From Ports to Portals
cnn.com
Asia's leading business family gets even richer
By RICARDO SALUDO Hong Kong
"I have no ambition, but only a loving heart for Hong Kong." Such talk from any tycoon is hard enough to believe. From Li Ka-shing, who was rebutting attacks on his family's business dominance, the words would launch eyebrows to Mars. Especially these days. Weeks after getting a $20-billion-plus asset windfall from the Vodafone-Mannesmann merger in Europe, the billionaire saw the market value of his latest listed vehicle, Internet play Tom.com, skyrocket to $2.8 billion - without a single cent in sales or profits - when it began trading March 1.
Li, 71, showed more of his love with the past week's takeover of Hong Kong's telephone giant Cable & Wireless HKT, by Pacific Century CyberWorks, the Internet venture of his younger son Richard (see main story, page 54). Their family now controls six listed companies in the territory (see table, next page). Once HKT merges with PCCW, the total value of the enterprises will top $170 billion - a third of the entire stock market's capitalization.
There is plainly a delight (and maybe competition) among father and sons in building well-oiled, endlessly churning profit machines. "Efficiency is beauty" was how Victor Li Tzar-kuoi, the patriarch's first-born, explained it to Fortune magazine a year ago. In Hong Kong it is almost impossible for anyone to avoid making money for the Lis. Whether living in a Cheung Kong apartment, switching on a Fortress appliance powered by Hong Kong Electric, buying groceries at Park 'N Shop or toiletries at Watson's, listening to Metro Radio, or, soon, connecting via a PCCW-HKT line, people in the Special Administrative Region are a captive market.
The drive for endless profit reaches well beyond the SAR's shores. Hutchison Port Holdings, a unit of flagship Hutchison Whampoa, is the world's largest private port management company, handling a tenth of global trade. HPH has 18 major container terminals across the globe, in Hong Kong, Shanghai and seven other cities in China; Jakarta, Rotterdam and Felixstowe (Britain's largest port), plus terminals in Myanmar and on both ends of the Panama Canal. The Hong Kong facility absorbs 30% of the SAR's commerce. HPH itself accounted for $580 million or 27% of its parent's pre-tax profit in 1998.
Li's other major global foray is in telecommunications. Last year Hutchison Telecom exchanged its highly successful Orange mobile phone operation in Britain for 10% of Germany's Mannesmann services conglomerate. That $14-billion asset play set the stage for an even bigger windfall from the $180-billion merger of Vodafone/Airtouch and Mannesmann, the world's largest takeover. Hutchison looks set to keep its 5% holding in the combined entity as a strategic investment.
So how does the PCCW-HKT merger fit into the Li family mega-empire? Well, it doesn't. Or shouldn't, if competition is to be maintained. HKT and Hutchison Telecom are rivals in fixed-line, mobile and Internet communications. Citing conflict of interest, Richard Li has pledged to resign his Hutchison Whampoa directorship if the HKT takeover goes through. But he could still sell HKT's phone business to Hutchison Telecom later.
Even before the takeover, there have also been fears that the Lis are becoming too powerful in Hong Kong. Many people insist, as Li biographer Anthony Chan does, that the family businesses should be viewed as a whole. "It's always been one Li enterprise," says the University of Washington professor.
"I'm getting faxes from small and medium-sized businesses complaining about how the Li family is so powerful now," says legislator Fred Li Wah-ming of the Democratic Party. "This all began with Cyber-Port - that was totally unfair." Fellow Legislative Council members Emily Lau Wai-hing and Christine Loh Kung-wai agree that the award of public land to Richard Li's Cyber-Port housing and high-tech project - a key source of PCCW's wealth - without public bidding created the perception of favoritism. That impression gained credence with the exemption of Tom.com from several listing rules.
Loh adds that the government needs to decide whether it will allow related parties to dominate any sector. For Lau, "it's a bit worrying to see them so omnipresent [in] electricity, property, telecoms, supermarkets. Personally, I find it oppressive."
Judging from the crowds that mobbed the 669-times oversubcribed Tom.com share issue, however, Hong Kongers don't seem to mind Li's money-making magic if they can get a piece of the action. Or, as he might put it, the warmth of a loving heart.
With reporting by Alexandra Seno, Alejandro Reyes and Allen Cheng/Hong Kong |
