IN THE SAGA surrounding PCCW there is an invaluable lesson for Beijing - if it wants to achieve political purposes in the commercial world, it should do it the commercial way. The commercial way would be for Beijing and its corporate creatures to acquire control of PCCW with real money and effort. It might be cheaper than it thinks. It is understandable for Beijing to be concerned by the prospect of foreign ownership of PCCW, which runs Hong Kong's most comprehensive telecommunications network. Too many security issues are involved. Other governments are just as sensitive. It was the Americans, you'll remember, who cited security concerns for barring Li Ka-shing from acquiring Global Crossing and forcing Dubai Port World to divest the US port interests it had bought from P&O. The way Beijing handled its political agenda was wrong. It did not play by the rules. Whatever one thinks of Washington's strong-arm tactics it has always been the job of its Committee on Foreign Investment in the United States to 'review the national security implications of foreign acquisition of US companies or operations'. In Hong Kong, which has no such formal structures, Beijing should have acquired Richard Li Tzar-kai's PCCW shares or launched a hostile takeover battle to wrest control. Instead it was blinded by its traditional, political way of doing things. Richard Li's desire to exit PCCW has been known since June. Yet Beijing never bothered to prepare a financial response. When Newbridge and Macquarie proposed acquiring PCCW assets, Beijing did only two things: it told China Netcom Group, with its 20 per cent PCCW stake, to say no to the offers. And revealing its ancient paternalistic mentality, it asked Li Ka-shing to rein in his unruly son. The sloppy share sale arrangement that was cobbled together deeply damaged Hong Kong's reputation as the world's freest economy. Ironically, the deal did not survive in the commercial world. It was voted down by investors. Beijing should undo the damage now. It should acquire control of PCCW through the commercial route. Some may say that would violate the 'one country, two systems' policy. But what is more damaging to Hong Kong - the closed-door manipulation that we've seen or a commercial transaction in broad daylight? Even if Beijing is not ready to pay a huge sum to buy out Richard Li, there are many other ways to clip his wings. One option would be for Netcom or any state-run company to increase its stake in PCCW. With Netcom already holding 20 per cent, it wouldn't take much to catch up with Li the younger, who owns a little more than 26 per cent. A 5 per cent stake in the company costs about HK$1.7 billion now. Owning more of PCCW would strengthen Beijing's hand in future boardroom battles and demonstrate its commitment to growing the company. Of course, there could be no better demonstration of that commitment than meaningful business co-operation between Netcom and PCCW in the mainland market. Netcom should recognise that PCCW is more than just an asset the government is determined to control. It has expertise and value that deserve to be exploited. By waving the prospect of greater access to the mainland market under their noses, Netcom might be able to persuade the PCCW board to oust Richard Li as chairman. After all, the job of company directors is to seek the best interests of the shareholders. I am sure there are investment bankers with much better ideas than mine. The most important thing now is for Beijing to change its approach from passive to active and from political to commercial. It must act fast. Richard Li's desire to exit is much too keen for anyone to believe that the status quo can last long.