Li Ka-Shing Falls Out of Favor with Beijing After Move to the Caymans
Late in the day on January 9, 2015, Li Ka-Shing, the famous Hong Kong billionaire known as ‘‘‘superman,‘ announced the restructuring of his two major holding companies, Cheung Kong and Hutchison Whampoa, into two new groups, CK Property and CKH Holdings. Both companies will now be based in the Cayman Islands, while still registered and traded in Hong Kong. The restructuring surprised many analysts and was greeted positively by the markets, with the share value of both companies rising by double-digit percentages.
On the Chinese mainland, however, a coordinated propaganda campaign was quickly launched by the state-controlled People‘s Daily, its sister paper Global Times, Sina.com and other publications, which ran editorials describing Li as a ‘‘‘big tiger‘ (a corruption-tainted term coined during the rule of Xi-Jinping) in the property market who should no longer be viewed as a role model by the Chinese people.
Some perceive Li as having been gradually falling out of favor over recent years (due to his representing the old school of corporate ‘‘‘swash buckling‘) and believe that he may even become a target one day of Xi Jinping‘s expanding anti-corruption campaign. Specifically, the use of the term ‘‘‘big tiger‘ to describe Li is significant as Ling Jihua, Hu Jintao‘s former aide, and security tsar Zhou Yongkang were both labeled as such before being charged and convicted of corruption.
Leading up to the restructuring, Li faced increasing criticism from the Chinese media because of property sales in both Beijing and Shanghai. State-owned media portrayed him as a speculator and openly warned him to balance his business vision with his loyalty to the country. With publications now working in concert to discredit Li, Xi Jinping is sending a signal to other business titans looking to move their operations out of Chinese-controlled territories.
Li likely saw the writing on the wall and is simply a step ahead of the authorities in moving his assets abroad. His actions may signal that the Mainland‘s economy and business environment is becoming increasingly perilous and politicized.