• Thu
  • Nov 27, 2014
  • Updated: 9:01pm
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INVESTMENT

If it doesn't look right, then it probably isn't

Sometimes in business, if a story sounds too good to be true, then it probably is, with Carson Yeung's downfall being a fresh reminder of this

PUBLISHED : Tuesday, 11 March, 2014, 11:59am
UPDATED : Wednesday, 12 March, 2014, 1:18am

There's a simple rule of business that some people learn the hard way, some discover by example, and some instinctively understand from Day 1.

This rule can be summed up as: if it doesn't look or sound right, then it probably isn't. It covers more or less everything, ranging from doing deals to people to ideas - and especially grandiose projects that come with lavish projections.

I am prompted to write about this by observing the fate of Carson Yeung Ka-sing, who has just embarked on a six-year jail term for money laundering offences.

Yeung is best known as the "unknown" guy from Hong Kong who secured control of Birmingham City Football Club. When he emerged from nowhere to take over the club, I was contacted by some British-based media outlets who wanted to know more about him.

I scrambled around to find this information but, in essence, came up with little more than the fact that he once owned a small chain of hairdressing saloons and seemed to have a lot of money.

Some people are serial believers in things that test the outer limits of plausibility

How he made the leap from scissors to buying a British football club was hard to explain, producing scepticism about Yeung on my part and disappointment from those asking the questions, who seemed to think that my doubts may have reflected a lack of diligence in researching his background.

However, nothing about Carson Yeung made sense, at least in the way he explained his fortune. Now we know that it didn't make sense because it simply was not true. Yet it is easy to see why a struggling club might have been happy to embrace a wealthy foreigner riding to its rescue.

People want to believe things that are to their advantage, and they regard contrary information as not only being inaccurate but somehow malicious, because it has the capability of shattering their dreams. This way of thinking explains why literally millions of people fall for implausible get-rich-quick schemes and why even experienced businessmen often get their fingers badly burned by seemingly plausible individuals who tell them what they want to hear - even if they have a nagging suspicion that there are holes in the narrative.

I would love to be able to say that I have never joined the ranks of the gullible, but that would be less than honest. I have lost money on a currency investment scheme that, in retrospect (my-oh-my isn't retrospect a wondrous thing), didn't add up.

However, I knew and liked the person selling this investment scheme and convinced myself that the holes in the sales pitch were more a reflection of my lack of knowledge than a lack of reality. Then there was the business start-up that had sales projections amounting to little more than a hope and a prayer but seemed kind of plausible if you really believed in the project.

There was some peer pressure here, because other investors were friends who appeared to have fewer doubts than I. Moreover I kidded myself that, as this business was somewhere adjacent to the familiar terrain of the food business, I also sort of knew about this.

Well you live and learn, even if the learning costs quite a lot of money, but some people are serial believers in things that test the outer limits of plausibility and simply refuse to acknowledge that the holes in the case tend to be chasms and that when things don't make absolute sense there is a reason.

Back in the 1970s, when I was an industrial reporter in Britain, I covered the much-hyped launch of the DeLorean sports car, which was to be manufactured in Northern Ireland at a time when most investors were giving the province a very wide berth. The British government was initially prepared to pour cash into this venture precisely because it looked like a beacon of light in dismal times; eventually, however the cash was withheld because of a lack of matching funds.

It didn't take a genius to work out that the project's chances of success were extremely slight. My moment of truth came during the car's presentation when, with much fanfare, the gull-winged doors opened and water started trickling into the car.

Yes, I know it's a small thing, but it seemed to me that the wealthy punters who were supposed to buy this car would not want a vehicle that dampened their backsides every time it rained. A comment to this effect had a DeLorean official telling me that I really had not understood the concept as a whole. But to me, a damp seat is, well, a damp seat and I couldn't see anyone wanting to sit on it.

John DeLorean was later arrested on drug-related offences, and the car turned out to be the lemon that it had always looked like being. However, in many ways it looked just great, the only small caveat being that it was no good as a sports car.

DeLorean and Yeung are great storytellers, but that's mainly what they are, even though they had their believers.

Stephen Vines runs companies in the food sector and moonlights as a journalist and broadcaster

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This article is now closed to comments

KwunTongBypass
Look out for peddlers of all kinds of miracle cures for waste incineration, including "emission free", cheap, reliable, and "net energy producing" plasma-arc gasification / incineration!
johnyuan
In my adult life time observation, Chinese whose last name spells as Li, Lee, Yeung and York has a good chance to do business well in English speaking countries – US and UK. No exceptional wise explanation except those locals accepts these names as one of their own in the absence meeting in person. In Carson Yeung’s case, the instinctive defense against a foreign crook just can’t exist.
.
Do I inspire any Chinese folks to change their last name? That is perhaps even not in doing business abroad?
daily
These "look too good to be true" conmen thrive because there are just too many gullible and stupid people out there.
 
 
 
 
 

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