The richest man in Asia
By Frederick Mordi
The early life of Li Ka-Shing, the Chinese billionaire, who was born on July 29, 1928, did not particularly place him on the path of fame and fortune. He is said to have dropped out of school when he was about 10, because his parents could no longer afford to pay his school fees.
The family’s relocation from Chaozhou in China, to Hong Kong, a very expensive place to live in those days, during the Sino-Japanese war, was partly responsible for their unhealthy financial situation. To help support his family, young Li started doing menial jobs, which brought little income and much stress. He served as an apprentice in a watch-strap factory, and at age 14, he got another job in a plastics company.
But he did not give up hope of returning to school as he came from a family that placed premium on education. His paternal uncles picked their doctorate degrees at Tokyo University (then known as Imperial University). Sadly, his uncles refused to assist the struggling family, and to make matters worse, his father contracted tuberculosis, which was quite deadly in those days. Li, unfortunately, got infected as well.
Knowing full well that he might not advance much in life without a good education, he used the little money that he made from his job to enroll for part-time studies. He excelled in his academic work and was soon noticed by his co-workers. When his boss, whose secretary took ill, wanted a letter written, Li’s colleagues recommended him. He soon found Li a suitable replacement for his secretary and later elevated him to head a small department.
Soon after his promotion, the ambitious Li requested to be reassigned as a wholesale salesman, which was a more difficult job, but with better prospects. Even though the firm had seven other experienced salesmen, he surpassed them in sales figure at the end of the year, and won the boss’ commendation.
If the company had paid him bonus based on his sales, as it had earlier promised, his bonus would have been higher than the general manager’s! Another promotion quickly followed. He became a manager when he was 18. But he was already looking at a bigger picture. He had closely studied economic and political developments in China and noted the areas that offered investment opportunities. He discovered that the plastics industry had a bright future, because so many products could be made from it. Few people in Hong Kong and China at that time were conscious of the potential of plastic.
When civil war broke out in China, it affected sales of the company, which shipped 90 per cent of its products to mainland China. As Li had envisaged that eventuality, he ensured that he did not keep too much stock or order too much raw materials. That minimised the loss. His boss, who took note of his foresight, promoted him to the position of general manager of the head office. But he politely turned down the juicy offer, to pursue his interests in plastics. That was how he started his own small business, which he named Cheung Kong, with his personal savings. He was not qualified for bank loan at that time.
By then, he already knew a lot about the plastics business, including the technology, the market, and the accounting side of it. He did everything by himself the first year, as he did not have enough capital. Even though he had no experience in accounting, he learned by reading books on the subject. He did other things by himself, which kept his overhead low at the initial stage. He has made a profit every year since 1950 when he started the business, never losing a penny in any year. Today, he is said to be the wealthiest man in Asia, with a networth of $31.5billion and 15th richest person in the world.
“I started from the bottom up and went through so many different levels, doing different jobs,” he once said in an interview. “Like a mechanical watch, if one gear breaks down, the watch doesn’t work. In manufacturing in particular, you must be well versed not only with the market, but also with production and quality. I had worked at every level, doing different tasks.”
He later diversified the plastics business when it began to do well, and went into property. He bought his first property with a partner in the ’50s, and by 1960, the pair became the biggest player in the industry in Hong Kong. In all his financial dealings, Li exhibits prudence, a trait that has brought him this far.
“I am very prudent financially because of those hard times I went through,” he explained in a chat with Forbes magazine. “During the Japanese occupation of Hong Kong, which lasted three years and eight months, I sent 90 per cent of my salary to my mother. I spent nothing. I had a haircut every three months. I shaved my head like a monk. Nor did I go see a movie during this period. Seeing a movie was very cheap at the time, but I needed to save every penny.
“My father was hospitalised at the beginning of the Japanese occupation. The hospital fee was not much, but you had to pay for the medicine. I have not had any personal debts in many years. Even now, if I have a debt, I could repay the loan within 24 hours if the bank calls me. Or maybe 72 hours, to be more conservative. Even if the company had to borrow from the bank, we would have alternative arrangements, such as buying government bonds equivalent to the bank loan amount, to ensure that we can readily cash out at anytime. The interest income would continue to accumulate, while interest expense on the loan would be repaid monthly. Our corporate finance is very conservative and prudent.”
That is how Cheung Kong was able to survive turbulent times. When the company went public in 1972, it was almost debt-free.
Despite his enormous wealth, Li does not show off. He wears a cheap Seiko wristwatch, has quiet dinner with his clients, and gives to charity. But above all, he always make good on his promises—a trait that builds confidence in business. His company, Hutchinson Whampoa Limited is said to have a current workforce of 270,000 people in 52 countries, and accounts for 15 percent of the Hong Kong Stock Exchange by market capitalisation.
The world’s largest operator of container terminals, his business empire, which spans manufacturing, property, telecoms and maritime, stretches from Europe to America and Asia. Perhaps, it is for these reason that he is known as Chiu Yan Li, the Cantonese expression for ‘Superman Li.’ His two sons, Victor and Richard, run the business with him. Physical fitness, a habit he acquired as a youth, has paid off as he is said to be quite fit even at his age. He plays golf for about 90 minutes and spends 15 minutes on the treadmill, every day.
A Harvard Business School article published on February 28, 2012, summed up Li’s interesting story in the following way:
“From his humble beginnings in China as a teacher’s son, a refugee, and later as a salesman, Li provides a lesson in integrity and adaptability. Through hard work, and a reputation for remaining true to his internal moral compass, he was able to build a business empire that includes: banking, construction, real estate, plastics, cellular phones, satellite television, cement production, retail outlets (pharmacies and supermarkets), hotels, domestic transportation (sky train), airports, electric power, steel production, ports, and shipping.”
Li’s 9 steps to success
Li once wrote an article that outlined a plan that anyone can follow to achieve success in life. Edmund Ng of CeoConnectz, translated it from Chinese into English. There are nine steps in all:
1. Buy lunch for people more important than you
“Always remember to buy lunch for people who are more knowledgeable than you, richer than you or people who have helped you in your career. Make sure you do that every month. After one year, your circle of friends should have generated tremendous value for you. Your reputation, influence, and added value will be clearly recognised. You’ll also enhance your image of being kind and generous.”
2. Become a bookworm
“When you buy books, read them carefully and learn the lessons and strategies that are being taught in the book. For each book, after you read them, put them into your own language to tell the stories. Sharing with others can improve your credibility and enhance the affinity.”
3. Learn to sell like a wolf
“It would be great to find a part-time sales job. Doing sales is challenging but it’s the fastest way for you to acquire the art of selling and this is a very deep skill that you will be able to use for the rest of your career. All successful entrepreneurs are good salespeople. They have the ability to sell their dream and visions. You’ll also meet many people that will be of value to you in the later part of your career. Once you’re in sales, you will also learn what sells and what doesn’t. Use the sensitivity of detecting market sentiments as a platform for running your business and in the identification of product winners in the future.”
4. Don’t wear clothes you can barely afford
“Try to buy minimal clothes and shoes. You can buy them all you want when you’re rich. Save your money and instead buy gifts for your loved ones and tell them your plans and your financial goals. Tell them why you are so thrifty. Tell them your efforts, direction and your dreams.”
5. Learn from others by offering to help them
“Businessmen everywhere need help. Offer yourself to do part-time work for any kind of opportunity. This will help to hone your will and improve your skills. You will start to develop eloquence and soon, you’ll be closer to your financial goals.”
6. Start planning A.S.A.P.
“Life can be designed. Careers can be planned. Happiness can be prepared. You should start planning now. When you are poor, spend less time at home and more time outside. When you are rich, stay at home more and less outside. This is the art of living. When you are poor, spend money on others. When you’re rich, spend money on yourself. Many people are doing the opposite.”
7. Don’t let your ego rule you
“When you are poor, be good to others. Don’t be calculative. When you are rich, you must learn to let others be good to you. You have to learn to be good to yourself even more. When you are poor, you have to throw yourself out in the open and let people make good use of you. When you are rich, you have to conserve yourself well and not let people easily make use of you. These are the intricate ways of life that many people don’t understand.”
8. Don’t ever flash your wealth to others
“When you are poor, spend money so that people can see it. When you are rich, don’t show off, but silently spend the money on yourself. When you are poor, you must be generous. When you are rich, you must not be seen as a spendthrift. Your life would have come full circle and reached its basics. There is tranquility at this stage.”
9. Discipline yourself and stay focused
“There is nothing wrong with being young. You don’t need to be afraid of being poor. You need to know how to invest in yourself and increase your wisdom and stature. You need to know what is important in life and what is worth investing in. You also need to know what you should avoid spending your money on. This is the essence of discipline. Try to avoid spending money on clothes but buy a selective number of items that have class. Try to eat out less. If you do go out to eat, make sure it’s for lunch or dinner and always foot the bill. When buying people dinner, make sure you buy dinner for people who have bigger dreams than you and who work harder than you.”
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