With that land he formed his property development company Cheung Kong. Slowly, the locals became awed by his investing prowess, nicknaming him Chi Yan, Chinese for Superman.
K.S. (Ka Shing) is a rare breed. He’s all about old values in a new world.
— Hasbro’s Alan Hassenfeld on Li’s traditional way of doing business,
in an interview to the Financial Times
If the Superman of the American comic strip flit skyscrapers with ease, the Chinese Superman built them as effortlessly. Although the skyscrapers that Li built made him tremendously rich and gave him entry into the prestigious golf clubs of Hong Kong that were usually reserved for British expats, Li was still not the richest tycoon around.
Hong Kong at the time was dominated by century-old hongs, or British-owned colonial firms controlled by Scottish and English families. Three hongs in particular, Jardine Matheson, Hutchison, and Swire ran the show in Hong Kong. These omnipresent firms owned everything in the tiny islands. Ships to ports, retail stores to airlines, and prized real estate to utilities were in the hands of the hongs.
The de facto central bank of the colony, the Hong Kong and Shanghai Bank (HSBC), had the power to make or break any enterprise in the colony. The bank was tolerant of the British hongs even though they used the bank’s capital ineffectively. Then a swashbuckling new chief for HSBC, Michael Sandberg, arrived in the 1970’s. Sandberg started resenting the hongs for their money squandering. He had the responsibility of selling the bank’s stake in one of the hongs, Hutchison Whampoa, whose ownership landed in HSBC’s book due to the hong’s loss-making ways.
But who would turn around the teetering Hutchinson? By the time Sandberg fixed his eyes on Li teeing off at the golf club, he had spotted his savior. On a September trading day in 1979, an announcement stunned the Hong Kong stock market: a small property development firm called Cheung Kong had bought from HSBC a 22% stake in the mighty British hong Hutchison Whampao. The remaining hongs were aghast with Sandberg’s decision. But it was just a sign of times – ethnic Chinese businessmen were coming of age. And it was a win-win situation for HSBC and Li Ka-Shing as well. While Li received a stable port business and the docklands from Hutchison, Li’s connection in the mainland paved the way for HSBC’s expansion into China.
With stable cash flows from the shipping and port businesses, Li Ka-Shing took even more audacious bets into property, hotels, utilities, retail stores, and telecom. Indeed, Li’s Hutchison Whampao ventured into Europe and the U.S., becoming the most profitable and diversified conglomerate from Hong Kong.
Li, who runs his conglomerate with the help of his two sons, is known for his kindness as much as his fiery temper. An executive at a board meeting remembers Li screaming his elder son Victor for dozing off during the meeting. Yet the softer side of Li has made a small play area near his office on the top floor of the Cheung Kong tower, to watch his toddler grandsons play. Li, who considers, charity as his “third son” has pledged one-third of his wealth to the foundation he established to help the needy.
In an emotional speech to students at the University of Manitoba, Canada, Li summed up his life. He recalled “the sadness of lost childhood in the turmoil of war, the helplessness of watching my father’s suffering, the loneliness of poverty, the desperation of seeking employment as a 12-year-old, the joy of receiving my first paycheck, the enthusiasm in getting the first deal, the setting up of my own company, the comfort of my first home, the ever-eventful participation in global changes and development and the sheer magnificent feeling of accomplishments and recognition.”
Despite these magnificent accomplishments Li still focuses all his energy into his company Cheung Kong, which he named after the great Chinese river that draws its strength from numerous tributaries. And like this mighty river, it seems that Li too, has adeptly used the confluence of his past experiences to create a commanding empire, earning him, most deservingly, the title of Fortune Magazine’s most powerful business leader in Asia.
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© Thomas White International, Ltd. 2019