Hong Kong s Surge Protector

Post on: 21 Апрель, 2015 No Comment

Hong Kong s Surge Protector

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(Repeats earlier post)

A display at the Hong Kong Museum of History reminds visitors about the historical bonds between Hong Kong and its 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 link 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.

Hong Kong s Surge Protector

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.” (Click here for a link to Woo’s analysis of the global economic outlook.)

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.


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