Passing of jewelry,
property mogul Cheng marks new era for HK’s billionaires
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[October 13, 2016]
KONG (Reuters) - Hong Kong's highest profile officials and business
people on Thursday paid their respects to one of Asia's richest men,
Cheng Yu-tung, whose passing marked the first of an aging generation of
tycoons whose hold on the city's economy faces growing challenges.
Cheng, who died aged 91 on September 29, was the billionaire founder of
Hong Kong property group New World Development <0017.HK>. His $17
billion empire included one of the world’s largest jewelry companies and
spanned the infrastructure and telecommunications sectors, while his
business dealings at one point included current U.S. presidential
candidate Donald Trump.
Among Cheng's pallbearers on Thursday were Hong Kong and Macau's top
leaders, Leung Chun-ying and Fernando Chui, Beijing's top official in
Hong Kong, Zhang Xiaoming, and local billionaires Li Ka-shing of Cheung
Kong Holdings and Hutchison, and Lee Shau-kee of Henderson Land
Well wishers had draped flowers for 200 meters leading to the entrance
of the funeral home, while scores of press waited outside during the
Cheng's death comes as many of Hong Kong's established billionaire
families struggle to lay down clean succession plans amid a much less
favorable business environment in the city than that enjoyed by their
patriarchs in their earlier days.
Succession plans for Cheng had been in place since 2012 when his son
Henry Cheng succeeded him at the helm of New World. Cheng’s grandson
Adrian Cheng was also appointed to top roles at New World and jeweler
Chow Tai Fook <1929.HK>, while his granddaughter Sonia Cheng was tasked
with running the Rosewood hotel group, which New World owns.
However, this transition contrasts with other families still grappling
with how to hand over multibillion dollar businesses in the face of
sibling disputes and competition from mainland China.
From the 1970s, tycoons like Cheng, Li Ka-shing, Lee Shau-kee and casino
kingpin Stanley Ho expanded their businesses unhindered, boosted by
rapid economic development and favorable regulations. These tailwinds
helped them dominate the city’s transport, retail and property sectors.
This oligopoly has faced challenges in recent years due to slower
growth, a more interventionist mainland government and heightened
grassroots political pressure to reduce the dominance of big
David Webb, a shareholder activist who operates a corporate governance
website in the city, said the main threat to the tycoons' Hong Kong
businesses was a slipping grip on power in the political structure that
had previously enabled them to fend off competition from outsiders.
[to top of second column]
Cheng Yu-tung, founder of Hong Kong property group New World
Development, attends a news conference in Hong Kong, China September
20, 2011. REUTERS/Bobby Yip/File Photo
had a number of sweetheart deals with the government such as the construction
and management of the financial city's main convention and exhibition center
where Hong Kong's 1997 handover ceremony took place.
"Some of their past economic success through cartels will not be possible in the
future," he said.
Li Ka-shing, the city’s richest man, also mapped out his succession plan in
2012, other families have had high profile disputes.
Brothers Raymond and Thomas Kwok took control of the city's largest property
developer, Sun Hung Kai Properties <0016.HK>, in 2008, sparking a feud with
their elder brother, Walter, that reached an agreement in 2014. The family of
Macau casino billionaire Ho, who has three surviving wives and 17 children,
battled publicly over his assets, before a truce was declared.
Meanwhile, China grows more important for Hong Kong’s tycoons. Many are now
publicly showing their allegiance to the mainland at a time when some residents
in the city are calling for independence, a move that would have been
unthinkable a few years ago.
Chow Tai Fook Jewellery has struggled over the past two years after a
Beijing-led crackdown on corruption dampened demand for luxury jewelry from
mainland tourists, who have shunned Hong Kong's retailers in favor of other
(Story corrects RIC for Sun Hung Kai Properties.)
(Reporting by Farah Master; Editing by Sam Holmes)
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