ad info

 > magazine
 web features
 magazine archive
 customer service
  east asia
  southeast asia
  south asia
  central asia

Other News
TIME Europe
Asiaweek Services
Contact Asiaweek
About Asiaweek
Media Kit
Get up to 3 months of Asiaweek free when you subscribe online!


Master of Guanxi
How Li wins people - and deals

Why Asia's battle against cronyism is taking forever
Fall: Suharto's buddies are fighting their way back
Fighter: Sabri Zain on the new Malaysia
Reformers: Crusaders wage war against corruption
Cronyism in Asia: A primer

No one has connections like Li Ka-shing. In his hometown of Chaozhou in southern China, he is a hero for building a university. He is said to have shared breakfast congee with Jiang Zemin. Both times that China's president visited Hong Kong — for the 1997 handover and the opening a year later of Chek Lap Kok airport — he stayed at Li's hotel, a unique honor. And Li's partner in developing Beijing's glitziest commercial complex was Tung Chee-hwa, long Li's friend before he became chief executive of Hong Kong. Li, the territory's premier tycoon, is a recognized master of the art of guanxi (personal relations).

Tapping such ties to facilitate business, though it can be controversial, is usually a far cry from either cronyism or corruption. Businessmen worldwide do it all the time. From Henry Kissinger to Richard Branson, the greatest businessmen know how to build relationships with people that will buttress their commercial empires. In Asia, Li sets the pace. "What he is so good at is making the right gesture at the right time, before the right audience," says a senior executive of a rival Hong Kong company. "That helps him win hearts and minds — and the trust of potential partners."

Li's ties in Beijing date back to the early 1980s. When Deng Xiaoping wanted local advice on how to handle Hong Kong's future, he summoned Li and pro-Beijing magnate Henry Fok. Li's efforts to build up his businesses and connections in China accelerated after 1992, when Deng made his famous "imperial tour" of the South to kickstart the country's stalling market reforms. In Beijing, Li was enthusiastically received by Jiang and then-premier Li Peng. "China's leaders saw him not just as an influential player in Hong Kong, but also someone who could help rally local business leaders to their causes," says a trade consultant.

Li's biggest and most controversial mainland project is the $2-billion Oriental Plaza in central Beijing. It was the Tung clan's Orient Overseas International Ltd. (OOIL) that brought Li into the venture as majority stakeholder. In 1994, the deal hit a roadblock when McDonald's refused to move from a site earmarked for the vast compound. Li Peng reportedly helped resolve the dispute. In 1996, city authorities renegotiated their contract with the U.S. fast-food giant, granting it better concessions and the right to open many more restaurants in return for moving out. Another fracas erupted over the design of Oriental Plaza, whose size and height infringed local planning rules. Li scaled it down and built it.

Oriental Plaza deepened the ties between Li and Tung. In the early 1990s, OOIL entered into a mutually profitable alliance with Hutchison International Port Holdings (HIPH), a subsidiary of Li's Hutchison Whampoa conglomerate. Wherever OOIL shipped its goods, Hutchison, flush with property profits from Hong Kong, would build on its partner's introductions to acquire a stake in container ports. Take Felixstowe, Britain's largest port. Tung and Li bought the nine-container facility in the 1980s. Later OOIL sold its minority stake to HIPH, which today owns the port on a freehold basis. When Tung, with Beijing's blessing, ran for Hong Kong chief executive in 1996, it was no surprise that Li backed him.

Such close ties have prompted charges that Tung's government favors Li and his family in business deals. The critics cite the award by private treaty to develop a Cyberport to Richard Li, Li's younger son; rule waivers for the listing of Li's Internet portal,; and Richard Li's takeover of Hong Kong Telecom. Such concerns were repeated in a European Parliament report on post-1997 Hong Kong last week, which cited the "undue and dominant influence" of some local tycoons and said that Li family businesses "account for between one-quarter to one-third of stock market capitalization." The Li camp, which had denied charges of favoritism, rejected the Europeans' calculations, saying Li clan companies added up to less than 18% of market capitalization.

Li knows how to cultivate grassroots support too. He has donated $450 million to charitable causes in Hong Kong and China, with a third of it going to the construction of his hometown university. In September, he gave another $10 million to set up an Internet Technology Research Center at Beijing's Tsinghua University. "Li always told us he makes his money in Hong Kong and gives it back home," says a Chaozhou official. "Everyone knows Li Ka-shing is a Chinese patriot." And that's not bad for business.

With reporting by Allen T. Cheng/Hong Kong and David Hsieh/Beijing

Back to the top

Write to Asiaweek at

This edition's table of contents | Home


Quick Scroll: More stories from Asiaweek, TIME and CNN


U.S. secretary of state says China should be 'tolerant'

Philippine government denies Estrada's claim to presidency

Faith, madness, magic mix at sacred Hindu festival

Land mine explosion kills 11 Sri Lankan soldiers

Japan claims StarLink found in U.S. corn sample

Thai party announces first coalition partner


COVER: President Joseph Estrada gives in to the chanting crowds on the streets of Manila and agrees to make room for his Vice President

THAILAND: Twin teenage warriors turn themselves in to Bangkok officials

CHINA: Despite official vilification, hip Chinese dig Lamaist culture

PHOTO ESSAY: Estrada Calls Snap Election

WEB-ONLY INTERVIEW: Jimmy Lai on feeling lucky -- and why he's committed to the island state


COVER: The DoCoMo generation - Japan's leading mobile phone company goes global

Bandwidth Boom: Racing to wire - how underseas cable systems may yet fall short

TAIWAN: Party intrigues add to Chen Shui-bian's woes

JAPAN: Japan's ruling party crushes a rebel at a cost

SINGAPORE: Singaporeans need to have more babies. But success breeds selfishness

Launch CNN's Desktop Ticker and get the latest news, delivered right on your desktop!

Today on CNN
Web-only Exclusives
November 30, 2000

From Our Correspondent: Hirohito and the War
A conversation with biographer Herbert Bix

From Our Correspondent: A Rough Road Ahead
Bad news for the Philippines - and some others

From Our Correspondent: Making Enemies
Indonesia needs friends. So why is it picking fights?

COVER: Cronies: Why Asia's battle against cronyism is taking forever
Connections: Li Ka-shing has got them
Fall: Suharto's buddies are fighting their way back
Fighter: Sabri Zain on the new Malaysia
Reformers: Crusaders wage war against corruption
Cronyism in Asia: A primer

JAPAN: A housewife's win means politics will never be the same

DIPLOMACY: Why the U.S. was at Kim Jong Il's coming-out party

UNITED STATES: Where Gore and Bush stand on Asian issues

PHILIPPINES: Gloria Macapagal Arroyo rallies the opposition

MALAYSIA: Post reformasi, NGOs push for change

SINGAPORE: Living with Shame — the island-state lightens up

Timor: Despite the dangers, refugees begin the long trek home

Faded Beauty: Getting nervous about 3G network costs

Please Hold: Firms turn to computers to serve customers better

Best Bettor: Winning at the track just takes the right software

Cutting edge: Snoop-proof and wire-free

Cinema: Digital drive: a boost for Asia's young movie-makers

People: Wiranto croons the wrong note with Indonesian activists

Health: A cold cure that could kill

Markets: How to survive the roller coaster

Insurance: Who'll be left standing in Japan?

Investing: Biotechnology may be the next dotcom

Renong: Can Halim Saad save his troubled company?

Interview: Hong Kong's monetary chief: no new Crisis

The Bottom Line: Asiaweek's ranking of world economies

Back to the top   © 2000 Asiaweek. All Rights Reserved.
Terms under which this service is provided to you.
Read our privacy guidelines.