How will Hong Kong’s next generation of tycoons remain relevant?
The city’s ageing tycoons have built power and wealth through decades of entrepreneurial charm, guile and audacity – traits that none of their offspring appear to possess
Karl Marx was right. The end game of capitalism is a massive and irreversible wealth concentration among the elite – and serfdom for everyone else. No one is left to save the positive remains of capitalist system. The real challenge with capitalism at this point of inequality is who gets access to capital and how are decisions being made in its allocation.
Hong Kong’s billionaire property developers rode a bull market for over 30 years, made some lucky calls, stayed in the game while competitors retreated, became known as geniuses, but now have become their own worst enemies.
With home prices stalled, an uncooperative government and no more sales tactics left, real estate tycoons Henry Cheng Kar-shun of New World Development and Lee Shau-kee of Henderson Land attempt to legitimise predictions that are incongruous, illogical and meaningless.
I have previously asserted there is no other way to push discounted flats, that despite discounts, are still as expensive as Manhattan except with usurious lending practises. Besides that, their vision of where things are going is no clearer than anyone else.
Our tycoons are people afflicted with a neuralgic concern for maintaining their privileged status quo.
Despite decades of being worshipped as brilliant businessmen, from my experience I don’t think these elderly people read anything more sophisticated than a horse racing tip sheet. Yet, they have perpetuated a local version of economic Darwinism that is almost impossible to reform.
In Europe or Africa, a population facing the extreme Hong Kong style economic oppression by a cartel of big developers and family owned conglomerates would riot in the streets over rip off grocery prices and poor living conditions. Their cities would be paralysed and ungovernable. Imagine burning rubber tires and the hulks of scorched out Mercedes littered in the front of Cheung Kong Centre or Wheelock House.
Now in their 80s and 90s, Hong Kong’s tycoons naively assume their kids are capable of taking over in the midst of social, political and economic upheaval that is centred around Hong Kong’s brand of winner-take-all capitalism. They cannot overcome the suffocating Chinese clan mentality where there is simply no other way to run a business – whether it is a wonton noodle shop or a sprawling conglomerate – than to hand it over to family members.
The rich business person plays both sides of the Hong Kong-China political divide so he can win both ways and his family’s fortune is safe. Intensely close and personal relationships with the government’s planning departments are required to play the Hong Kong property game. Indeed, this collusion can easily cross ethical and criminal lines as the Rafael Hui-Thomas Kwok-Sun Hung Kai case showed.
While the tycoons have built power and wealth through decades of entrepreneurial charm, guile and audacity, none of the their offspring appear to possess the intuitive talents needed to advance their empires. Indeed, few of them seem enthusiastic or capable of dealing with mainland officials besides attending the mandatory banquets.
They may talk about China, but few have any genuine experience in China. They are surprisingly incurious about issues beyond Hong Kong. Beijing is at worst a nuisance or a compliant toll booth.
Despite benefitting from a better education than their parents, they have led a privileged life experience of no experience. It leads to a jaded cynicism of life experience without having had any. And this paralyses a Chinese company as all the executives sit around waiting for the boss to give them orders. One man shows are the best way to define their corporate culture even today.
So when leading tycoons were called by President Xi Jinping to meet in Beijing during the Occupy protest in September 2014, it couldn’t be to compliment them on what a great job they were doing in Hong Kong. Among other things, Xi hinted that Beijing would play a more active role in the city’s affairs.
What wasn’t reported was that in the same meeting the President warned the tycoons that if they didn’t like Beijing’s new attitude their empires should consider exiting Hong Kong. How the next generation of local tycoons remain relevant and connected to the city’s and China’s political economy in the face of ambitious mainland enterprises will determine if Hong Kong can find its future beyond profiting from waves of massive property inflation and deflation. Unfortunately, when the city’s governing class think only of their own fortunes, class interests must sever national interests.