Passing of jewellery, property mogul Cheng marks new era for HK's billionaires

K Wah International Holdings

13/10/2016 08:29

HONG KONG, Oct 13 (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 jewellery 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 Development  0012.HK . 
   Well wishers had draped flowers for 200 meters leading to the 
entrance of the funeral home, while scores of press waited 
outside during the service. 
    Cheng's death comes as many of Hong Kong's established 
billionaire families struggle to lay down clean succession plans 
amid a much less favourable 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 jeweller 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 favourable 
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 conglomerates. 
    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. 
    Cheng 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. 
    While 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  0086.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 jewellery from mainland tourists, who have 
shunned Hong Kong's retailers in favour of other destinations. 
 
 (Reporting by Farah Master; Editing by Sam Holmes) 
 ((farah.master@thomsonreuters.com; +852 96318262; Reuters 
Messaging: farah.master.thomsonreuters.com@reuters.net)) 
 
Keywords: NEW WORLD DEV FOUNDER/