Tycoon who took the road less travelled

Henry Fok Ying-tung is a walking encyclopedia of the history of China's economic reforms and opening up during the past 25 years. The vice-chairman of the Chinese People's Political Consultative Conference is by no means an academic specialising in China's economy. But his first-hand experience in operating businesses on the mainland in the early stages of reform has given him a unique understanding of the nation's economic transformation during the past quarter-century. Younger Hong Kong people would probably find it hard to believe Mr Fok when he says that he and his employees used to have to bring their own food and mineral water when they travelled to Shenzhen. 'Before the late 1970s, there was just one cement road in Guangdong province,'' Mr Fok said. 'It was the road linking Guangzhou and Conghua Hot Spring, which was built for senior leaders to have vacations during winter.'' Guangdong now boasts hundreds of thousands of kilometres of highways. During the past two decades, the Hong Kong-born tycoon, whose fortune was estimated by the US magazine Forbes at US$1 billion (HK$7.8 billion) in February, has embarked on a series of unprecedented projects, ranging from founding the first joint-venture hotel to building the first golf course on the mainland. In 1980, two years after the Chinese leadership embarked on the path of reform, Mr Fok founded the Zhongshan Hot Spring Resort, the mainland's first joint-venture hotel with a foreign partner, in the remote village of Yongmo in Zhongshan city. 'China's reform and opening up to the rest of the world started with opening the tourism sector. The opening of new hotels has brought tremendous changes to our country in the past two decades,'' Mr Fok said two weeks ago during his visit to Nansha, Panyu, where his non-profit foundation has invested $2.5 billion since 1991. The modest tycoon, 80, is still keeping very busy, and he could only spare 30 minutes to speak to the Post about his mainland experiences. Ho Ming-sze, an adviser to the Fok Ying Tung Foundation, said the strict border control policy of the Hong Kong colonial administration prompted Mr Fok to launch his mainland investments in Zhongshan. 'In the 1970s, Hong Kong people who crossed the border via the Lowu checkpoint were often questioned by police officers. That was why Mr Fok used to travel to the mainland via Macau, which is located near Zhongshan.'' In February 1983, Mr Fok, founding president of the Hong Kong Real Estate Developers Association, opened the White Swan Hotel in Guangzhou, the first five-star foreign JV hotel on the mainland. In the early 1980s, running hotels on the mainland was not purely a business matter. There were worries over whether lifting restrictions on travel to the mainland would bring about 'spiritual pollution''. In an era marked by shortages of staple foods, the two hotels were once accused of pushing up the price of daily necessities. The White Swan Hotel sold a bowl of wonton noodles for 4 yuan (HK$3.75), compared with the average price of 50 cents elsewhere in Guangzhou at the time. Even the hotel managers initially disagreed with the price. Mr Fok is proud of how the market-oriented principle guiding his hotels' operations had an impact on Guangdong's planned economy. 'The Zhongshan resort sold a bottle of a mainland-brand beer for more than one yuan in the early 1980s while all other hotels on the mainland followed the state-fixed price of 48 cents.' The shock to the planned economy was eventually appreciated by the residents of Guangdong. Thousands in the province flocked to the Zhongshan resort in the early 1980s to buy items such as bread because rationing coupons were not required there. None of the 2,000-plus staff at the White Swan Hotel had worked in hospitality before, but Mr Fok insisted it should be managed by mainlanders. The five-star hotel was rated in 1985 by an international tourist organisation as the mainland's first world-class hotel. Its accumulated turnover in the past 20 years was 5.3 billion yuan, while it has paid a total profits tax of 500 million yuan. The hotel became a state-owned enterprise when the 20-year agreement between the Fok Ying Tung Foundation and the Guangdong provincial government expired in February. However, the Guangdong authorities extended Mr Fok's rights to operate the White Swan Hotel under a contracting agreement, marking the first case in which the management of a state enterprise had been contracted out to investors outside the mainland. The management company has to guarantee an annual profit of 30 million yuan, with 75 per cent to be taken by the provincial government. In 1984, Mr Fok built the mainland's first golf course near the Zhongshan resort and established the country's first golf team amid criticism that the game was a 'bourgeois sport''. In the late 1980s, Mr Fok built the Luoxi Bridge linking Guangzhou and Panyu. The 1.9km bridge was the first toll bridge in the province. 'Subsequently, more than 10,000 bridges have been built in the province, with most of them funded by private capital,'' he said. In the early 1990s, Mr Fok started to develop Nansha. Situated on the Pearl River estuary, the island was dotted with desolate beaches and was dubbed the 'Siberia of Panyu''. During the past 12 years, Mr Fok's foundation has invested about $2.5 billion in business and recreational facilities on Nansha. But the facilities, including piers and conference and shopping centres, have been underused, partly because of Nansha's relative isolation. But Mr Fok is adamant the island will become a transport hub due to its location at the geographic centre of the delta. Last October, the Guangzhou municipal government said it would invest 30 billion yuan in basic infrastructure in Nansha during the next three years. On Longxue island, just south of Nansha, Guangzhou authorities are going ahead with plans to build a logistics centre, a deep-water port and two heavy industrial zones for petrochemical and iron and steel plants. The city will relocate many of its heavy industries and state-owned enterprises to Nansha and Longxue. December saw the completion of the first phase of the Nansha Information Technology Park, a joint venture between the Hong Kong University of Science and Technology, Mr Fok's foundation and the Guangzhou government. The park is an integral part of Mr Fok's decade-old efforts to develop the island. The foundation hopes the park will allow Guangdong to exploit Hong Kong's access to international markets and the latest information technology. A total of 300 million yuan has been invested in the park's 15ha first phase, which covers and comprises convention and training facilities and a software development centre. An electronic packaging centre will be built next month, university officials say. Cathay Pacific and the Kowloon-Canton Railway Corporation are among the 10 companies which have been attracted to the park, along with a travel agent and a company specialising in systems for so-called intelligent buildings, according to officials of the university. The 250ha park will be developed in three stages and is scheduled for completion in 2010. But Mr Fok warns that the province should not rest on its laurels. 'Guangdong has enjoyed advantages in attracting foreign investment during the past 20 years, but now it is facing competition from other provinces,'' he said. 'These days, in some cities in the Yangtze River Delta, an investment agreement can be approved within a single day, while the regulations regarding foreign investment in Guangdong often vary from city to city.'' To protect the interests of Hong Kong businessmen in the Pearl River Delta, Mr Fok plans to form a new commercial chamber, tentatively named the Federation of Hong Kong Entrepreneurs in the Pearl River Delta. He wants the body to serve as a middleman between the Guangdong authorities and Hong Kong-based companies and offer legal and financial advice. Ambiguities in laws and regulations have been a major source of complaints by Hong Kong businessmen investing on the mainland. There are nearly 50,000 Hong Kong-registered enterprises in the Pearl River Delta.