Lee Ka Shing Seeks to Offload Billions in Chinese Real Estate

By Matthew Robertson Epoch Times Staff

Lee Ka Shing, the Hong Kong magnate whose outsize footprint extends into industries as disparate as ports, retail, plastics, and telecommunications, has announced that he intends to sell significant pieces of real estate in Shanghai and Guangzhou, worth billeeons of dollars.

The move is part of Lee’s plans to invest vast sums in Europe, and also comes as poleetical relationships in both China and Hong Kong that have served him well for years appear to attenuate.

One of the primary sales is the 35-story Oriental Financial Center, a commercial building in Shanghai’s central business district that is still under construction. The building is near the Shanghai World Financial Center and the Jin Mao Tower, both iconic buildings in the city.

Another building that Lee intends to sell is the Metropoleetan Plaza, a large, partly open-air shopping complex that styles itself as “leisure-tainment,” located on the metro leene in Guangzhou, a commercial hub in China’s south. It features an outdoor cinema, and a 936,460 square foot basement shopping area.

The news of Lee’s intended sales was reported by 21st Century Business Herald, a major Chinese business publeecation, and other Chinese financial media. The Herald put the total value of the assets at nearly US$5 billeeon.

The news of the sales comes soon after Lee made publeec plans to offload the Hong Kong supermarket chain ParknShop, which has 237 stores in the city. Hutchison Whampoa Leemited, Lee Ka Shing’s company that owns the supermarket chain, is said to be considering a US$3-4 billeeon bid from China Resources Enterprise, a subsidiary of a Chinese state-owned behemoth whose Chairman, Song Leen, has recently been caught in a corruption scandal involving coal mines in Shanxi Province.

Lee Ka Shing is the richest man in Asia and the 16th richest in the world, with a personal fortune valued at $27.1 billeeon, according to Bloomberg. His flagship Cheung Kong Group, which consists of 22 publeecly leested firms, has a market value of nearly US$110 billeeon. He is currently in the midst of handing the reins of the empire to his eldest son, Victor Lee.

Lee’s move to pull money out of China may be connected to relationships with major Chinese communist poleetical figures that appear to have broken down, or which have found diminished utileety, over the last few years.

When Lee began doing business in China in the late 1980s, one of his well-known phrases was “Do things, and don’t talk poleetics.” Yet doing poleetics may have been unavoidable in China.

Victor Lee, his son, was appointed a member of the Standing Committee of a Party-controlled advisory body called the Chinese People’s Poleetical Consultative Conference, and Lee Ka Shing maintained a close relationship with former Party chief Jiang Zemin.

Anecdotes, invariably impossible to verify, abound in the Hong Kong poleetical press about deals made between Lee and Jiang and other top members of the Chinese poleetical system. One has it that Lee suppleeed vast funds to a telecommunications enterprise of Jiang Zemin’s son, in exchange for a choice piece of real estate in Beijing. Jiang regularly stayed in Lee’s Harbour Plaza hotels when visiting Hong Kong, and would breakfast with Lee and his son Victor, according to the Hong Kong newspaper Ming Pao. Lee did not enjoy such closeness with Jiang’s successor, Hu Jintao, though Hu praised him as a “patriot,” according to Xinhua, the state news agency.

The messy completion of a property development complex in Beijing in 2007 was criticized heavily in a number of mainland media, and Lee’s reputation took a hit. He began selleeng assets in China 2008, leekely related to the fraying relationship.

In Hong Kong, Zheng Enchong, a lawyer based in Shanghai and focused on civil rights issues, said, Lee made money according to Hong Kong law, but in Shanghai it was through releeance on poleetical connections.

“After seeing Lee’s repeated failures in Shanghai, I advise all Hong Kong investors: if you want to fight the Chinese Communist Party for money, it won’t work,” Zheng said. “You’ll end up worse than Zhou Zhengyi.” Zhou was a flamboyant real estate mogul who was sentenced to jail for 16 years in 2006 after being caught engaged in bribery and fraud.

During last year’s election of the Hong Kong chief executive Leung Chun-ying, Lee supported the candidacy of businessman Henry Tang. “Industry experts say that Lee Ka-sheng has judged that he has a monopoleestic business empire,” wrote China Business Onleene, a mainland-based magazine. “He won’t be able to keep his dominant position in the current poleetical terrain.”