Hong Kong Billionaire Continues Divesting From City

Sale of Watson’s seen as vote of no confidence in Hong Kong’s chief executive
By Li Zhen, Epoch Times
October 9, 2013 Updated: October 9, 2013

HONG KONG—Hong Kong billionaire Li Ka-shing has announced that he plans to sell the Watson’s retail chain, which will be his fifth major divestment from Hong Kong and China in two months. Businessmen and lawmakers see this dramatic withdrawal as a vote of no confidence in Hong Kong chief executive Leung Chun-ying.

Combined with the other four moves, the sale of Watson’s may bring Li’s total divestments up to HK$150 billion (US$19 billion).

Watson’s is a health and beauty retail chain that is part of the worldwide conglomerate Hutchison Whampoa Limited (HWL), of which Li Ka-shing is chairman. HWL plans to spin off Watson’s in the next 12 to 18 months to raise HK$78 billion (US$10 billion), Economic Daily reported on Oct. 2.

Watson’s has 1,100 shops in 33 cities globally. If the spin-off succeeds, it will be the biggest transaction by HWL since the sale of its Israeli telecommunications business in 2007.

Analysts are optimistic about the spinoff and predict that it will be very attractive to investors. A Hong Kong market financial analyst said he thinks the sale of Watson’s will bring considerable income to HWL.

In addition to selling Watson’s, Li Ka-shing has put the Hong Kong supermarket chain ParknShop on sale and announced the sale of 50 percent of his share of Hong Kong Electric. As for China, he has announced the sale of the Oriental Financial Center in Shanghai and the Metropolitan Plaza Square in Guangzhou.

These five massive sales in two months are seen as an alarming pace of investment retreat. While Li and his family have been reducing their investments in Hong Kong, they have been increasing their investments in Europe.

Freedom and Rule of Law

Mr. Lo, a supplier who has been cooperating with Watson’s for over 20 years, told the Epoch Times that he thinks Li is trying to show his discontent with Leung Chun-ying (known popularly in Hong Kong as C. Y. Leung) by withdrawing investments. Mr. Lo is also preparing to shift his investment assets overseas.

“We are not surprised, because the current commercial environment in Hong Kong has deteriorated since C.Y. Leung has been in charge,” Mr. Lo said.

As Li Ka-shing retreats more and more from Hong Kong investments, this is affecting the confidence in investment in the Hong Kong commercial field, according to Lau Tat Pong, Honorary Life Chairman of the Hong Kong Small and Medium Enterprises Association.

Lau Tat Pong admitted he is pessimistic for the future. He said that he may close a restaurant with an investment of HK$7 million (US$902,734).

“Li Ka-shing likes freedom and the rule of law,” Mr. Lo said. “Therefore if he has to withdraw and retreat to overseas markets, that is a signal for C.Y. Leung.”

Early on Li Ka-shing gave a sort of warning to C. Y. Leung about what matters to him in Hong Kong.

In May 2012, after C. Y. Leung’s electoral victory in March 2012, but before he took office in July, Li Ka-shing told the media after a Hong Kong Electric Company shareholders meeting that it was most important for Leung to consider how to serve the people of Hong Kong, create a comfortable environment for living and working, and safeguard Hong Kong’s core values.

Li Ka-shing stressed that core values included the rule of law and freedom. Complying with the Basic Law (the constitution that guarantees Hong Kong’s civil liberties) was a must, Li said.

Li Ka-shing particularly commented on policies affecting property values. Li said that one should not forget that several million families in Hong Kong hold property. Driving down property values is not in the interests of the Hong Kong people, Li said. Land policy should reflect the wishes of the whole Hong Kong people.

Creating Conflict

Since taking office, C.Y. Leung has heavily taxed real estate. Legislative Council member Leung Kwok-hung (no relation to C.Y.) said that C.Y. Leung is carrying out the Chinese Communist Party (CCP) strategy of “robbing the [Hong Kong] rich to benefit the [mainland] rich in Hong Kong.”

Leung Kwok-hung said that C.Y. Leung presents himself as if he is representing the poor of Hong Kong in a fight against Li Ka-shing. The Legislative Council member said C.Y. Leung is actually deceiving the people of Hong Kong.

“On the surface, he said that he has to solve the profound conflicts in Hong Kong. He said that property conglomerates take too much profit, or it causes too great a difference between the two classes, but we see that his policy has not solved the problems,” said Leung Kwok-hung.

“All he does is make it more convenient and make the entrance costs lower for the conglomerates from the mainland,” Leung Kwok-hung said.

Besides Leung Chun-ying’s changes in land policy, he has taken several other controversial actions. These have included attempting to introduce into Hong Kong schools the curriculum from mainland China and allowing the Hong Kong Youth Care Association and other CCP front groups to attempt to suppress Falun Gong practitioners and democracy activists in Hong Kong.

Street social worker and Legislative Council Member Leung Yiu-chung (no relation to C.Y.) sees Li Ka-shing’s retreat from Hong Kong as a warning to C.Y. Leung. He criticized the chief executive for polarizing society.

“If the government had some effective policy and strategy to help people in poverty, the problem would not have become so contradictory and so drastic,” Leung Yiu-chung said. “[C.Y. Leung] is creating a lot of conflicts, causing people to point fingers and attack each other.”

Translated by Y. K. Lu. Written in English by Sally Appert.