Like Father, Like Son

By Anthony Spaeth

There are a lot of Lis in Hong Kong, but only one Li Ka-shing. Li is a billionaire and a major player in the real estate market, and in retail, telecommunications and power generation. His port operation handles 30% of Hong Kong's trade. His nickname in the press is Superman. Now comes Superboy: Li's son Richard, 33. Last month, Richard took over Cable & Wireless HKT, the territory's telecom giant, using an Internet company he started only 11 months ago called Pacific Century CyberWorks. The deal, valued at $38 billion, was Asia's biggest takeover ever.

Richard's spanking new empire is starting to rival the one Dad took decades to amass. And while CyberWorks' capitalization could deflate tomorrow with a market slump, Richard's vision is hugely ambitious. He wants to provide fast and flexible interactive television and Internet access, through so-called broadband connections, to the vast populations of China, India and the rest of Asia--and thus become the largest such provider in the world. Dad is on the same wavelength. A week before his son struck the Cable & Wireless deal, Li Sr. went public with a tiny, barely operating Internet company called Tom.com setting off investor hysteria in the streets of Hong Kong. Li says Tom.com will become the biggest portal, or entry site, for Chinese speakers using the Internet--a grand goal too.

All the companies controlled by father and son together account for more than a quarter of the capitalization of the Hong Kong stock market. In the telecom business alone, Li-controlled companies have 60% of Hong Kong's mobile-phone market and virtually the entire fixed-line system. Bricks and mortar? Li is Hong Kong's property king. Now he and son have displayed highly advanced knowledge of how to prosper in the new era of telecoms and the Internet. Richard, for one, sees these talents as anything but local. "These are truly global transactions," he told TIME. The message: watch out world; Hong Kong isn't big enough for the Li family anymore.

Li & Li have clearly seen the future in the New Economy and are staking out big claims. The intriguing question about Superman and Superboy: Are they working as a team or as future competitors? Much is made in the Hong Kong press of Richard's attempts to step out of his father's shadow; of how he was passed over in favor of elder brother Victor, now 35, as heir apparent to the Li empire; and of the differing styles of father and son. The father is reclusive, cordial, traditional and lives in the same house he bought for $13,000 in the 1960s. Richard likes junk food, can be blunt with subordinates, is building a lavish mansion and flew Whitney Houston to Hong Kong for his millennium party. (One trait the duo share is a penchant for being seen with beautiful women; Ka-shing is a widower, and Richard has never married.) When asked which businessman he admires most, Richard mentions not Dad but Sony's co-founder Akio Morita--and he makes clear that questions about his father and their relationship are unwelcome.

Yet Richard is deputy chairman of Li Ka-shing's Hutchison Whampoa conglomerate, owns 5% of Tom.com and has a long history of cross dealings with his old man. Is he a son with burning ambitions of his own? Or one standing on his father's shoulders? Perhaps a little of both.

Li Ka-shing's life is one of the most remarkable success stories of postwar Hong Kong. Born in the southern Chinese city of Shantou in 1928, he fled to the British colony in 1940 but quit school at age 15 to make a living selling plastic wallets. In 1950 he started a factory producing plastic flowers for export. Then he began buying apartment buildings. By 1979 the portfolio of his Cheung Kong Holdings was enough to impress merchant bankers and, finally, to gain him entrance to Hong Kong's Very Big Boys Club: he bought a controlling stake in Hutchison Whampoa, one of the traditional hongs, or trading houses. The hongs had long been the center of British wealth and power in the colony.

Long before Britain handed Hong Kong back to China in 1997, business was firmly in the hands of locals, though Li Ka-shing occupied a tier above the rest, particularly in his investments around the world. One Hutchison division manages 18 container terminals from Burma to the Panama Canal; one-tenth of the world's trade passes through them. Last year Li Sr. sold Hutchison's Orange mobile-phone unit in Britain to Germany's Mannesmann group for $5.7 billion in cash and stock worth $8.9 billion at the time of sale. Since Britain's Vodafone AirTouch agreed to merge with Mannesmann in February, Li's stock has rocketed in value to around $25 billion.

Li's sons couldn't have had a more different upbringing from that of their father. At an early age, Victor and Richard were invited to attend Dad's board meetings. Their education was extensive, expensive and foreign: both graduated from Stanford University. In fact, from age 13, Richard attended schools in California, where he also caddied at a golf course and manned a cash register at McDonald's. After graduation in 1987, he did time as a fund manager at a Canadian investment bank and then in 1990 was summoned home to take charge of Hutchison's satellite unit. It wasn't as big a job as Victor's, who was already being groomed as Dad's successor.

As it happens, Richard realized that Hutchison's satellite, which the company used for its telecommunications operations, could also handle television transmissions, and that led to a visionary idea. He could circumvent the government monopolies that controlled TV throughout Asia by beaming programs directly to viewers. True, few Asians owned satellite dishes. But Richard realized that demand for exotic American programming would lead entrepreneurs across the continent to buy a dish and fling cables around neighborhoods to satisfy customers. He persuaded his father to invest $62.5 million and launched Star TV. (Hutchison's total investment in Star would climb to $125 million.) Within two years, Star was bringing modern TV to isolated corners of India and China and attracting 45 million viewers.

That success, in turn, drew suitors. Rupert Murdoch wanted an Asian counterpart to his Fox Network in the U.S. and British Sky Broadcasting, and he invited Richard for a chat on his yacht in the Mediterranean in 1993. A deal was hammered out in a matter of hours. When the final payment came through two years later, Richard had earned Hutchison $950 million.

Richard followed Star with his own scheme to provide long-distance phone service to Asian businesses via satellite, but that went nowhere. In 1996 brother Victor was kidnapped by a criminal triad boss, and father Li paid a ransom estimated at more than $100 million. If that wasn't enough, Hong Kong went into recession after the Asian financial crisis hit in 1997, and the fortunes of the Li family, or at least the family's confidence in Hong Kong, seemed to be slipping.

Then came the rise of dotcoms. Richard believed satellite transmission of the Internet to TV sets in China and India would be his future, and his Pacific Century Group got $50 million in backing from Intel for that dream in 1998. His next big deal was to develop a high-tech "Cyberport" on a prime piece of land donated by the Hong Kong government--without, strangely, the territory's usual process of taking bids from potential developers. He then created Pacific Century CyberWorks through a so-called back-door listing on the Hong Kong exchange, a procedure in which an existing public company is bought and renamed. (This evades the exchange's rule that a company must have two years of profits before it can list.) CyberWorks inherited the Cyberport project, and its shares increased fifteenfold on its first day of trading.

When Britain's Cable & Wireless, which owned 54% of Hongkong Telecom, announced its intention to spin off non-core businesses like HKT, Richard realized that HKT had assets he could use. Chief among them: its broadband Internet service, which has 100,000 customers; its cellular-phone system and the potential of new, third-generation cellular technology to enable Internet access; and rights to a valuable deal signed by Murdoch's Star TV to provide television shows for HKT's broadband network. He eventually offered shareholders a package of shares and cash that could cost him $12 billion.

Even in his hour of triumph, Richard finds it hard to get 100% of the credit. Many analysts point out that all of Hong Kong's telecom licenses expire in 2006, and the decision on whose gets renewed will surely be made in Beijing. That's why HKT chose Richard, the analysts say--because Li Ka-shing's clout in China will smooth the way. To others, however, it looks like Superboy is perfectly capable of flying on his own.

--Reported by Isabella Ng and Maureen Tkacik/Hong Kong

With reporting by Isabella Ng and Maureen Tkacik/Hong Kong