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Rediff.com  » Business » The inspiring story of a rags-to-riches entrepreneur

The inspiring story of a rags-to-riches entrepreneur

Last updated on: February 05, 2015 16:02 IST

Not many people remember the long, lonely miles Asia's richest man had to travel before he arrived where he is today, notes Barun Roy.

Image: Li Ka-shing is Asia’s richest man. Photograph: Reuters
 
 

Asia's legendary tycoon Li Ka-shing, founder and chairman of Cheung Kong Holdings, has once again revamped his vast and diverse global business empire in his continuing endeavour to enhance corporate profit and shareholder value. 

Instead of separate entities for separate activities, only two companies will henceforth look after all group operations - one for the property side and the other all non-property interests.

Shareholders, according to Li, don't like too many cooks stirring the same broth, and he should know. He has an uncanny ability to spot even the subtlest changes in shareholder thinking. 

While analysts study the significance of this new twist in the tale, it's worth recalling how it all began in the first place. 

To me, that's the more interesting part of the Li saga. 

Image: Headquarters at the Cheung Kong Center. Photograph, courtesy: Baycrest/Wikimedia Commons
 
 

Not many people remember the long, lonely miles he had to travel before he arrived where he is today - Asia's richest man (for at least two decades) with a current net worth of $31.9 billion. 

Life wasn't easy for this rags-to-riches entrepreneur, who fled China with is family in 1940. 

It became harder after his father died of tuberculosis and he became the breadwinner of the family. Li was only 15. He will be 87 in July. 

I came to know of those struggling days during an interview with him in the early 1980s for a regional financial monthly I was working for. 

Sitting in his office on the top floor of the Cheung Kong Centre in Hong Kong's Central district, he described how he had to drop out of school and find a salesman's job at a plastics trading company. 

But he was also keeping his eyes and ears open. He soon found out that, in addition to the usual buckets and containers, there was a growing craze for plastic flowers and trees as home decorations. 

By the time he was 22, he had set up his own company making them. He named it Cheung Kong (Yangtze River in Cantonese). 

Not too long afterwards, what began as a plastics manufacturing enterprise blossomed into a top real estate company. 

A prolonged and violent political battle had erupted in Hong Kong in 1967 between pro-Communist Leftists and British loyalists, and as people started fleeing the colony in panic, property prices plummeted.  

Image: Li acquired British-owned Hutchison Whampoa in 1979. Photograph, courtesy: Cheung Kong
 
 

They hit rock bottom when rumours spread that Beijing might invade Hong Kong and take it over. Li saw his opportunity. As others sold, he started buying, thus building up a cheap land bank that he calculated would produce handsome future dividends. 

At the same time, he guessed there would be an influx of refugees from the mainland in the wake of Mao's Cultural Revolution, most of whom would be ordinary Chinese with little means to afford large residences but enough to buy small apartments. 

He guessed right and came up with an idea that paved the way for Cheung Kong to emerge as a real estate major. It's a common practice among developers today, but in those early days it was quite revolutionary. 

The concept was that of building clusters of high-rise, self-contained residential complexes and pre-selling apartments to potential buyers, asking them to pay up in advance for a unit on any floor of their choice. 

 
Image: (L-R) Cheung Kong Holdings Deputy-Chairman and MD Victor Li, Chairman Li Ka-shing and Hutchison Whampoa Group Managing Director Canning Fok. Photograph: Reuters
 
 

That way, the developer could use buyers' money to finish his projects, and wouldn't have to bear the entire cost himself. The idea clicked so well that, by 1972, Cheung Kong was big enough to be listed on the Hong Kong Stock Exchange. 

That was the first testing ground where Li perfected the art of forecasting demand and making pre-emptive moves. 

That also prepared him to go for the big kill. 

When Li acquired British-owned Hutchison Whampoa in 1979, he was convinced it had dealt a winner. History has proved him right.

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