Li Ka-shing should be lauded for his global vision in the restructure of his business empire
Albert Cheng says the criticism heaped on Li Ka-shing for diversifying and restructuring his corporate empire amid difficult economic times defies business logic
To shore up economic growth, China has followed the American way of "quantitative easing", lowered its deposit reserve ratio and interest rate, and introduced the "belt and road" development initiative. It even tampered with its stock market when it plummeted.
Yet, these stimuli have apparently failed to halt a downward economic trend. Manufacturing, consumer spending, and imports and exports have continued to be sluggish. In the face of these realities, the mainland media took it out on Li Ka-shing, for having diversified his business empire's investments away from China.
Li's rags-to-riches story is well documented. It is more than sheer luck that he has managed to build success upon success over the years. It entails foresight. Not just Li, but any sensible investor should be taking a second look at their investment strategies on the mainland. Being at the helm of major listed conglomerates, Li has a fiduciary duty towards his investors. It would be irrational and irresponsible for him to act against economic sense.
His companies have sold off major property developments on the mainland, the most eye-catching of which was the Oriental Financial Centre in Shanghai's Lujiazui district, sold for US$9 billion in 2013. Public psychology aside, such business transactions do not inflict any tangible financial loss on the country. Li thought it was a good time to sell, others thought it was a good time to buy. Patriotism has nothing to do with it; it is business.
Besides, Li still runs substantial enterprises in niche areas such as life sciences. It is hardly a total flight of investments from the mainland.
Yet, his business decisions have been roundly criticised. The People's Daily urged readers to "build a better country to make his departure today become his regret tomorrow", while an article published on the website of a think tank affiliated with Xinhua News Agency also denounced him. The commentary, titled "Don't let Li Ka-shing run away", was widely circulated before being removed from the internet.
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"In China," its author Luo Tianhao asserts, "the property industry is closely related to political power. Without political capital, there is no way to do business in real estate." Luo noted that Chinese officials' feelings were hurt. "At a time of economic tension in China, Li Ka-shing has abandoned China by selling extensively his assets, disregarding how Beijing had strongly assisted him in the sectors of port facilities, real estate and other infrastructural projects. His act has seriously undermined public confidence in the mainland. The pessimistic mood he created has spread. Li has fallen from his moral high ground.
"When he wanted cooperation, he tapped the political powers. When he sold off his business, he called it market forces. There is apparently a double standard. It is egocentric self-interest."
In a way, the commentary has exposed the unspoken reality of doing business in China. Without political guanxi, or connections, it's almost impossible for a business to get off the ground. China has also benefited in this arrangement, of course.
What Luo has failed to point out is that officially sanctioned investment opportunities do not necessarily result in handsome profits. Each large-scale project in China comes with considerable risks. There is a long list of Hong Kong businessmen who have had their fingers burnt.
Li's phenomenal success benefits not only himself but also the people and governments at both the local and national levels. He has also given back much of the profits he has earned. Since its inception in 1980, the Li Ka Shing Foundation has granted over US$17 billion, almost 90 per cent of which support projects in the Greater China region.
Li's business empire defies national borders. Global diversification has long been his vision.
China's major state enterprises have pursued the same strategy of reaching out. Nobody calls them unpatriotic. Instead of bragging of China's importance to Li, the Chinese authorities ought to hail Li as a role model for its state enterprises.
Albert Cheng King-hon is a political commentator. email@example.com