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Photo montage by Adam Connors

David Paul Morris for Asiaweek
Li Ka-shing

Up, Up And Away

The view is truly awe-inspiring. From his penthouse office 70 stories above Central district, Li Ka-shing commands sweeping vistas of Hong Kong's fabled harbor on one side and its equally renowned Peak on the other. The entire territory -- this dazzling financial and trade hub of Asia, gateway to the emerging economic powerhouse of China -- lies literally at the magnate's feet.

Even figuratively, few in Hong Kong would dispute that premise, especially after the stellar performance of Li's five listed companies in the past year. The eye-popping deal by his younger son, Richard, to acquire the territory's top telephone company for $38 billion only augments the father's mystique and aura of power. And when Li's major Internet venture, China portal, listed in March, eager subscribers formed some of the longest queues Hong Kong had ever seen.

Indeed, there is not a single major economic sector in Hong Kong or China in which "Superman" (Chiu Yan, in Cantonese) isn't a big player. He has stakes in property, telecommunications, retailing, media, investment banking, the Internet and infrastructure. And Li's empire has spread far beyond. His Hutchison Whampoa Ltd., which controls 18 major shipping ports, is now the world's largest private port operator. In Canada, the company controls Husky Oil. In Europe, Hutchison owns 3.5% of telecom giant Vodafone/AirTouch and recently won a third-generation mobile-phone license for $6.8 billion in Britain. And it is preparing for a G 3 license bid in Germany. During the past year, Li demonstrated not only an unparalleled power to dominate markets -- and influence politics -- in Hong Kong and abroad, but also a pacesetting ability to capitalize on the global high-technology revolution. For that, he heads our Power 50 ranking this year.

All that clout has landed Li and his family in some controversy. Richard Li's purchase of Hongkong Telecom (HKT), in which Li is thought to have played a key behind-the-scenes role, was criticized as making the clan too dominant in the local economy. Today, Li-linked companies account for 21% of the Hang Seng Index's market capitalization. When the HKT deal is completed next month, the figure will rise to 26%. The Li family was thought to be worth $12.6 billion last year, 26% up from 1998.

Local legislator Li Wah-ming complains about the tycoon's close ties to Hong Kong Chief Executive Tung Chee-hwa. Shipping scion Tung has been a Li friend and occasional business partner for two decades. "Tung was elected by a small circle and Li has ample influence," says the lawmaker. "Li has voiced his support for Tung's re-election [in 2002]. Their cozy relationship is self-explanatory." Both the Lis and the Hong Kong government have denied any preferential treatment.

China-born Li arrived in Hong Kong in 1939. The eldest child of a school principal, he started a plastics factory in 1950. Fifteen years later, he entered the property business through his flagship company Cheung Kong Holdings. But Li didn't hit the big time until 1979, when he became the first Chinese to buy one of the British hongs (trading companies) that dominated the local economy. His purchase of a controlling 22% stake in Hutchison surprised many at a time when real estate was king. But Li's strategic foresight would be vindicated later, as the conglomerate not only allowed him to diversify but helped him become a global player.

Even the tycoon's stumbles have a way of turning into opportunities. In 1992, Hutchison had invested in a British cordless-phone operation called Rabbit; it lost $183 million by the time Li closed it a year later. But the venture allowed Hutchison to gain a toehold in Britain's mobile-phone market by launching Orange, a company Li sold to Mannesmann AG last year for $14.6 billion (which included a 10% stake in the German telecom giant). When Britain's Vodafone/AirTouch took over Mannesmann, Li gained a 5.2% holding in the new entity. Last month, he sold a third of the stake for $5 billion.

Li's Midas touch has continued at home., oversubscribed 669 times, immediately gained a market cap of $2.8 billion. As grandmothers and taxi drivers battled for places in the subscription queues, a housewife and veteran investor in Li's companies gave voice to the prevailing sentiment: "There is a saying in Hong Kong -- You cannot lose with Li Ka-shing."

In China, Li has worked hard to nurture guanxi (personal relationships). He has donated nearly $400 million to charities in Hong Kong and the mainland, including a third of that toward the construction of Shantou University near his hometown of Chaozhou. Li refused university officials' attempts to name the school after him, saying he only gave out of the goodness of his heart. Then-premier Li Peng was so impressed that he visited the campus in 1991. Hong Kong lawmaker Li is more skeptical: "Li Ka-shing is not running a charity organization, he's responsible to his shareholders. Anyone with economic knowledge would not believe what he said about investing on his conscience alone."

Beyond doubt is the strength of Li's ties in Beijing. He is known to talk directly with President Jiang Zemin and Premier Zhu Rongji. After Li's eldest son Victor was kidnapped by notorious gangster Cheung Chi-keung in 1996, the tycoon was said to have put in a word at top levels in Beijing. (Li himself brushed off the suggestion.) Mainland police caught Cheung, put him on trial and executed him. During Jiang's two presidential visits to Hong Kong -- for the 1997 handover and the opening a year later of the Chek Lap Kok airport -- he stayed at Li's Harbor Plaza Hotel in unfashionable Hunghom district, a unique honor.

The Beijing relationship did hit a bump in the mid-1990s. Li's Oriental Plaza, a vast shopping complex in the capital's heart, was chided for infringing planning rules. Li scaled it down and completed it anyway. Today, the enormous glass-and-granite edifice symbolizes the new market-driven China.

Li's Beijing links have sparked unease in Washington. In the past year, some American congressmen portrayed Hutchison's winning of two 25-year contracts to manage Panama Canal ports as a threat to U.S. national security. The company said that the deals were strictly business. True or not, the allegations are further testimony to Li's expanding impact.

What more can the tycoon achieve? "Li will not rest until both his sons have their own empires," a Hong Kong investment banker predicted a couple of years ago. Now that Victor is taking control of Cheung Kong and Hutchison, and Richard runs his own Internet conglomerate Pacific Century Cyberworks, Superman is finally in a position to think about hanging up his suit. But don't count on it. As his sons rise, Li Ka-shing will be freed to take on even bigger things. To him, Hong Kong is but a platform. The world is his ultimate stage.

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