Bloomberg Markets interview

22 December 2002

Q: You told Matt Winkler you don’t plan to retire for a long time. You also said: “I will never be satisfied, like the Olympics.” That’s a good quote. Does it correctly reflect your drive and ambition?
A: There is always much speculation over my retirement. It started when I was 55.

Well, I have my own definition for the term “retirement”. Life was extremely hard when I was young; today working without the burden of pressure to me is the same as the luxury of retirement. These few years, our Group has embarked on some new projects and is in exciting times. We plan all our projects meticulously. Our work is certainly challenging, but we are not under any pressure except for the pressure to outperform.

Since many seem to be interested and concerned, I am happy to report that I am in good shape, and can rise to the opportunities and challenges of our times, and I embrace each project with enthusiasm. I also spend a lot of my time on education and medical care initiatives. This is a passion that I will never grow tired of. In fact, I consider it a lifelong endeavor.

Q: You have a legendary capacity for hard work. But you have also built up a sophisticated and talented management team. What decisions do you take your self and what do you delegate? If you are ever forced to step down, who will succeed you and what impact will it have on your businesses?
A: Over the years, our group’s horizons have been expanding. We are now in 41 countries. With such a wide span of activities and geography, our company structure and corporate culture must seek to embrace the aspirations and concerns of our colleagues all over the world. I consider this of utmost importance.

We are living in a dynamic age with multiple ideas and beliefs of correctness; this world is not deterministic and not still. A lot of management theories have suggested numerous ways on how a corporation could modernize structure and modify corporate culture to equip for a global economy.

To me, when CKH took over Hutchison in 1979, I focused on establishing a management structure and corporate culture that could align the interests of management and shareholders and within which our executives have the maximum flexibility to realize the full scope of their professional expertise and enterprising spirit. Truly great talents with capabilities and strategy are extremely rare and the extra margin on inventiveness, courage and prudence is even rarer and must be rewarded.

I started with identifying within the fluidity of Chinese philosophical thinking and the science of western management, the co-ordinates upon which we could format a seamless management structure. Building on this foundation, the company structure becomes a life-force that supports the development of each division of business. Even should I myself or any senior management retire from office, it would not have any real effect. Succession is not a concern at all.

Q: On the question of risk, you’re also exposed to another poorly performing sector-Hong Kong property. But you don’t seem unduly worried. Why?
A: “If you think, then you will be prepared. If you are prepared, then you will have no worries.” A traditional Chinese thought that is practical in the business world. A decade ago, alarmed by the property frenzy, I decided to accelerate diversification to reduce our exposure in the real estate market. Before the Asian financial crisis struck, the signs of a bubble economy were already glaring.

The Government’s move to stabilize the property market is, to a certain extent, good news. Proactive economic policies might yield greater effects. The timing of economic policies determines the multiplying effects it has on the economy. Housing is a basic necessity. As people seek to improve their living environment, there will be continuous demand for residential property. Investment in real estate market should have reasonable prospects in the long run. Our Group will proceed conservatively in this area.

Q: At the Hutchison and Cheung Kong results announcement, you seemed very disappointed by the critical treatment your family sometimes receives from the Hong Kong media. People may say they put 5 cents of every dollar in your pocket, but you also provide many jobs. Why do you think some people are so keen to attack you-especially given the respect your achievements have earned you over the years?
A: First I want to point out, a responsible media company believes in being constructive; an irresponsible media company weakens the fabric of society for its own profit, at the expense of society. Some people delight in creating controversies and sensationalism; they blur and shift the line between right and wrong. They craftily take advantage of people’s prejudices and biases to sensitize emotions to drive sales. They are advocating, not reporting. Beyond the fancy veil in the name of all kinds of justification you will see its true face-a money and power game.

I have been working for over 60 years. I segregate news reports into two categories-those based on facts I certainly would view their criticisms and opinions with professionalism and objectivity. The others I won’t pay any attention to. I am confident that the people of Hong Kong know me well. They know that I have worked hard to achieve my success. As both under the colonial government and at present the SAR government, my group has never received any special privileges. We have achieved considerable success in Hong Kong and overseas then and now. We have investments and operations in 41 countries, and the last time I counted, our group employs over 150,000 people internationally. I am sure more people in other countries will understand me now.

All through these years, whether during the colonial administration or the SAR Government, I have always supported policies that focus on the economy and the people’s livelihood. What saddens me most today is that Hong Kong is undergoing a difficult economic restructuring, and what we need is intellectual vigor, innovation and insight, but some popular media have gone in the opposite direction and are corroding the public en masse towards intellectual torpor. This is truly regrettable.

Q: I think sometimes people overlook the amount of charitable work you do in Hong Kong and mainland China. I know you don’t want to boast about this, but would you like to tell us a little about the charitable work you are funding and the reasons behind the it?
A: Our young people, particularly those that were raised in affluent societies such as in Hong Kong, Europe or America enjoy many, many privileges and take things for granted. It is more difficult for them to feel for the less fortunate. Despite my achievements, I can still remember poverty. I told my children and grandchildren that “The fruit that you eat will never taste as beautiful as the fruit that I ate during the turmoil of war. You will never cherish it as much as I do.”

In 1980 I set up Li Ka-shing Foundation; we focused mainly on education and medical care projects. It is my belief that knowledge can change one’s fate. My father died of Tuberculosis when we could not afford medical care. I know the feeling of helplessness and loneliness. This is why I am very dedicated to developing better medical care services. We have programs in many areas of medicine, including research, education and training, hospice care, and medical aid for the poor in remote regions of the PRC such as nomadic tribes in the deserts in Xinjiang.

Q: The South China Morning Post quoted you as saying that corporations should pay more tax and poor people less. Is that correct?
A: Like all Hong Kong people, I would like Hong Kong to prosper. I am always supportive of well planned and executed Government policies that are beneficial to the long-term development of Hong Kong. If the government is prepared to introduce a detailed plan to raise taxes and lower public spending I agree that corporations should take up the responsibility and pay more taxes. As for giving the middle and lower classes more tax breaks, Hong Kong’s present tax base is already quite narrow. I’ll leave it to the experts to debate whether the tax base should be broadened or further narrowed.

Q: What is the best deal you have done in your career? How would you rate the acquisition of Hutchison shares from the Hongkong Bank in 1979? How did you feel when you realized you had won control of that historic company and penetrated the British-dominated business elite?
A: With such an encompassing range of businesses, it is inevitable that some businesses progress at a faster pace than others. Our managers are constantly making strategic adjustments to adapt to changing market conditions. We have done so many notable deals, but the sale of Orange to Mannesmann in 1999 was the most memorable in recent years. It was the most profitable transaction in history, and represented a win-win-win situation for shareholders of Hutchison, Mannesmann and Orange.

Our acquisition of Hutchison Whampoa was indeed very significant. But if I had not taken control of Hutchison at that time, I would have purchased another foreign-owned conglomerate. Back in the late 70’s, we had already established a solid foundation with Cheung Kong, and I began to take notice of foreign-owned companies, whose shareholders were able to control sizeable assets with only a relatively minor stake. I had a clear intention of taking over one of these companies with underperforming assets and developing it into a multinational corporation. At the time, Hutchison had negligible operations outside of Hong Kong. Now it has investments and operations in 41 countries and employs 150,000 worldwide. When the transaction was announced, the press neglected one important factor in Hongkong Bank’s decision to sell the Hutchison shares to me-Hongkong Bank’s management was confident that I am better suited to lead this company. I believe I have not disappointed them. Hutchison Whampoa is now a world renowned multinational conglomerate.

When I first took control of Hutchison, there were many internal problems that others were not aware of. I eradicated those problems, improved the company’s operations and grew the company. Some people seem to think that the acquisition of Hutchison was a sweet deal for me, but only because they did not know the full picture.

Q: What is your biggest challenge ahead?
A: The most challenging issue raised by globalization is how we can all get along with each other in our race against time. Corporate leaders must possess far-sighted vision, detailed action plans, macro-thinking, and a global outlook. To get ahead in the race, they must also possess a deep understanding of their own organization and that of their competitors.

Q: How important to you is transparency? Despite frequent criticism of Asian family companies, one investor I spoke to compared you favorably with Jardines and made the point that your more positive relationship with investors contributed in part to your success and Jardine Matheson declining in importance.
A: We believe in the integration of western management science and Chinese philosophical thinking. We believe in striking a balance between shareholder interest and corporate governance with strict adherence to regulations. Our different businesses are managed by consummate professionals. Our strong yet flexible structure allows us to move quickly to take advantage of narrow windows of opportunity in the fast-paced commercial world. As the chairman and a shareholder, I have a duty and responsibility to create long-term value and achieve short-term returns for all shareholders.

Q: What do you get the most pleasure in life from? And what are your other interests?
A: It is difficult to describe what life’s pleasures are. To me, reading a good book, hitting a nice shot, finding a meaningful charitable cause, conversing with close friends, getting on with colleagues-these are all life’s pleasures that I appreciate. But what I truly enjoy is putting my time and energy into developing education and healthcare projects. Rather than simply writing a cheque, I am quite involved in the development process of some projects. Assessing the project’s effectiveness allows me to see the real value of money and the meaning of my work. This is the greatest joy.

Q: Can I check some things that are often written about you: Do you still wear a $50 Citizen or Seiko watch? Is it always set 8 minutes fast? Do you still drive a relatively modest car? Do you still live in the same house you have lived in for 20 years? How important are material things to you?
A: Except for the fact that my watch clocks a full 20 minutes ahead, your facts are basically correct. My standard of living has remained at about the same level as when my business first began to take off in 1957, perhaps even more modest. I have always enjoyed a simple lifestyle. I have very modest needs in terms of material comfort. Spiritual peace and comfort, however, are very important to me. I only have a desire to do more meaningful deeds.

Q: What’s your China strategy and your view of China’s potential? You were an early player in property and ports. What future opportunities do you see? How has the ATV outcome affected’s efforts to become a major Greater China media player?
A: I am Chinese and I have a great love for my country. I more cherish democratic and humanistic values; they are dear to my heart. The first time I returned to visit China was in 1977. My activities on the mainland were primarily charity-related. It was until the early 1990’s, when Deng Xiaoping made his famous southern tour and committed the country on the path to further reform and opening-up policies that we commenced venturing into China. In comparison, we have more investments in European and American companies. To date, we have investments in China of around HK$60 billion, or about 12% of our Hong Kong-listed assets.

The Chinese economy has grown significantly over the years. Following its accession to the WTO, commercial activities have become better regulated, falling in line with international standards. It is certainly very encouraging, and our Group will continue to explore new opportunities on the mainland. was first established as a technology company developing web-based platform for customs-related programs in China. It further expanded to develop value-added services for telecommunications and content-building including sports and entertainment. Purchasing a stake in ATV was just one of the possibilities that came along. As always, the key to our investment decision is simply whether it is a sound and good investment opportunity. It has no particular bearing on the TOM Group. For reasons unknown the whole affair was completely blown out of proportion by the media.

Q: Are there any other points concerning your businesses you feel investors need to be better informed on?
A: All of our businesses are making good progress, and we are constantly exploring new opportunities as they arise. Our 3G and life sciences units in particular have excellent prospects. I have absolute confidence in the continuing development of our Group.

Q: Finally, can I ask one question about your son Richard and PCCW. PCCW’s shares have been near their all-time lows and many people feel you will one day acquire the company. Is there any truth in this? Do you have any business connection with Richard these days? I heard he didn’t tell you in advance about his bid for HK telecom. Is he running completely his own race? And aren’t you actually competing in some areas?
A: Richard informed me of his decision to acquire Hongkong Telecom just hours before it was publicly announced. PCCW is doing pretty well, and its share price has rebounded strongly from its lows of two months ago. Cheung Kong and Hutchison do not have any ties to PCCW. Our senior executives, however, do enjoy a good relationship with their senior management. Obviously some of the businesses our companies operate are similar, but we continue to compete on a level playing field with each other and with other companies. We have a duty and a responsibility to act in the best interests of our shareholders.

Q: You are investing $16.7 billion in 3G when your rivals are pulling out. Is this the biggest bet you are taking in your career? What do you know that your rivals don’t? And how do you hope to pull it off?
A: 3G is not a gamble. People are quite wrong about it. It is a fully funded business plan which is in the process of rolling out. We have over 4,500 people earning a living to develop the 3G technology into various exciting services.

3G takes the best elements of mobile telephony-convenience and freedom-and combines these with the best of the Internet-interactivity and depth of content. So you have two of the most successful consumer technology revolutions in the history of mankind, brought together in one device in the palm of the consumer’s hand.

As far as we know, our rivals are pulling out for reasons that have everything to do with their own immediate financial circumstances and nothing to do with the underlying technology behind 3G. I have every confidence that 3G will be a great success.

Q: Some people say you have great influence in Beijing which is how your businesses do so well. Yet developing Oriental Plaza in Beijing was tough even for you. I think it has taken about 10 years and cost $2 billion or more. Likewise getting approvals for various developments in Shantou University has not always been easy. How influential are you with Beijing’s leadership? And what hope for other businessmen who have the same problems?
A: At times I felt perplexed by the misguided logic of some who purport to analyze me. My love for my country does not necessarily compromise the democratic and humanistic values and principles that I hold dear to my heart. These last 20 years, China’s economy has made good solid progress, not just the size of the economy, but also in governing rules and regulations. They now also embrace investing in human capital which would reap a better and more mature economic environment.