Hong Kong tycoon covets robber baron role in China Need for roads, utilities offers opportunity

October 24, 1993|By Robert Benjamin | Robert Benjamin,Staff Writer

Hong Kong -- Gordon Wu Ying-sheung is a 20th-century entrepreneur who fancies himself a 19th century "robber baron."

And the American-educated, Hong Kong tycoon is well on his way to building a business empire in China that would befit a Vanderbilt.

Within a few years, his company -- Hopewell Holdings Limited -- will own key chunks of sorely needed infrastructure in the region with the world's fastest growing economy, neighboring Guangdong Province's Pearl River Delta. Those projects include:

* Two power plants in the middle of the booming river delta, which produces one-fifth of all of China's exports.

* Toll roads lacing the delta, the first efficient highway connections between Hong Kong, Macau and Guangzhou, which was formerly known as Canton and is Guangdong's capital.

* Another superhighway circling Guangzhou, and the development rights to 60 square miles of land around key intersections along all these expressways.

Mr. Wu, a Hong Kong native with a disarmingly direct manner, uses American analogies to express the lucrative potential of the road projects in a nation with only 400 miles of expressways. Hopewell, he says, will own a major share of the Chinese equivalents of the New Jersey Turnpike, the Capital Beltway and the Chesapeake Bay Bridge.

Not to mention his dream for the late 1990s: Building a 550-mile expressway north from Guangzhou to the Yangtze River in central China, a proposal Mr. Wu calls his "Pennsylvania Turnpike."

In Mr. Wu's story, there are larger trends at work.

Hong Kong's capital, technology and well-educated managers are being integrated with China's vast labor force and marketplace -- particularly in neighboring Guangdong Province. The British colony's manufacturers now employ an estimated 3 million workers in Guangdong alone. Hong Kong now is just the front door for many of its industries; some companies even have shifted office functions to Guangdong.

Meanwhile, many large, publicly traded Hong Kong firms are rapidly transforming themselves into companies that live and die by China's future. Hong Kong now accounts for 60 percent of China's total foreign investment; China in turn is the colony's largest investor. Hong Kong's raucous stock market is soaring to record highs because so many foreign investors -- particularly Americans -- view it as a way of investing in China's prospects for growth.

In Hopewell's case, 60 percent of its profits are expected to come from China by 1997, compared to just 8 percent last year. Its stock is up 55 percent this year, roughly in line with the increase in the Hong Kong stock market's overall index.

And Hopewell has become the Hong Kong market's "largest and most visible China player," according to a report last month by Jardine Fleming Securities Limited here.

Hopewell made about $200 million last fiscal year, largely from office, hotel and residential property sales and rentals in Hong Kong. The company also is building a mass transit system in Bangkok and has proposed erecting a 91-story hotel in Hong Kong.

For Mr. Wu, whose family controls 38 percent of Hopewell's stock, shifting his emphasis to China not only makes business sense, it is the key to Hong Kong's future under Chinese rule after 1997.

Like dozens of other entrepreneurs in the colony, he's been appointed by China as an "adviser" on the forthcoming political transition.

Not surprisingly, he agrees with China in opposing British Governor Chris Patten's push for greater democracy before 1997.

"Hong Kong can't fight China with guns or words," Mr. Wu, 57, said in a recent interview in his 64th-floor headquarters atop the Hopewell Centre in the colony's Wanchai district. "The only way that Hong Kong will be safe is by helping the Chinese economy grow."

The initial spark behind Mr. Wu's interest in China came not so much from politics as from his days at Princeton University in the 1950s.

There, he studied engineering and architecture. But what really impressed him was a course in which he learned about 19th-century U.S. "robber barons" such as the Vanderbilts, who made their fortune building railroads in the frontier.

Flash forward two decades to 1978, when Chinese patriarch Deng Xiaoping declared China's re-opening to the world.

Mr. Wu -- having built Hopewell on Hong Kong and Macau properties -- realized he had a chance to become "a 20th-century version of a 19th-century robber baron" by meeting China's need for infrastructure.

More recently, other Hong Kong entrepreneurs have had much the same vision, launching road, rail or port projects in China.

But Mr. Wu was among the first to boldly jump into China on a large scale, and he locked up the most prominent deals just across Hong Kong's border in Guangdong Province, a region with 64 million people.

Guangdong's economic growth has averaged about 20 percent a year. But per-capita electricity consumption in the province is just 16 percent of Hong Kong's. And while the number of private vehicles there grew by 75 percent from 1987 to 1991, the combined length of highways increased by only 2 percent.

Mr. Wu's projects are designed to end the horrible road congestion -- and bring big profits.

According to the Jardine Fleming report, the Hong Kong-Guangzhou toll road alone could mean profits by 2000 of a quarter billion dollars a year -- profits worthy of a robber baron.

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