HK tycoons' billion-$ succession question

PAYING THEIR RESPECTS: Among Mr Cheng's pallbearers were (from left) Beijing's top official in Hong Kong Zhang Xiaoming, Hong Kong's richest man Li Ka Shing and Lee Shau Kee of Henderson Land Development.


    Oct 17, 2016

    HK tycoons' billion-$ succession question


    HONG Kong's highest-profile officials and business people paid their respects to one of Asia's richest men, Cheng Yu Tung, whose death marked the first of an ageing generation of tycoons whose hold on the city's economy faces growing challenges.

    Mr Cheng, who died aged 91 on Sept 29, was the billionaire founder of Hong Kong property group New World Development.

    His US$17 billion (S$23.6 billion) empire included one of the world's largest jewellery companies and spanned the infrastructure and telecommunications sectors.

    His business at one point included dealings with United States presidential candidate Donald Trump.

    Among Mr Cheng's pallbearers on Thursday were Hong Kong and Macau's top leaders - Leung Chun Ying and Fernando Chui, Beijing's top official in Hong Kong Zhang Xiaoming, and local billionaires Li Ka Shing of Cheung Kong Holdings and Hutchison, and Lee Shau Kee of Henderson Land Development.

    Well-wishers had draped flowers for 200m leading to the entrance of the funeral home, while scores of journalists waited outside during the service.

    Mr Cheng's death comes as many of Hong Kong's established billionaire families struggle to lay down clean succession plans amid a much less favourable business environment in the city than that enjoyed by their patriarchs in their earlier days.

    Succession plans for Mr Cheng had been in place since 2012 when his son Henry succeeded him at the helm of New World.

    Mr Cheng's grandson Adrian was also appointed to top roles at New World and jeweller Chow Tai Fook.

    His granddaughter Sonia was tasked with running the Rosewood hotel group, which New World owns.

    However, this transition contrasts with other families still grappling with how to hand over multi-billion-dollar businesses in the face of sibling disputes and competition from mainland China.

    From the 1970s, tycoons like Mr Cheng, Mr Li, Mr Lee and casino kingpin Stanley Ho expanded their businesses unhindered, boosted by rapid economic development and favourable regulations.

    These tailwinds helped them dominate the city's transport, retail and property sectors.

    This oligopoly has faced challenges in recent years due to slower growth, a more interventionist mainland government and heightened grassroots political pressure to reduce the dominance of big conglomerates.

    David Webb, a shareholder activist who operates a corporate governance website in the city, said the main threat to the tycoons' Hong Kong businesses was a slipping grip on power in the political structure that had previously enabled them to fend off competition from outsiders.

    Mr Cheng had a number of sweetheart deals with the government such as the construction and management of the financial city's main convention and exhibition centre where Hong Kong's 1997 handover ceremony took place.

    "Some of their past economic success through cartels will not be possible in the future," said Mr Webb.

    While Mr Li, the city's richest man, also mapped out his succession plan in 2012, other families have had high-profile disputes.

    Brothers Raymond and Thomas Kwok took control of the city's largest property developer, Sun Hung Kai Properties, in 2008, sparking a feud with their elder brother, Walter, that reached an agreement in 2014.

    The family of Macau casino billionaire Ho, who has three surviving wives and 17 children, battled publicly over his assets, before a truce was declared.