To some he is the “Cockroach King,” accused of being a closet supporter of Hong Kong’s pro-democracy movement and a traitor to China.
To others – namely the Trump administration and its allies – he is a Chinese Communist Party loyalist who can’t be trusted with critical infrastructure.
Li Ka-shing, who built Hong Kong’s biggest fortune by straddling the divide between China and the West, is now finding it harder than ever to keep both sides happy.
As Beijing spars with western governments on everything from Hong Kong to trade and the coronavirus, the 91-year-old billionaire’s business empire has become an important test case for whether international companies can navigate what many are calling a new Cold War.
The odds of success are getting smaller by the day, if the stock market is any guide.
CK Hutchison Holdings Ltd, the largest piece of Li’s empire, now trades at less than half the value of its net assets, the most depressed level since the company was formed in a 2015 restructuring.
The stock has tumbled 30% over the past year, versus a 7% decline for Hong Kong’s Hang Seng Index.
While Li has always been closely associated with Hong Kong and mainland China, CK Hutchison gets more than 80% of its revenue from overseas, with much of it coming from sensitive industries such as energy, infrastructure, telecommunications and ports.
That makes the conglomerate – along with a handful of other firms including HSBC Holdings Plc and Swire Pacific Ltd – subject to more intense political scrutiny than most multinationals with a major presence in both China and the West.
“This is a delicate balancing act,” said Jackie Yan, who teaches management strategy at the University of Hong Kong. “He doesn’t want to be perceived by western countries’ regulators to be closely connected to the Chinese government.”
Yet that connection may have been made in May, when an affiliate of CK Hutchison lost a bid to build a water desalination plant in Israel that could have generated an estimated $85mn a year in revenue, or $2.1bn over its lifespan.
US Secretary of State Mike Pompeo warned Israeli Prime Minister Benjamin Netanyahu that the US was concerned about CK Hutchison’s participation in the tender, according to one of Israel’s largest newspapers. “We do not want the Chinese Communist Party to have access to Israeli infrastructure,” Pompeo said in a televised interview about two weeks before the contract was awarded to an Israeli company.
CK Hutchison declined to comment on the deal.
It wasn’t the group’s first loss.
In 2018, it was blocked from acquiring a gas pipeline operator in Australia over similar national security concerns.
The operator, APA Group, has since reported about A$463mn ($322mn) in profit.
Li, who was born in mainland China but fled to Hong Kong as a child during World War II, has a complicated relationship with the Communist Party.
While he was known for enjoying cordial relations with previous Chinese leaders when the country began opening its economy and needed support from Hong Kong, Li’s ties to mainland power appear to have weakened since President Xi Jinping took the top job in 2013.
Li met personally with previous party bosses including Deng Xiaoping, Jiang Zemin and Hu Jintao, according to state media reports, but it’s unclear whether he has won an exclusive audience with Xi.
Li has faced criticism in Chinese state media since 2015, when he registered CK Hutchison and CK Asset Holdings Ltd – two new companies created as part of a group-wide restructuring – in the Cayman Islands instead of Hong Kong.
That, combined with reports that Li’s companies were offloading their properties in Shanghai, prompted state media, such as the People’s Daily and a think tank under Xinhua News Agency, to question his loyalty to China.
In response, Li’s office issued a three-page statement denying allegations that he was pulling out of China and stressing his respect for Xi’s leadership.
It said Li’s group had added 1,000 retail stores in the mainland during the previous two years and that 87% of the HK$17bn ($2.2bn) in donations by the tycoon’s foundation were to interests in China and Hong Kong.
While it’s true that Li has expanded in China in some areas, he has been reducing his overall exposure in recent years.
Since 2015, CK Group’s three flagship companies – CK Hutchison, CK Asset and CK Infrastructure Holdings Ltd – have made or planned investments and acquisitions globally totalling almost $60bn.
Just 1.6% of that has been in China or Hong Kong, data compiled by Bloomberg show.
At the same time, about 60% of the companies’ $9bn in planned or completed asset sales since 2015 are from China and Hong Kong.
CK Hutchison now gets just 18% of its revenue from the region.
Last year, Li again drew China’s ire amid months of protests in Hong Kong against Beijing’s increased control over the former British colony.
Unlike other tycoons who mimicked the government’s position condemning violent protesters and supporting the police to restore order, Li published a vague message in local newspapers with lines from a Chinese poem that were widely interpreted as a call for not only halting the violence in Hong Kong’s streets, but also stressing freedom, tolerance and the rule of law.
A few weeks later, Li urged the government to show leniency toward young people when dealing with the unrest.
He also called on youth to consider the big picture.
Criticism quickly followed, with China’s Central Political and Legal Affairs Commission, the country’s top law-enforcement body, accusing the tycoon of “encouraging crime.” Other state media blamed property developers like Li, who has a fortune valued at $29bn by the Bloomberg Billionaires Index, for causing social inequality.
A Hong Kong delegate to China’s National People’s Congress, the nation’s top legislative body, posted a meme on his Facebook page depicting Li as the “Cockroach King,” adapting a term often used by Hong Kong police and their supporters to dehumanize protesters.
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