Cheung Kong’s Ausgrid response exposes just where its loyalties lie
Li Ka-shing’s business empire needs to spend a lot more on lobbying, government and public relations to avoid being labelled a ‘national security risk’ in future
When you can’t define to others where your loyalties lie, they get defined for you.
Being a major successful commercial force in China and Hong Kong means that you will be asked for something more than money: you need to give your political soul.
You don’t get to choose when it starts. You don’t get to decide when it ends.
Li Ka-shing’s Cheung Kong Infrastructure (CKI) is just starting to learn this dilemma. Last week it tried to distance itself from its Hong Kong roots after the Australian government made a preliminary decision to reject bids for its Ausgrid electricity network from Hong Kong and mainland China, based on national security concerns. CKI must have felt they won the lottery in reverse.
On Thursday, Australia’s Treasurer Scott Morrison told a press conference in Brisbane on that national security would be compromised if the sale of a 50.4 per cent stake in Ausgrid proceeded with the current buyers.
Ausgrid supplies electricity to Sydney and neighbouring areas.
China’s rapid ascent as a superpower arouses suspicion, if not distrust in any Chinese company involved in sensitive business areas.
Believing themselves superior in soul, in strength, in energy, industry and national virtue, China feels they deserve their share of economic dominion.
This phenomenon demands a major change in how Hong Kong and mainland companies project their business ambitions overseas.
According to public relations firms around town, corporate identity, branding, social responsibility and government lobbying are considered a waste of money, especially by rich Hong Kong groups like Cheung Kong. They are only beginning to learn their lesson now.
CKI’s response was surprisingly weak: “We believe the Australian Government must have reasons beyond the obvious which led them to make today’s announcement. The issue is unrelated to CKI.”
It added: “The company’s investment in Australia is significantly more than that of Hong Kong and mainland China, and over 90 per cent of our profit contributions are generated outside of Hong Kong mainland China. Incidentally, CKI is incorporated in Bermuda and not in Hong Kong.”
Unfortunately, CKI falls into a trap that Hong Kong companies are only about making money above and beyond sovereign allegiances.
Cheung Kong needs to spend a lot more money on lobbying, government and public relations if its participation in major infrastructure projects is going to avoid being labelled a national security risk.
The company is afflicted by its roots as an opportunistic property developer and asset trader through the 70s to 90s.
Infrastructure is more than just about money. Cheung Kong may have enjoyed cooperative government relations in Hong Kong and China, but abroad they must compete with other multinationals who are far more politically sophisticated.
Cheung Kong’s only loyalty resides in the Li family. And the way they conduct business in Hong Kong suggests they are phlegmatically arrogant beyond reproach.
They must combat the perception that they cannot be influential and successful in China without being perceived as being cooperative with Chinese authorities.
But, you cannot be loyal to more than one master. Or play them off against each other.
The Australian government didn’t say that CKI would ever turn over confidential information from Ausgrid to the Chinese government. But no one knows for sure.
And in the case of Ausgrid, which controls an important part of Australia’s national security infrastructure, it is a matter of being dead sure or dead.
Peter Guy is a financial writer and former international banker