Entrepreneurship Li Ka-Shing the Entrepreneur

Entrepreneurship Li Ka-Shing

The Entrepreneur Li Ka-shing- Hong Kong, China

Li Ka-shing is one of the most innovative and successful entrepreneurs of all time. Though little is known about him in the west, he seems to be in constant motion, with his hands in nearly every aspect of business and he is also constantly in the business news, for his successes, investments and strategies. He seems to be well respected and a trusted member of the international business community, with people willing to invest in his ventures even during tough times. What really makes him unique is not only his success but his background and skill at coming from nothing and rising to great things. This is especially true in his case because he is working from within a nation that has extreme traditional views regarding business and interactions within it. He seems to have managed to fully bridge the distance between his own cultural ties and those of western business and he has done so with remarkable success. According to those who know him, he is a simple, frugal man, with significant drive and interest in countless new and varied issues and ideas. For the most part he is considered to live as an example to anyone who seeks to become a success in business.

The Chinese entrepreneur Li Ka-shing (1928) was born in the town of Chaozhou in the province of Guangdong. His father was a primary school head in his home town but decided to move his family to Hong Kong in the wake of the Japanese invasion of China in 1940. His father was never able to settle into city life and passed away three years after immigration. Li Ka-shing was only a teenager at the time of his father's death and despite his father's commitment to education Li had very little formal education as he had to help support his family beginning at age 15. Li began working as a street salesman of plastic goods and rapidly raised his position to manager, by 17. In 1950 (at 22) Li opened his own small plastics factory, making mostly plastic flowers and began exporting to the U.S. "Cheung Kong Industries, after the Cheung Kong River -- also known as the Yangtze -- the longest river in China. The name was reportedly an allusion to both the river's many tributaries and the need for business alliances." (Larkin, 2010, para. 5) in 1958 Li's factory was flourishing and he began to diversify, he purchased his factory building, his first foray into real property.

After this purchase Li recognized the value in real estate and began acquiring properties. His strategy is often used today by western and eastern property developers; "Li's strategy was to avoid debt by raising capital before building, both through the formation of joint ventures with landowners and by preselling apartments to friends and colleagues. As such Cheung Kong could incur fewer risks while still earning profits for both Li and his co-investors, fueling rapid growth. The company, renamed Cheung Kong Holdings in 1971, had its initial public offering in 1972. By 1979 Li was Hong Kong's largest private landlord." (Larkin, 2010, para. 6) His next step was revolutionary for China, when he acquired majority holdings in a traditionally British company "hong" in 1979, becoming the first Chinese person to own a hong and the hong he now had controlling interest in was the oldest of its kind, the first registered business in Hong Kong, Hutchison Whampoa. Over time he increased his holding in the company to 49.9% by 2004. (Larkin, 2010, para. 7-8) He continued to diversify both his major companies over the years both nationally and internationally, with interests in energy, cell technology, international commerce, telecommunications and even internet technology and hosting, in addition to expanding his interests in manufacture and retail. (Larkin, 2010, para. 9-11) Li also invested in the social networking cite Facebook in 2008 (Campbell, 2008, p. 53) and was also reported to have invested in the UK music cite Spotify ("Tycoon invests...," 2009, p. 6).

By 2008, Li was listed as the richest man in China and at nearly 80 showed no signs of retiring or even slowing down, (Einhorn, 2008, p.13) though he has shown a much greater interest in philanthropy over the years and has become a much more active member of his Foundation, described below.

In Hong Kong they call him "superman"-and his feats in business are indeed the stuff of legend. Born in China, Li, 79, came to Hong Kong as a refugee. Forced to drop out of high school, he founded his first company, a plastics manufacturing concern, in his early 20s. Through Cheung Kong (Holdings), his corporate flagship, and Hutchison Whampoa, a conglomerate, he wields enormous influence in Hong Kong, mainland China, and Europe, which last year accounted for 45% of Hutchison's $34.3 billion in revenues. Li's empire includes the world's biggest ports company and the world's largest provider of 3G mobile-phone services, plus holdings in shipping, property, retailing, and energy. And he is not slowing down. Last year Hutchison's profits and EPS rose 40%, and Li, who may be Asia's richest man, remains keenly interested in a new business school he is financing in Beijing. (Chandler, 2007, p. 46)

"Li Ka-shing, emerging Asia's biggest tycoon by far, appears to have blended the business culture of the overseas Chinese with some elements of international best practice." ("The best and…" 2001, p. 8) Though the article goes on to call Li's leadership style is secretive and authoritarian, as one insider is quoted saying he, "sees no value in independent directors disagreeing with him…" and that is corporate structures are extremely complex, in a seemed attempt to retain family control. (p.8) the work also stresses that almost despite his style, his holdings are one of the only one's in China and Hong Kong that foreign and domestic investors continue to commit to even in the wake of significant economic downturns and that investors are usually very happy with their dealing with Li as he always leaves enough for the investor and does not seek to trap all the profits of deals. (p. 9)

In other words he is highly respected all over the world as a good entrepreneur and business leader and even after losing 50% of his total net worth in the current business crisis, where China was hit very hard. (Flannery, 2009, p. 38) Some of this personal net loss is related to Li, reinvesting his own money back in his businesses to keep them fluid during the crisis, and despite the economic downturn his holdings are considered the most liquid in all of China. Additionally, Li continues to be a very well respected philanthropist, with a creative spirit, treating his foundation (Li Ka-Shing Foundation) as any other business with investments to build its giving potential ("China: Selling Up…" 2009, p. 1) Li has always been known for a sense of obligation to give to peoples and organisations in need ("Heroes of Philanthropy…" 2009, p. 43).

Most accounts described Li as personally unpretentious and frugal, leading a modest lifestyle that reflected his respect for traditional Chinese values. His philanthropy was well-known throughout Asia, where his Li Ka-shing Foundation, created in 1981, contributed about $500 million in the fields of health and education. (Larkin, 2010, para. 12)

One of Li's most enduring visions, as a philanthropist has been to see China's elite, educated expatriates return and help build the nation. His goal has largely been realized as he founded a business school in China that now recruits not only expatriates who have gained much from their education abroad but foreign academics from all over the world.

The Graduate School of Business is one of three ambitious programs established by the Hong Kong billionaire Li Ka-shing to improve the quality of Chinese higher education, in part by drawing back some of the thousands of Chinese scholars who have left since China began opening up in the 1980s… in addition to financing the Cheung Kong universities, Mr. Li's foundation bankrolls the Cheung Kong Scholars Program, which provides annual bonuses of up to 100,000 yuan ($15,000) for recruitment of public-university professors from overseas. Since 1998, more than 800 foreign-educated professors, most of them returnees, have taken positions through this program. (Hvistendahl, 2008, NP)

Li is a fundamental entrepreneur and a respected, though secretive leader of many. His entrepreneurial behaviour is associated with, from an outside and hindsight perspective, both integral timing of insight into new emerging technologies, using traditional business models with a strategy twist, and diversifying into many markets so risk is reduced when single aspects of the business are faltering or failing.

To illuminate these three behaviours I will use examples from Li's career. First, Li recognized plastics and a fundamental and relatively new technology that would revolutionize manufacture and retail, and he built his business on this. Yet, almost immediately he recognized that sinking all of your interest and success into one aspect f business could prove risky, so he began to invest in property, beginning with his own factory and then as Hong Kong's largest private landlord. Within this example there is a fundamental example of the strategy twists used by Li, i.e. The private and presale real estate tactic, which in many ways was before its time, and likely served as an example to many property developers since that time. This rather simplistic but nonetheless effective linear model of Li's business life exemplifies the spirit of entrepreneurship. Li has, from his first tentative steps in business proved his ability to be in constant development. He is clearly a risk taker and has accepted both reward and loss as a result, markedly more rewards than losses. Lastly, Li demonstrates through his vast network of diversified holdings an ultimate desire to stay ahead of the game and be fiercely independent in doing so.