原文： Forbes Asia
In a cover interview in the new January issue of Forbes Asia, senior Hong Kong business leader Peter Woo talks about future plans for his main business, Wharf, and sizes up the first several months of C.Y. Leung’s tenure as Hong Kong’s chief executive. Woo ranks No. 7 on our new Forbes Hong Kong Rich List with wealth of $8 billion. He gave us his insights on where the global economy is going in and here exchanges business lessons learned from his legendary billionaire father-in-law, shipper Y.K. Pao, and plans for succession in his own huge empire.
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Y.K. PAO was certainly my life teacher. A self-made man, he became the world’s largest ship owner and a true legend, growing from one 30-year old small ship to 20 million tons and two hundred ships. I learned something new from him almost every day for 15 years.
I had never met a man that looks so far, so wide, and thinks so deep, a man who is strategic but never misses the important details. He keeps things simple but always has the big picture (in mind). He was able to focus and multi-task at the same time.
Y.K. was also a sharp decision maker. He was always on a quick pace and never a procrastinator. He never really sort of sat down and taught me anything specific. It was more by osmosis. Every new day with him seemed a new adventure.
He was charismatic and charming, and had great integrity. He was an international icon and held high esteem in business and also by world political leaders, from President Reagan to the Queen.
When Y.K. took over Wharf, it was not a complicated exercise for him. The acquisition of the first 10% block of shares from Li Ka-shing was an overnight decision. The final 20-odd percent was a contested block from the market, and that was done over one weekend before the stock market opened Monday morning. He knew what outcome he wanted and he got that outcome. Nothing deterred him. It was his single-mindedness and great nerves. He was applauded by many for the strategic diversification move from shipping investment on the high seas to investing on land.
I also recall clearly that when the market started to go bad (in the mid-1970s) before the worse shipping depression, he had already started aggressively selling down his fleet. He sold and he sold. As people outside and inside (the) company thought he might be off his rockers. He just said, “I want to sell ships.” So by the time the worse shipping downturn hit bottom, he was debt free. Other ship owners were still reacting to the crisis and fully laden with debt. Y.K. was ahead of the game.
So when Y.K. bought Wharf, people said, “How Y.K. Pao can afford it and to carry such high interest debts to finance this new extravaganza?” The shipping market then was really very bad and interest rates were very high. But he was actually in cash. A lot of people didn’t know or could not imagine that, but being a banker at heart, Y.K. was on alert and prepared.
Y.K. also was a bloodhound for market intelligence. He always made well researched and informed decisions. He was also an eager learner. After he made a decision, he would be very single-minded until it got done. He didn’t get distracted. That’s why his life was about health, exercise and business. There were no distractions.
When he was ill and before he passed away, he contracted six super tanker new buildings at the bottom of the market. They were great buys and perhaps his last hurray. It’s a pity he was not able to witness the next following shipping boom. He was intuitive.
With respect to succession planning, when Y. K. decided it was time, he kept things simple and divided his businesses so that his children can separately get on with their lives and still remain family, with each to succeed or fail on their own, with no claims and no impasse. To him, life was too short for that.
It was perhaps more about passing out apples and oranges and pears that could hardly be seen as exact equals. To him, it was simply not about how to divide up one big watermelon equally and fairly. The World Wide Shipping Group was his whole life and principal interest, and his different non-shipping interests in Wheelock/Wharf, Cornes of Japan, and World Wide Investment group separately went to his four children respectively — all in separate trusts. Forcing future generations to stick together through businesses I suppose was not his cup of tea. Also, as a very forward looking and wise man, he was determined not to leave any matters that could cause problems and troubles to his next generation.
To this end, any formula which minimizes complexities appeals to me. My daughter will probably deal with our private retail portfolio under the Lane Crawford Joyce Group and which she has substantially built up over many years. My other children will have nothing to do with that. She has been the chairman. She can do whatever she wants to do with it. That’s for her alone to decide. It will be her gain or her pain. My son studied architecture. He is keen on the property businesses in our listed companies. Again, the other siblings will have nothing to do with it.
There is professional management succession planning with our group of self-contained subsidiary companies. This is an art. It is fully engaging and clearly a top-agenda item. Without constantly pushing my senior colleagues to formulate decisions, I would never be able to learn and know what they are made of.
My family must learn to work with the professional management teams. They must learn to build and motivate the professional teams. They must learn with humility, go to work before others and being the last one to leave are just the bare minimums.
My children need not work so close to me. I arranged at very early stages (of their career) for my children to have several mentors. I say (to them), “You’d better learn from your mentors close up and start to pull together some hard-earned (achievements).” Mentorship is critical for young people. Mentorship by others for my children is very high on my agenda. Judgment is a delicate thing and does not come overnight. Learning how to set a direction is the acid test (of one’s skills). Authority without (good) judgment is dangerous.
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Peter Woo Talks About The Global Economic Outlook
Below, Woo, who ranks No. 7 on our new Forbes Hong Kong Rich List with wealth of $8 billion (click here for the full list), talks about the global economic outlook:
Q. What’s ahead for the global economy?
A. 2013 of course is very important, but we need to look at it in the context of QE3. You have QE1, QE2 and QE3. What does it mean to have QE1, QE2 and QE3? Q3 is talking about almost a perpetual easing, and the conditions of any stop to that easing would be a drop of unemployment to a certain acceptable level and (that) inflation doesn’t set in. That being the case, we’re going to see a very low interest-rate period. That is one aspect (of the global economy) that you cannot not look at. The second aspect is that Europe is going thru a major rationalization process. There two are very important economies – the EU and the U.S. You can’t talk about the world without talking about the EU and the U.S.
My sense is that the U.S. is base-building. They will do 2.5% GDP growth. I think the EU is going to have a hard time. If you take the EU and the U.S. and aggregate the two, you probably come into a positive growth area, a little bit above zero something. That’s what I see.
So what does it mean? It means that the ’08 depression scenario was avoided. I think the political leaders, the Fed and everyone were saying, “We’re not going to allow (a) 1928.” It was keeping the world going — no cliffs.
(Yet ) it (also) means that somewhere, the political leaders dealt with the moral hazard issue. It means that people with capital assets will be bailed out. That is the scenario you see.
So: Okay, you have capital assets. What do you do?
We still believe there are attractive investments in growth areas like Asia in China, Hong Kong and Singapore, and in financial center cities – London, New York, Hong Kong, Singapore, Tokyo… Money is going to flow toward those places because there is critical mass. We think that is attractive. For the people that have the capital assets, what are the things that they buy? I think simple investment concepts such as leading consumer brands, companies connected with properties in financial centers and growth economies, financial services companies where capital limitation is not an issue and growth visible.
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Surge Protector
A display at the Hong Kong Museum of History reminds visitors about the historical bonds between Hong Kong and their mainland kin, going back to when migrants came south to eke out livings in the salt and fishing businesses centuries ago. Lately the ties have reached a new level–one not entirely pleasing to contemporary Hong Kongers.
Encouraged by Beijing, well-heeled mainland shoppers, property buyers and service industry customers have given a boost to the economy of the “special administrative region” at a time of slow GDP growth–below 2% in 2012. Yet along with hot, easy money from Western countries, they have contributed to an unpopular 23% spike in residential sale prices in the first ten months of last year, helping to make Hong Kong property by some accounts the world’s most expensive. Although few outside of Asia have cause to think of Causeway Bay, rents in the shopping mecca surpassed Manhattan‘s Fifth Avenue’s last year as the world’s highest.
Part of the rub with China is political–many cherish the local prerogatives and feel bullied by the new overseers. But for some in Hong Kong it’s the physical mainlander crush that hurts. “There are too many of them,” said Martin Kit, 22, a surveyor who joined a reported 130,000 marchers in a huge New Year’s Day protest against Hong Kong’s unpopular political leader C.Y. Leung. “The economic benefits aren’t that big.”
Peter Woo doesn’t see it that way. The billionaire knows those benefits firsthand. Mainland and overseas shoppers flock to his signature retail malls, Harbor City in Tsim Sha Tsui and Times Square in Causeway Bay. That lifted the share price of his Hong Kong-listed real estate-led flagship Wharf Holdings by 77% in 2012, triple the rise last year in the property-heavy Hang Seng stock index. The bulge in Wharf’s share price helped to boost Woo’s wealth from $3.4 billion a year ago to $8 billion. (Click here for a link to the complete 2013 Forbes Hong Kong Rich List.)
“You see people complain, ‘Now we don’t want people from the mainland to come here to use our facilities,’” Woo says, seated in his 24th-floor headquarters office in the Central district for a rare foreign-media interview. “To me that’s music to my ears when there is demand for your services.”
China lifts Hong Kong’s boat, he argues–to the degree it is seaworthy. “We are facing a surge. In the next few years the surge is going to be even more tremendous,” he says. But “our capacity has not grown appropriately to capitalize on the surge.”
The solution, he says, is to attract more business jobs to Hong Kong and create the infrastructure to handle a larger metropolis. “We have to bring more companies in. We have to open up. We have to take down our barriers of not allowing people to come in to work,” he says, noting OECD professionals. “Why? The more service capabilities we have, the more critical mass we build” for the financial, transport, retail and trade industries that account for 94% of Hong Kong’s GDP. That means embracing big-ticket items like an expansion for Hong Kong’s airport, the Kai Tak Cruise Terminal and easier links to China–not fewer.
Woo is not new to Hong Kong public affairs. The businessman was, in fact, one of three candidates to be the territory’s first chief executive at its return to China in 1997. He previously was chairman of the governmental Hong Kong Trade Development Council and the Hong Kong Hospital Authority.
He looks young for age 66–and was slowed last year only by the ribs he broke skiing in Austria, one of his outdoor enthusiasms. Indoors he avidly plays bridge, a pastime since college. He speaks in short sentences that people who know him say reflect a crisp approach to life that partly explains his business success.
Woo’s family hails from Shanghai and moved to Hong Kong in revolution-torn 1949. He stayed through college but earned a second undergraduate degree from the University of Cincinnati, where he was a varsity cheerleader, senior class president and valedictorian. An M.B.A. from Columbia’s Business School and a Chase banking job followed. It was while living in New York that he met his future wife, Bessie, a daughter of shipping tycoon Y.K. Pao, at the time one of the wealthiest people in Asia (see related story here). By 1975 Woo had joined Pao’s Worldwide Shipping Group and in 1982 became managing director at Wharf, a onetime British business acquired by his father-in-law. Woo controls Wharf through its smaller parent, Wheelock & Co.
Back in the 1980s Hong Kong faced uncertainty ahead of its return to China. The U.S., its major export market, was also struggling. Wharf’s Hong Kong-listed shares were trading at HK$2. “We didn’t have a lot of management,” he recalls about that era; its operations for land, hotels and terminals (Modern) were outsourced. “From then on we said, ’We’re going to have our own management team, our own value creation.’” It’s paid off. Its shares have recently traded at HK$60, up 30 times in those 30 years. The market capitalization at the end of 2012 was $24 billion.
Woo’s Harbor City, one of seven Wharf retail centers in Greater China, attracts an average 200,000 shoppers a day–mostly tourists. It has added 60 tenants (out of 450), including Tom Ford and Gucci Kids, in the past two years. For sweet tooths there is Europe’s macaron maven Ladure in its Hong Kong debut. On New Year’s Eve it had dozens of shoppers lined up waiting to get in.
Meantime, at Times Square in Causeway Bay–long known for big Japanese department stores–Woo turned a parking depot for a tramline into the world’s tallest vertical mall. Its 2012 sales were pointing toward $4 billion.
Woo is going after Chinese customers in China, too. After first investing in the mainland through projects such as Shanghai Times Square in the 1990s, Wharf upped its pace. “In 2006 I made a substantial policy decision. Half of my assets were going to be in China,” he recalls. He’s fallen short only because the Hong Kong valuations have soared so high. “I have made the budget. We spent. But we are still at only about 40% of total assets.”
With the China market, “You are chasing a running train,” Woo says, and Wharf is running as fast as it can: Activity is under way in Chengdu and Wuxi, for example. Overall, Woo wants to build an additional 130 million square feet in largely high-end commercial and residential real estate in the next five years. “I will build three Harbor Cities. I’ve got to build four supertowers. I have to build six hotels.”
A Wharf board member, Vincent Fang, CEO of fashion retailer Toppy of Hong Kong, affirms Woo’s pace: “Others might think one step ahead; he thinks three.” Another director, fellow rich lister Jim Thompson, eyes the execution: “He is very loyal to his staff even though he expects a lot of them. I would say he drives himself very hard in everything he does.”
Chinese officials say they plan to boost domestic consumption as a share of GDP, and Woo is a believer. Also, at odds with many China skeptics, he says the private sector will expand its place in the mainland economy.
Woo’s confidence lies in new Chinese Communist Party chief Xi Jinping. “For the first time a Chinese leader is younger than me,” chuckles Woo. (Xi is 59 years old.) “The first week in his office he already followed Deng Xiaoping’s path in Shenzhen and said Deng Xiaoping’s idea of reform is my model. That message was very clear.” He expects Xi to embrace the private sector’s role because of his experience in top posts in provinces such as Fujian, where two-thirds of GDP comes from private-sector business. “He’s seen how it’s done.”
Woo is also hopeful about China because of urbanization and the spread of high-speed rail. “That speed-rail grid will energize the domestic market.” Hong Kong–in another big-budget project–will soon have a link in Kowloon, not far from Harbor City.
Wharf has one advantage over newcomers in the scramble for real estate gains in China: Woo can tap a private retail entity, including the Lane Crawford chain, run by his daughter Jennifer, 36, which does business in 40 cities, compared with 16 for Wharf. It’s useful in providing advanced intelligence about bigger property projects. “They tell us which cities are ready,” he says.
Woo in the past year added another leg to expansion in China: Greentown. Wharf obtained a controlling stake in the Hangzhou-based residential developer in mid-2012 after it became overstretched financially. With the Chinese housing market turning up, Greentown’s Hong Kong-traded shares had nearly tripled a half-year later, adding to Wharf’s market cap bulge.
Back at home Woo’s optimism about Hong Kong is tempered: It will face a lot of social problems, he concedes. The growing divide between rich and poor in so much of the world is also manifesting problems in Hong Kong, and newly elected C.Y. Leung, whom Woo was seen as backing in a split from several other property barons, has run into problems advancing an agenda that would address them.
Leung’s first three months were adversely affected by elections for Hong Kong’s legislature, Woo says. “That was disruptive.” The second few months were tied up with a scandal over his illegal home construction–something tolerated by the British colonial government but not today. “Unfortunately the chief executive’s involved in this.”
But, adds Woo, “does that mean he has to go? The answer is no. Now let’s get on with business, so to speak.”
“If you ask me, I think that C.Y. is a very capable man. He’s very policy savvy. He has tremendous energy. And he doesn’t procrastinate on things, which I think is very important. He has a platform which I think is a good platform. ? It’s to the left. But in my opinion, to the left of what the business community really liked is not a bad thing. I think it’s a good thing.”
What is it about the liberal agenda that Hong Kong needs? “Two or three” points, Woo replies, including housing for the poor who can’t help themselves and assistance for the elderly “but not on the basis of a full entitlement program.” Also, environmental mitigations.
Says Woo: “There’s this dichotomy of people with capital assets getting better, much faster, and people without capital assets [having] a hard time. That’s a political issue.” Hong Kong’s social problems, he says, need to be addressed “head-on and early” by both government and businesses. Wharf itself directly funds charity projects.
The government should take action to relieve middle-class worries over residential prices, he says. (Wharf is not active in that Hong Kong sector.) “The solution is in the supply of land, plus the gradual conversion of factory land to residential use,” he says.
Nothing terribly unconventional in all that. Whether it is enough to anticipate the mainland “surge” is subject to a heated street debate. But if your China hands have paid off as well as Peter Woo’s, you’d be inclined, too, to keep playing trumps.
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