Transcription
[Music]
When Hong Kong's housing prices became the world's highest, many blamed Lee Kashing's property business. During the 2019 Pro-democracy protests, his unclear comments pleased neither side. In 2023, after selling Panama Canal ports to Western investors, Chinese officials restricted his family's movements and questioned his loyalty.
Lee Kashing's $38 billion empire was built on flexibility and neutrality, but in today's world, clear allegiances are increasingly demanded. How can such wealth survive when loyalties are closely examined? This story looks at how Hong Kong's richest man ended up between East and West. It highlights the difficult choices business leaders face as global businesses meet demands for state loyalty in a divided world.
Hong Kong in the 1950s was filled with refugees. Among them was a 12-year-old boy who had just lost his father to serious illness. This boy would later control up to 70% of all retail space in the city and own ports across 23 countries. So, how did Lee Kashing go from factory worker to Superman of Asian business?
After leaving communist China in 1940, young Lee supported his family through 16-hour shifts at a plastic factory. By age 20, he saved enough to start Shung Kong Long Industries, making plastic flowers. His timing was perfect. Plastic flowers were becoming popular in Western markets, and Lee's business quickly became Hong Kong's top exporter of this product.
Lee's success came partly from his ability to work with the British authorities who controlled Hong Kong until 1997. They limited who could reach the top levels of business power, but Lee worked well within the system. The big moment came in 1979 when Lee bought Hutchison Whampoa, a British trading company controlling key parts of Hong Kong. What's interesting is that other Hong Kong businessmen made higher bids but were rejected. The British favored Lee because he had built good relationships with them over the years.
The bank HSBC gave Lee special terms. He only paid 20% upfront for this huge purchase, with two years to pay the rest. During the high-interest 1970s, this saved him millions. Other Hong Kong business people couldn't get such good deals. This becomes clear when compared to businessmen like [ __ ] Fong. Despite having similar money and goals as Lee, Fong was blocked from major purchases. Why? Fong openly showed his Chinese patriotism, making him less trusted by British authorities than the flexible Lee.
This pattern continued as Lee grew his business. He gained control of infrastructure that others couldn't get: water systems, electricity, telecommunications. When British authorities sold public services, Lee often got them first at good prices. But Lee wasn't just working with the British. He also built relationships with mainland Chinese officials before Hong Kong's return to China. He understood that political situations change, and staying flexible helped survival.
When Deng Xiaoping started China's economic reforms in the late 1970s, Lee was ready. While keeping his British connections, he became one of the first Hong Kong businessmen to invest in mainland China. By the 1980s, he had major real estate projects in China while expanding his Hong Kong businesses. This political flexibility was a new approach. Lee maintained relationships with different political groups, adjusting as needed. This earned him his Superman nickname in Hong Kong business circles. While others rose and fell with political changes, Lee navigated colonial transition, financial crisis, and China's economic changes. By Hong Kong's 1997 handover to China, Lee had turned a plastic flower business into a huge company spanning telecommunications, retail, infrastructure, and real estate. He was worth billions.
Are you tired of juggling multiple AI subscriptions? Meet Monica AI. Monica accesses premium AI models like GPT-4, Claude, and Gemini all in one place. No more hefty fees or complicated setup. Whether you're a creator, developer, or student, Monica's powerful tools streamline your workflow. From document analysis to content generation, it's designed to save you time and money. Generate stunning visuals, automate coding tasks, and translate documents in over 120 languages, all at your fingertips. Plus, customize outputs to fit your unique style. Over 800,000+ users have transformed their productivity with Monica AI. Start with our free plan today and unlock the future of AI assistance. Click the link in the description to learn [Music] more.
Lee Kashing's influence on Hong Kong extends beyond politics to something more tangible: the housing system. Residents often pay over a million dollars for apartments smaller than some prison cells. The reason lies in a concept called the "shared area system," a practice his companies pioneered and popularized. Under this system, buyers pay for space they cannot use, such as hallways, elevator shafts, and structural walls. This can increase costs by 20% to 40% without adding usable living space. For example, a 700 sq ft unit might actually offer only 500 sq ft of livable space. The remaining 200 sq ft represents shared areas that buyers fund but never occupy.
This system, combined with land banking, a strategy where developers hold undeveloped land to create scarcity, has driven prices to record highs. A developer might acquire land, wait years for surrounding areas to develop, and then sell the land at a significant profit. For instance, a plot purchased in 2007 for $3,000 per square meter could be worth $40,000 after a decade. As a result, Hong Kong's housing market is one of the world's most unaffordable. This has created nano-flats and coffin homes, spaces as small as 20 sq ft. Elderly retirees live in cage-like units, while working-class families cram generations into cramped apartments. The housing crisis has fueled social discontent, contributing to protests in 2019. Many young professionals feel trapped, their economic prospects limited by skyrocketing prices. These practices, which began as business innovations, have reshaped Hong Kong's social fabric, turning living space into a luxury rather than a [Music] necessity.
In 2013, as Xi Jinping tightened his control in Beijing, Lee Kashing quietly began one of the largest asset relocations in modern business history. At first, these moves seemed like normal business adjustments, but a clear pattern soon emerged. Lee carefully and strategically moved his businesses out of China. Like a chess player making a plan, his companies changed a lot, moving from 88% of assets in Greater China to just 12%, with the remaining 88% relocated to Europe, Australia, and North America.
By 2015, Chinese state media expressed concern with headlines like "Don't let Lee Kashing run away." This public criticism highlighted Beijing's unease with Lee's actions. His sales of major properties, such as Shanghai Century Plaza and Beijing Oriental Plaza, totaled over 250 billion yuan, marking significant divestment during a period of economic uncertainty in China. While other Hong Kong tycoons maintained or increased their investments in mainland China, Lee took a different path. He focused on acquiring infrastructure assets in the UK, including a 30% stake in the country's gas distribution network and investments in water utilities. These assets offered stable, predictable returns protected by strong legal systems.
Lee carefully moved his money from risky areas to safer places with better laws. While doing this, his companies kept saying they were committed to China's growth. This created a two-part plan: publicly showing support while quietly moving his investments elsewhere.
While Lee Kashing moved his assets offshore, political unrest grew in Hong Kong, forcing him into a difficult position. In 2019, the city experienced its largest protests since the 1997 handover. What began as an opposition to the extradition bill quickly grew into a wider pro-democracy movement, drawing millions to the streets. For Hong Kong's business elite, the situation demanded clear allegiance: stand with Beijing or face consequences.
Lee, known for his political adaptability, tried to remain neutral in a conflict that offered no middle ground. As tensions rose, Hong Kong changed. Tear gas filled the financial district where Lee had built his empire. Protesters in masks clashed with police near his corporate offices. The city that made him wealthy was now marked by barricades and protest chants. Meanwhile, most of Hong Kong's business community sided with Beijing, publicly supporting authorities and condemning the protests.
Lee took a different path. He placed newspaper advertisements featuring an ancient Chinese idiom: "The melon of Wang Tai cannot bear the picking again," warning both sides against pushing too hard. This attempt at neutrality backfired. Beijing expected unwavering support during the crisis, not philosophical messages. State media quickly questioned his patriotism. The Hong Kong and Macau Affairs Office warned that "businessmen without a motherland will only become children who are bullied," signaling that even Hong Kong's richest man wasn't exempt from political expectations.
This public criticism marked a significant shift in Lee's relationship with mainland authorities. For decades, he had maintained good relations with Beijing while protecting his business interests, but the 2019 protests created a situation where his usual balancing act was impossible. Once celebrated for bringing capital into China, Lee now faced accusations of insufficient patriotism during a national crisis. Under mounting pressure, Lee tried to repair ties with Beijing while maintaining credibility with Hong Kong's public. In 2020, he publicly supported China's national security law for Hong Kong, a move seen as an effort to align with Beijing after his earlier stance drew criticism. However, his financial actions told a different story. His systematic withdrawal of assets from Greater China continued, suggesting that while he expressed public support, his business strategy focused on reducing political risk.
The 2019 protests showed China's changing expectations under Xi Jinping. Previously, economic successes alone proved loyalty, but now ideological support is equally vital. His experience warned other business leaders that during political crises, they must clearly demonstrate allegiance to [Music] Beijing.
While other tycoons rushed to demonstrate loyalty after the 2019 protests, Lee quietly arranged a $2.8 billion deal involving 43 global ports, triggering a strong response from Beijing. Why would he risk so much at this stage? This decision shifted Beijing's view of Lee from a potential suspect to something more serious: a possible threat to state interests. CK Hutchison Holdings announced a deal that caught Beijing's attention. The company planned to sell 43 ports across 23 countries to a group led by BlackRock, the largest American asset manager. The deal focused on two key ports, Bocas and Cristobal, located at opposite ends of the Panama Canal, a critical global shipping route.
"The Panama Canal was built by Americans for Americans, not for others. But others could use it. But it was built at a tremendous cost of American blood and treasure. 38,000 workers died building the Panama Canal." For China, these ports were more than just investments. They provided access to a waterway handling approximately 6% of global trade and 21% of China's merchant cargo. The canal cut shipping times between Asia and the US East Coast by two weeks, giving Chinese exporters a competitive edge. Disruptions to this route could harm China's export-heavy economy.
The timing added to the tension. The deal happened very quickly, which worried people. Even though it included many assets around the world and cost $2.8 billion, everything was finished within weeks. Lee personally joined video calls, showing how urgent this was. By moving so fast, he seemed to expect problems and wanted to finish before anyone could object. This showed his smart business thinking, despite his age.
On the same day as Trump's speech to Congress, where he called the deal "a win for American interests," China is operating the Panama Canal, and we didn't give it to China. We gave it to Panama, and we're taking it back." Chinese state media labeled Lee's decision as betrayal. One article branded him a "vampire," accusing him of being unpatriotic. This marked a shift in how the government viewed business decisions. Certain assets, regardless of ownership, were considered strategic national resources. By selling to an American-led group, Lee went beyond what was considered acceptable in business and was seen as being disloyal. Expect companies to support national goals, which leaves businesses with fewer choices about where their loyalty lies.
Lee Kashing, who started as a plastic flower manufacturer, is now Asia's most powerful businessman. His recent decision to sell 43 ports marks a significant shift in his business strategy. This move comes after a decade of redistributing his assets away from China and Hong Kong, reflecting the changing geopolitical landscape. Lee's sale shows the end of border-free business. Political neutrality no longer works. Today, leaders must handle political risks and align with national interests. Major companies are splitting operations to meet different country rules. Hong Kong's role as a bridge between China and global markets faces new challenges. [Music]