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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?

Asiaweek Time Asia Now Asiaweek story

DECEMBER 3, 1999 VOL. 25 NO. 48

The Maverick vs. The Establishment
Page 4: Nothing Ventured, Nothing Gained

The older, wiser Jimmy Lai was much in evidence on Oct. 21, when he held a press conference to announce, at long last, his much-delayed stock exchange listing. Arriving right on schedule in a classy gray suit over his trademark suspenders, Lai took every question, answering with little emotion, apart from a quip or two. No off-color jokes, no insults aimed at Chinese leaders.

Lai is clearly relieved to put the listing behind him. His previous attempt ended in 1997 when Sun Hung Kai International pulled out of another deal to underwrite one. In the end, Lai bought Paramount Publishing Group, a public company that prints Apple Daily, injected a magazine and website valued at $43.5 million and issued new shares in return. When talks with Paramount grew serious earlier this year, the stock was trading at HK$0.15 a share. Lai paid a premium of HK$0.20 per share; the stock soared to HK$1.80 and has since settled back to about HK$1.10. "We didn't go public because we needed money," Lai says, but concedes: "It gives me the opportunity to do something big." Indeed, the listing opens up a line to funds for a maverick who might have a hard time finding partners because of his checkered past and his risky present.

Hong Kong's Jimmy Lai takes on the Establishment

Will Hong Kong's tech-heavy stock market fly?

The new exchange in Japan has plenty of rivals

Singapore's fast-rising silicon-wafer maker

Thailand finally passes a new foreign-investment law

Asia's markets defy the usualy year-end dullness

South Korea's reform czar Lee Hun Jai looks back -- and ahead

Viewpoint: Where Are the Profits?
Coming to terms with the realities of China's market

Technology: Groceries to Go
Always ready to buck the system, Jimmy Lai is tackling a well-established Hong Kong cartel

Accusations fly in Hong Kong's media wars

Business: An All-New Dress For Success
Giordano is out to remake itself before big global retailers like the Gap arrive for a showdown

Lai calls adMart Hong Kong's first all-out foray into e-commerce. Critics have not been quite so complimentary. One dubbed the odd collection of foodstuffs and electronics, ordered over the Internet or by fax and delivered by van, a "Pricemart-pizza." Though the concept, the smart logo and the brightly colored vans got off to a quick start, the business was overwhelmed by the initial demand and the website crashed. Orders had to be taken by phone, and delivery delays ensued. It was an inauspicious start for an Internet play.

Later, with distribution channels allegedly choked off by its competitors, adMart was accused of delivering counterfeit goods, including Mouton Cadet wine. The company quickly acknowledged the charges and apologized, even as rival grocers gleefully posted gloating ads offering to sell the real thing at cut-rate prices. Since those early hiccups, adMart's service has improved, and the website, in Chinese and English, is fast and efficient. Yet skeptics continue to argue that adMart is ill-suited to densely packed Hong Kong, where a Wellcome, Park'n Shop or wet market is never far away. In fact, adMart is based on San Francisco's Webvan. Lai's critics say such services work in the U.S. because consumers have the storage space to shop in bulk. The truth is that, as in all Internet ventures, no one can accurately predict the future. Hence, many analysts are loath to give adMart the thumbs-up or thumbs-down.

Perhaps the strongest indication that Lai is on to something is the cutthroat response to the launch, and the fact that prices are coming down in grocery stores around Hong Kong. Besides, adMart is merely in the initial stage. "Groceries," says Lai, "are just a thing to help build the network. Our intention is to take services into people's homes so they can taste the convenience. Later, we'll sell other things." Besides food and electronics, adMart currently offers home and office furniture as well as computers. The target audience is fairly downmarket; one could describe adMart as the Internet five-and-dime of the future.

In December, Lai launches adMart Travel - an online plane ticket service. So far, he says, "we've had no adverse reaction from the travel industry." He also hopes to set up a distribution agreement with Wal-Mart, though the U.S. retailing behemoth has announced no such plans. And if adMart succeeds, Lai will start to spin off such businesses as the travel component. He will likely continue experimenting until he finds the right mix of online services. Eventually he hopes to become a regional e-commerce player.

In the meantime, he is resigned to the continuing gout of red ink. Lai doesn't expect to make money for at least two years. Can he sustain the losses? Colleagues fret that adMart could sink the entire Apple empire, but Lai says: "This won't put me out of business or bankrupt me. I'd pull the plug before that happened. Ijust don't think I'll have to." While Lai is a recent convert to e-commerce, his colleagues say he really gets it. "He knows we need to create need, not just put something on the Net, but to create something new," says one. "That's how it was with all his businesses, whether Giordano or Apple, always something new."

Plenty of smart people predicted Lai's trashy daily newspaper would never succeed against the entrenched players. It prospered, transformed Hong Kong's publishing landscape and prompted his rivals to launch their own versions. Now he is taking on a whole new set of even more powerful people - in fact an entire system for doing business. The stakes are higher than ever, but then that's how Jimmy Lai likes it.

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