Business Lessons from Highly Successful Entrepreneurs – Li Ka-Shing (Part 1)

“When you’re a self-made man, you start very early in life… You get a drive that’s a little different, may be a little stronger, than somebody who inherited.” – Kirk Kerkorian

Who is Li Ka-Shing?

Age: 84

Networth:US $ 25.5 billion (Forbes)

Education: Drop Out, High School

Hong Kong based business magnate. He is Chairman, Hutchison Whampoa Limited and Cheung Kong (Holdings) Limited. Cheung Kong Holdings is a property development and strategic investment company – includes 8 listed companies with combined market capitalization of US $ 104 billion on the Hong Kong stock market as at January 2012; leading Hong Kong based multi-national conglomerate operating in 53 countries and staff strength of 270,000; Hutchison Whampoa handles 70% of Hong Kong’s port traffic and 13 % of the world’s container traffic. Li’s companies built one out every 7 residences in Hong Kong. Besides business through his flagship companies Cheung Kong Holdings and Hutchison Whampoa, Li is personally and extensively invested in real estate in Singapore and Canada. He has personal investment in Facebook and Sportify. Referenced as Asia’s most influential businessman, Li was born in Chiu Chow, China, forced to quit school at the age of 12 and fled to Hong Kong with his family to avoid the perils of war.

Lesson 1: We Don’t All Have to Change the World

“Success can be attained in any branch of human labour. There is always room at the top in every pursuit.” – Andrew Carnegie

Li’s background is like that of many Hong Kong entrepreneurs; he is a refugee from China. Forced to work at the age of 14, after his father suffered from tuberculosis and passed away, Li Ka-Shing absorbed the lessons of desperation which later inspired his success story.

“After 17, I knew I’d have a good chance of starting my own business because I knew I’d been right in my beliefs” says Li Ka-Shing. Li had a dream – to change his world.

In employment, Li rose to become a wholesale sales man in a plastics watch strap company in 1945; Having, proved himself further, he was promoted to a manager and then general manager. He laid the foundation for his future success by studying the latest trends and technologies in the plastics industry which he believed held enormous promise.

Li set up his plastics industry in 1950, at age 22, with the start-up capital of US $ 6,450 (HK$ 50,000) from his savings and money borrowed from friends and relatives, making plastic flowers and toys. According to Li “my factory was not huge. It was in fact small”. By 1960, Li’s manufacturing business was the biggest in Hong Kong in terms of dollar value export. His profit was sufficient to launch him in to real estate investment where he made a fortune. By 1971, Li officially named his real estate company Cheung Kong. His successes in industry and real estate continued; he cultivated contacts and built a strong reputation that set the stage for the purchase of Hutchinson Whampoa in 1979 – Its diverse array of holdings range from some of the world’s biggest port operators and retailers to property development and infrastructure to the most technologically-advanced and marketing-savvy telecommunications operators.

Li’s strategies might not have earned him a page among entrepreneurs who changed the world, but he remains one of the greatest empire builders of our time and the master of his game.

Lesson 2: Poverty Inspires; You Need Not Search Further For Other Sources of Motivation

“Money is like a sixth sense – and you can’t make use of the other five without it.” – William Somerset Maugham

Most successful entrepreneurs say that their primary motivation has been to build something lasting, and not to make money.

What is Li’s ideology on money or lack of it?

On arrival in Hong Kong in 1940, Li’s father died of tuberculosis. According to Li, this was “the most terrible experience during my childhood. I too was infected. The burden of poverty and this bitter taste of helplessness and isolation sort of branded on my heart forever the question that still drive me: Is it possible to reshape one’s destiny? Is it possible to minimize challenges through lessening complexities?”

Li made a promise to his father on his death bed – that “the whole family will have a good life”. Li says “I promised myself that; (and) after saying those confident words to father, I knew that I must work doubly hard for a future.”

“His father’s misfortune made Mr. Li believe that money was somehow a better marker of human dignity…Money became linked to life itself. Money was a means to keep the family together, and it was also a means of keeping a promise…For him, money was a measure of a person’s worth and the key to freedom and independence. In his early years, money became almost a surrogate religion for Mr. Li” -Xu Zhiyuan.

By 1958, Li was already a millionaire.

At his old age, Li still remembers the source of his inspiration. He says “I can still remember poverty. I told my children and grand children that the fruit that you eat will never taste as beautiful as the fruit that I ate during the turmoil of war. You will never cherish it as much as I do”. Perhaps, this is the reason why Li has refused to retire even at the prime age of 84.

Lesson 3: Confidence is Companion of Success

“The old saying that success breeds success has something to it. It’s that feeling of confidence that can banish negativity and procrastination and get you going the right way.” – Donald Trump

As our Confidence is, so is our Capacity. Li Ka-Shing ventured into the real estate business in 1958; made his first break in 1967 when public confidence was down – Riots in Hong Kong caused widespread panic and fear. Li says “I was emotionally challenged as others were. It was threatening. Then in one night, I had it all thought out, down a simple theory. If China wanted to take back Hong Kong, it didn’t have to resort to such measures. So I went against market sentiments and used my idle cash to buy a lot of property. 1967 gave me a chance to make a lot of money.” Then further, he says “Almost every time Hong Kong was in a lull and people lost confidence, I made investments, large investment; particularly from 1983 to 85, when public confidence was down and the economy was in bad shape. I made heavy investment totaling over 10 billion dollars.”

Li’s confidence is built on his capacity for knowledge. He says “First of all, I am an optimist. When you study hard and work hard, your knowledge grows, and it gives you confidence. The more you know, the more confidence you gain…..I always believe that knowledge can change life. It was a case of knowledge changing my life”.

Li laments the premature end of his schooling and his lack of formal education but he has never given up his quest for knowledge. On his early years, he notes “While other people learned, I grabbed….grabbed knowledge. Without the money for new books, I bought old ones, text books used by teachers for high school. I only had a dictionary and the books and I studied on my own. When I was done with the books, I exchanged them for more old books. In the circumstances then, I was working for a future.”

“The more you know, the more prepared you will be when opportunity knocks,” says Li. “If you are lazy and wile your time away, you would not know how to take advantage of opportunities even if they stared you in the face.”

Lesson 4: Play to your strengths

“Conventional wisdom says we should work on improving our weaknesses. What a terrible waste of time talent and opportunity.” – Gary Lockwood

In Asia, Li Ka-Shing’s business model is believed to be clouded in mystery – simple, yet complex. Li is known to ‘tap and leave’. He was however, an afterthought for many American investment experts in his early days. Simon Murray, current Executive Chairman of GEMS and a Director in Cheung Kong Holdings Ltd noted in October 1990 when Hutchinson Whampoa Ltd first attempted to launch its periscope into corporate America,

“We’re an afterthought for some of these people. They say there’s this guy in Hong Kong named K. S. Li who has got a lot of bread. He’ll buy anything.”

Today, Li has built a multibillion-dollar business empire by trusting his instincts. He is a shrewd trader with a keen sense of timing. Li hunts for bargains. He is passionate about his business but never falls in love with it. His “tap and leave” tactics is done with the precision of a marks man, and formed the basis of his success in real estate investment.

Li Ka-Shing’s property investment grew steadily in the 1960’s and profits from the line of business eventually surpassed those of his plastics manufacturing business despite being one of the biggest manufacturers in Hong Kong. In 1986, he began large scale international ventures – by this time, property remained his most profitable concern. Li notes “no line of business remains forever prosperous. At a certain point, there will be market saturation or government will have new policies.”

Li diversified in to other sectors including ports, telecommunications and Oil through Hutchinson Whampoa; he however never forgot his key strength that brought him to business prominence.

Hutchinson Whampoa has a reputation of being an astute asset trader – It builds up a business and sells it off. The company was a leading player in Europe’s mobile phone services when it sold off Orange to Mannesmann Group in 2001 and raked a profit of $ 15.2 billion in profits. In 2006, the company sold 20% of its ports business to PSA Corp of Singapore and realized a profit of $ 3.12 billion on a $ 4 billion deal. In India, 2007, Hutchinson sold its 67% investment in Hutchinson Essar, a joint venture mobile operator, to Vodafone for $ 11.1 billion. Its initial investment in the entity was $ 2 billion. In 2009, Hutchinson sold its 51.3 % interest in Partner Communications Co. Ltd for $ 1,381 million. In November 2011, Cheong Kong (Holdings) announced an agreement to sell its stake in Kobo Inc. for $ 42 million to $ 43 million which represents a five-fold gain in 24 months.

Lesson 5: Hard Work Pays Off

“The average person puts only 25% of his energy and ability into his work. The world takes off its hat to those who put in more than 50% of their capacity, and stands on its head for those few and far between souls who devote 100%.” – Andrew Carnegie

Li is well known for his diligence and relentless work schedule. He invests over 85 % of his time on work. He gets up 5.59 am everyday; play golf for an hour and half. “This period belongs to me alone. The rest of the time, I deal with business and work. Time spent like this is not necessarily my own” Li says. “The most important enjoyment for me is to work hard and make more profit… For a young entrepreneur today, hard work is more important than opportunities. If you don’t work hard, opportunities will slip away.”

Business Lessons from Li Ka-Shing continues: ‘Business Lessons from Highly Successful Entrepreneurs – Li Ka-Shing (Part 2).’

“If you keep a good reputation, work hard, be nice to people, keep your promises, your business will be much easier.” – Li Ka-Shing

Written by, Samuel Okorho.

From smartbusinessdatabase.com

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