Li Ka-shing’s Retirement Marks the End of an Era for Hong Kong

Family business succession is a delicate matter. Commenting on Li Ka-shing’s retirement, Prof. Joseph Fan told The Economist that family-run firms in Hong Kong, Singapore and Taiwan lost 60 percent of their value on average in the years before and after a change in leadership.

“Too long” was how Li Ka-shing, known fondly by locals as ‘Superman’ for building his business from nothing, described his working life when he announced his retirement in May in a press conference on 16 March 2018.

Few expect Li, who will turn 90 this summer, to hang up his cape for good. He says he will continue to advise his eldest son, Victor Li, who will inherit his two main businesses – CK Hutchison, a conglomerate with interests in power plants, perfume and much in between, running 52 ports and 14,000 high-street stores, including Watsons at home and Superdrug in Britain; as well as CK Asset, one of Hong Kong’s biggest property developers. The two businesses combined are worth US$79.7 billion.

Succession is a delicate matter. In an interview with The Economist, Joseph Fan, Professor of School of Accountancy and Department of Finance and Co-Director of Centre for Economics and Finance at The Chinese University of Hong Kong Business School, said that family-run firms in Hong Kong, Singapore and Taiwan would lose 60 percent of their value on average in the years before and after a change in leadership in the family.

Many a tycoon has proved hopeless in planning for his departure. Discussing death is regarded as unlucky. Most cling on past their prime. Not so the meticulous Li. As early as 2000 it became clear that Victor would inherit his empire, after his second son, Richard, stepped down as deputy chairman of Hutchison Whampoa (now CK Hutchison) and went his own way. In 2012, Li made this line of succession official.

Although both father and son speak of continuity, many in Hong Kong see Li senior’s exit as the end of an era—and not just for his empire. Two decades ago, Li’s stocks were among the ten most actively traded on Hong Kong’s exchange, according to Bloomberg. Now they are outside the top 30.

As for Hong Kong, it is less fertile ground for would-be tycoons than before. Mainland China, meanwhile, produces a dollar billionaire every five days. A new Li Ka-shing is more likely to rise in next-door Shenzhen than in Hong Kong… Read More (PDF)

This article was also published in The Economist‘s print edition under the headline “Plastic flower of the flock”. Please click the images below for further reading.

The story was also reprinted on 26 March 2018 by StarTribune, Minnesota’s leading daily newspaper under the headline “Li Ka-shing, for many years the richest man in Asia, will retire at 89” (PDF).

Source: The Economist
Date published: 24 March, 2018

Photo: Anthony Wallace/AFP