Li Ka-shing created a miracle in the Hong Kong real estate market, but quite a few years ago, he had already foreseen the weaknesses of the property bubble. In an exclusive interview with Yazhou Zhoukan, Li Ka-shing, pointed out that at present foreign investors account for less than 5% of the local real estate market, and that for Hong Kong to earn more foreign currency, it must diversify and develop high tech and other value-added industries. He said that as we enter the new millenium, Hong Kong must overcome its obsession with property.
Li believes that the financial crisis has sent Hong Kong a very clear signal — the high land price policy has reached the end of the road, and that it is time for a re-think. He commented that some property developers only hope that profits from property would go on indefinitely, but that was very narrow minded and would only impede Hong Kong’s future development. The Government’s support for the Cyberport and other high tech projects means that it understands the need to diversify, and to create new opportunities for Hong Kong. Li said, “Pain is unavoidable as the economy undergoes transformation. But we must support the Government’s policies and continue to develop businesses which we have the capability to handle and have established a good foundation on which to work.”
After the Asian financial crisis, Hong Kong is faced with the task of reinventing itself. The Government is promoting projects such as the Cyberport, International Chinese Medicine Centre, and international cruise terminals for Hong Kong’s future development. Li has no doubt that the Government’s policies will benefit Hong Kong in the long run.
Long before the Asian financial crisis, Hong Kong’s property business was booming and the prices were escalating at a very fast pace. The economy seemed to be going strong, but the situation was actually like a few brothers playing mahjong against each other — winnings and losses were all kept within the family. Li took steps to diversify and globalize his business quite a long time ago. He now has investments in 24 countries, employing a total of over 80,000 people. Businesses that Li’s group are involved in include hotels, container terminals, retailing and manufacturing, telecommunications, infrastructure and energy. Li believes that for Hong Kong’s economy to restart after the financial crisis, it must look beyond property to create more value-added industries. He hopes that one day, Hong Kong can earn its foreign currency from industries such as technology, service and tourism.
Li said that for his Group it was most important that the business they engaged in earn foreign currency and create employment opportunities. The Cyberport project has been a much talked about topic for a long time. But actually, there had not been many people in Hong Kong interested in high tech businesses. “We must understand that Hong Kong cannot survive on property alone. Property is important for the domestic economy, but don’t forget, foreign investment in our property market accounts for not more than 5%. So what can we depend on to earn foreign currency and attract foreign investors?” Li continued, nowadays industries in general find it difficult to survive, trade is on the downside, container terminals are affected by competition from mainland ports, and even tourism has been hit. It is important to establish other key industries to attract foreign capital.
Li recently retired from his post as Managing Director of Cheung Kong but remains as its Chairman. He will gradually reduce his workload and let his eldest son Victor take over the reins. Li senior, however, will still be consulted on major decisions. Li continues to head Hutchison Whampoa, but he is also hatching new plans.
At 71 years old, Li is about to write a new chapter in the legend of Li Ka-shing. He is determined to challenge the saying that “wealth does not pass down three generations” in Chinese families. He is trying to systemize the running of his business empire and incorporate his own personal management philosophy so that both his business and his philosophies will live on forever.
“Don’t believe that Chinese learning is for foundation and Western learning is for application. Chinese learning can also be applied,” Li said, quoting a Qing Dynasty saying. He commented that it was necessary to have a system of reward and punishment, and to make good use of talent, but most importantly there must be checks and balances within the system. He cited Barings as an example. Years ago, a hole in the Group’s operations in Singapore allowed one of its traders to lose a huge sum. This was the fault of not only the individual trader, but of the system itself.
An organization must be complemented by professional and human management. Li pointed out that the turnover rate among his staff is very low, which can be attributed to the sense of belonging that he instills in his staff. “Even when they retire, both the organization and the staff feel sad.”
Has Li ever fired anyone? The answer is yes. Sitting in his large office at the new Cheung Kong Center in Central, Li recalls a former middle rank manager who was discovered to have made personal gains using his authority. His conduct was commercially and legally unacceptable. Li had no choice but to ask him to leave because it was a matter of principle.
What Li perceives as most important in business operation and management is knowledge, as he sees a close correlation between knowledge and fate. He never ceases to acquire knowledge and enrich himself. He was born into an educated family. His father was a respected teacher. Due to the turbulence at the time and the early death of his father, Li did not receive much of a formal education. He began his working career while still in his teens. He started from zero and slowly built a business empire. But even today he continues to read before going to bed every night.
Li will receive an Honorary Doctorate of Laws degree from University of Cambridge later this month. Li’s relationship with Cambridge University began years ago, when Felixstowe Port, operated by Hutchison Whampoa, leased a piece of land owned by one of Cambridge’s colleges. Li also initiated a research project at Cambridge that aims to fight cancer.
Li cares greatly about the dissemination of knowledge. In April this year, as support for Beijing’s policy of “Building the Country through Science and Education”, Li established the Cheung Kong Scholars Programme and the Cheung Kong Scholars Achievement Award in cooperation with the Ministry of Education. The schemes aim to provide extra incentives for mainland academics. With initial funding of HK$70 million, the schemes will benefit up to 1,000 specially appointed professors, who will each receive up to HK$100,000 in allowances every year. Outstanding scholars will also be chosen each year to receive the Cheung Kong Scholar Award with the prize being HK$1 million.
In recent years, Li has begun building a new career. Li is paying greater attention to community and charity services. Western entrepreneurs such as Carnegie and Rockefeller put in large sums of seed money and operate charitable funds the way corporations are run. These funds are set-up in such a way that they can be self-run and self-financed. Li Ka-shing appreciates this set-up and is fully committed to creating one.
Over the years, he has been a strong supporter of medical and educational projects in Hong Kong and the mainland. He said that he hoped he could be guided by forces from above that would “tell me what I can do to benefit our people and mankind. I would like to do more meaningful deeds. I don’t care how much money or how much energy it takes. I have very simple needs. With the blessings that I have received, I have no need for more wealth. But if I can do more for mankind, for our people, and for our country, I would be more than happy to do so.”
Li has received a number of honorary degrees from universities in Beijing, Hong Kong, and Canada as recognition for his contributions. Other renowned universities in Western countries have offered him similar degrees, but he has turned them down. Li has his own principle in accepting awards. “These universities must be familiar with me and what I do, and I must have made some sort of contribution to benefit their society or educational development in order to accept honours.”
Li is a man of principles. Not long ago, he made an investment on Grand Bahama Island which included container terminals, an airport, hotels and a golf course, and became the biggest foreign investor there. The Bahamas Government offered Li a much sought-after casino licence as a gesture of thanks. Li declined politely. “I have set boundaries for myself. There are certain businesses I won’t get into.”
The Prime Minister of the Bahamas said to Li: “There are many businessmen who want this licence, but we have not offered it to them. We want to give it to you because you have such a large investment here. You have three hotels, and you can put the casino in any one of them.” Feeling it difficult to say no, Li then made a “compromise”. He declined the casino licence, but offered instead to build a new building outside of the hotels for the casino to be operated by a third party. Hutchison Whampoa would only receive rent from the third party. “I don’t care where our hotel guests go, but the casino will not be built inside my hotels,” Li said. “This is my principle, and I will stick to it.”
Shantou University is the biggest of these projects. Since the project was approved in 1981, Li has put in a great deal of money and effort. To date he has donated more than HK$1.2 billion toward the university. Every year, the University needs to meet operating expenses of RMB120 mil.(i.e. around US$14.5 mil.). Li settles 70% of this, while the Guangdong Government takes up the remaining 30%. It is not possible to put a monetary value on the energy and effort that Li has put into this University.
Li said, since the 1980’s, the type of work that requires him to work overnight are all charity related. He is fully involved in the projects, giving both his money and his energy. The annual Shantou University Council meeting is one which Li would not miss attending. Once he almost fainted during a meeting at the Shantou University Medical College due to exhaustion from long hours of work.
Li is not superstitious and firmly believes that each person holds the key to his own destiny. In 1955, Li started expanding his business into a medium sized factory, received several months’ orders and bought new equipment. He rented a 20,000 sq. ft. factory that was about to close down.
One of the workers at the factory told him, “Mr. Li, I have never seen a young man as hard working and polite as you. But the people doing business here at Smithfield Road have all failed and lost money. No one has ever made money. When my boss first came, he was also full of confidence, but now the factory is on the verge of closing down. The two factories next door will also close down soon. You are still young. You should forfeit your deposit and take your losses and leave.” Li thanked the worker, but said, “That would be impossible. I already have the orders, and I have bought new machines. If I don’t go into production, I’ll let my buyers down. I can’t do that.”
After Li moved in, he ran his business prudently and worked very hard. Business was good, and the factory earned a full year’s operating expenses within the first month. In less than a year, the two factories next door also closed down, and Li rented those premises as well. He stayed there until he bought his own premises for the factory. When he left Smithfield Road, many other businessmen wanted to rent these factories. Li expressed, “You can believe in Fung Shui if you want, but ultimately people control their own fate. The most important thing is to improve yourself and give it your best. Then many things previously thought to be impossible will become possible. Broaden your vision, and maintain stability while advancing forward. That is my philosophy.” And that is why Li gets personally involved whether it be business or charity.
The night before the interview, Li fell asleep while reading in bed. The 71-year-old Li still feels a sense of urgency in regards to acquiring knowledge. Books on philosophy and technology are his favorite. “I never stop reading about new technologies and new ideas because I don’t want to be left behind by time,” he stated. Knowledge reshapes destiny. As Li continues to acquire knowledge, his fate continues to evolve.
Challenging Hong Kong’s Competitiveness
Li told us two stories that reflect the difficult challenges that Hong Kong is facing. The Beijing secretary of a Cheung Kong executive earns RMB 5,000/month and speaks fluent Chinese, English and Japanese. There was one time when this executive had just finished an important meeting with Government officials and needed the meeting’s minutes to be written into a report immediately. He was stuck in a traffic jam, so he phoned his secretary and dictated the report. When he arrived at the office, a flawless report was ready and waiting. Not a single word needed amendment. Li said, compared with Hong Kong office staff, it was difficult just to find someone with good Chinese skills, not to mention the difference in wages.
Li believes that in the age of the information economy, Hong Kong’s education system should encourage students to learn and think independently. Li feels that students in the 60’s and 70’s had better language skills than today’s students when they finish school. Besides acquiring knowledge, students should also learn methodology, innovative thinking, perseverance, professionalism, and motivation.
Once, Li was playing golf with friends in a private club in Japan. They were playing faster than the people ahead of them, and while they waited, they noticed the female caddie pulling up weeds during the intermission in play. In contrast, Li said, the student workers employed during the summer to pull up weeds at the Hong Kong golf clubs always appeared slack and unmotivated. They were paid to pull weeds and yet they were far less efficient. “Even though it was none of my business, I felt sad,” Li exclaimed. Li hopes young people will put in more passion and respect towards their jobs and work harder.
As Hong Kong faces a changing landscape of technology and information, the younger generation must not cease their quest for knowledge. Li said, “In the age of information economy, if you have capital but lack the latest information, no matter what business you are in, the harder you try, the greater the chance of failure. But if you have knowledge but lack capital, a small effort can pay big dividends.”
Li hopes Hong Kong can recapture that entrepreneurial and hard working spirit of the 50’s and increase its thirst for learning. “Knowledge is not just about textbooks; it includes life experience, civilization and culture, and current affairs. Only then will we be competitive.” Li concludes that knowledge is the capital of the new age. In the 50s and 60s, you could succeed by hard work alone, but in today’s Hong Kong, you need to succeed by seizing knowledge.
The Brand-name Entrepreneur who Shuns Brand-names
Li Ka-shing has always kept a low-profile. Legendary stories abound, but they are always half true, half fabricated. In a recent interview with Yazhou Zhoukan, Li tells us about his philosophies, his personal life, and his experience.
Q: We hear that you like to read before going to bed at night. What did you read last night?
A: The book I read last night was about the future of IT. This is a fast growing industry. I believe that in just 2 to 3 years, movies and television programs can be shown on mobile phones. I prefer books on technology, economics, history and philosophy, and recently, I have taken an interest in network information.
Q: You don’t read novels?
A: That’s right, I don’t. Nor do I read entertainment news. That is because I have developed the habit of acquiring knowledge whenever possible. I did not have the time or the money to study when I was young. I went to the barber’s only once every few months. In order to acquire knowledge, I had to buy used textbooks, which contained teachers’ notes and answers to questions. I don’t read fiction or martial arts novels because I don’t have time. I like reading history books; I received high marks in history when I was in school.
Q: How do you arrange your schedule? Do you get tired from work?
A: I wake up every day just before 6:00am and exercise and play golf for an hour and a half. I insist on reading before I go to bed at night. I am still energetic during the day. Your energy comes from being interested in your work. If you are interested, you won’t get tired. Meetings are the most tiring. After a person has spoken for one minute, you already know the gist of what he wants to say. When he talks on for 10 minutes, you will feel tired because it is mundane. Sometimes I have to take ginseng tea to keep me alert.
Q: Do you take afternoon naps?
A: No, but sometimes if I get tired, I will drink some coffee.
Q: You like reading books about technology. What do you think should be the focus of technology?
A: Letting people become familiar with technology and its commercial applications. I think that if we can shape technology into something more practical, more applicable to China’s needs, it would be an enormous commercial opportunity for Hong Kong. In recent years, our company has encouraged our staff to learn new technologies on their own, and to consider technology projects that strengthen our business efficiency, increase our competitiveness and raise our productivity. I read up on new technology everyday.
Q: Have you ever tried surfing the Internet?
A: Two years ago I spent over 2 hours surfing the Internet, but since then I have not used it much. I use a computer mainly to view our company’s information.
Q: Last year you said that you withdrew from a HK$10 billion investment because Hong Kong’s environment has changed. What’s the major problem?
A: I will cite an example of how committed we are to Hong Kong as the base for our businesses. In 1989, Hong Kong faced political turmoil. Many of our local and overseas partners, even our own directors, urged me to take our company registration overseas. But I refused. Then one day, after there had been much talk about moving overseas, I told everyone during a meeting that if they want to move, they first have to remove me as chairman. Of course, no one mentioned this topic again. I love Hong Kong, and I think that a harmonious environment is most important, otherwise, our economy will remain stagnant. At the time, I said that we would withdraw from this one single project, but I also said that Hong Kong would remain the base for our Group and that we would continue to make other investments. Unfortunately, the media did not report my other comments.
Q: What do you think of the British Administration and Tung’s SAR Government?
A: Many of the policies developed by the British administration were designed to lessen instability after the reunification (dollar peg, high land prices to boost reserves, etc). These policies helped to instill confidence. The present Government is facing a much more difficult task with the bubble economy and the Asian financial crisis. The Government faces great pressure from within and outside. The job of the Chief Executive is a difficult one. The Government must set long-term policies while being able to reap short-term benefits, which may actually be self-contradictory. This has increased the difficulty for the Tung administration, but the Government has done its best.
Q: Are you considering the question of succession?
A: I have already retired as Managing Director of Cheung Kong, just keeping my capacity as Chairman. The duties are now shared by my son Victor and a team of young Executive Directors; on major decisions, they will consult me. Both Victor and I get along very well with our senior executives, and I believe there won’t be a problem with succession.
Q: In this highly competitive, information-intensive and rapidly changing Hong Kong society, is the road more difficult for the next generation of entrepreneurs?
A: Businessmen must move with the times. They must remember that knowledge and economic development is inseparable. Problems faced by the next generation are both easy and hard. But compared with decades ago, the correlation between knowledge and business as the key to success is closer than ever.
Q: Westerners say leave your children not gold but gold refining methods. What are you leaving to your children?
A: Chinese people say leave your children fishing methods, not fish. Both my sons are highly motivated and they both love Hong Kong. Victor is now the head of a public listed company and he gets along very well with the staff. He is also a father himself, and he cares about our society and our environment. He is always telling me what Hong Kong will be like if we don’t save the environment. He leads a simple life, and his tastes are simpler even than mine. This is the path he has chosen.
Q: Richard is striking out on his own. Are you comfortable with that?
A: Richard is in close contact with many of the world’s leading technology companies and figures. In the past several years, he has put a lot of time into developing his high tech business. With his performance and experience, he could do well in many countries, especially Western countries. Even though he is facing great pressure on the Cyberport project, he insists on staying in Hong Kong. That is a sign of maturity as well as a demonstration of his love for Hong Kong. I have great confidence in both Victor following my footsteps and Richard developing high tech business and his future career.
Q: The Cyberport project proposed by Richard recently seems to have run into opposition. Will you exert pressure on the Government?
A: No, absolutely not. I have never used my influence to speak to Government officials to help Cyberport.
Q: Are you a strict father? Have you ever hit your children?
A: I would only pretend to hit them. I am a strict father. In the past, I spent my Sundays with my children. I took them out on the yacht and talked to them not about making money but about how to be good human beings.
Q: Do you have any religious beliefs?
A: I do not have any special religious beliefs, but I have read many books about religion, such as Christianity, Buddhism, Confucianism, and Tao. Some of the sayings and mottos are brilliant.
Q: What should a successful entrepreneur be interested in?
A: Continuously meeting new challenges. The success of my business has provided me with resources which allow me to make constructive contributions to our society and people. My standard of living compared with 30 years ago has not risen. When I was young I thought about getting nice things, but now I only ask for convenience. My clothing probably cost less than yours.
How much do your shoes cost?
Mine only cost $200 something.
Mine are a little more expensive. They cost around HK$400, but they are rubber soled. My watch cost around HK$200. I only ask for spiritual satisfaction. I believe that a person’s status in life is determined by his behavior. If you are at peace with yourself, you will have your own paradise, and you can look beyond power and humility. Life cannot be measured by a calendar. Some people are alive but do not contribute to society; while others die in glory. If you have done your best to make meaningful contributions, when it is time for you to go, all you will feel is a little tired, just like when the sun sets you need to take a rest. The feeling is that of enjoyment, and there is no fear in it. I just hope that I lead a full life.
Q: Are Western entrepreneurs better at charity and community services?
A: China has had many wealthy businessmen in its history, but traditional thinking calls for the business to be passed on from one generation to the next. I believe that business should go on and on, but a person does not need a lot to have his basic needs provided for. If you have more wealth than you need, you should give more to the community, especially when you still have the strength and energy. That is why I will slowly let go of my business, while taking up more and more philanthropic work. I hope that this will increase the participants’ sense of mission and also get others involved.
Q: You have a wide range of businesses, but you don’t seem to have a lot of interest in news media.
A: I am very interested in media. I am a shareholder of Metro Broadcast. But sometimes there is conflict between media and other businesses. Telling the truth sometimes offends people. I don’t like to fabricate news just to make money or to hurt others.
Q: You said that you get along well with your staff. Have you ever fired anyone?
A: No one at senior level. There was one in the middle ranks. He was a well-educated middle manager, but he took advantage of his position for personal gains on many occasions. His behavior was not in line with his remuneration, so I decided to fire him. If a staff is sloppy in his work, I will get very angry and criticize him. But if he makes a mistake, you should give him a chance. Once a staff broke a very precious Tang Dynasty tri-colored pottery horse in my office. I just told him to be more careful next time. The horse is shattered; he is blaming himself; why do you need to say more? This is not a question of money; it’s a personal philosophy. I believe that our turnover rate at the senior level is the lowest among similar companies. They are always sad to leave when they retire.
Q: Can you summarize your life experience for all your compatriots?
A: Chinese living overseas should assimilate into the local communities, and if they are successful, they should give something back. They should spare no effort in doing things that benefit the local communities. I want to build a corporation that not only the Chinese are proud of, but that even foreigners are impressed with.