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November 30, 2000

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From Our Correspondent: Making Enemies
Indonesia needs friends. So why is it picking fights?

AsiaweekTimeAsia NowAsiaweek story

FEBRUARY 11, 2000 VOL. 26 NO. 5

Technology on His Mind
Why a property mogul is eyeing the Internet

He is the youngest of the three brothers who run Sun Hung Kai, the $23-billion Hong Kong property giant founded by their late father, Kwok Tak-seng. So it is perhaps no surprise that Raymond Kwok Ping-luen is the most gung-ho about the Internet. The 46-year-old Cambridge-educated lawyer and Harvard MBA graduate has just launched Sunevision, an umbrella organization of all the conglomerate's technology ventures. Kwok says the new group -- he is chairman and chief executive -- may one day eclipse Sun Hung Kai's core real-estate business. He spoke with Asiaweek's Tim Healy and Alexandra A. Seno.

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Why is a property company aboard the Internet train?
In Hong Kong, the property business has always been very competitive so we have to think of ways to get an edge over our competitors. We enjoy the scale [of a big operation], so we have the luxury to always do new things. In 1992, we founded [cellular phone operator] SmarTone. We saw that mobile communications would be the wave of the future. Whenever we spot a good opportunity, we always want to try it.

You have said that the changes brought on by the Internet are as momentous as those caused by the Industrial Revolution.
The Internet moves very fast. In the old world, we could afford to sit and analyze forever. But in the new world, the first mover has the advantage. Initially, when we went into the Internet, it was principally property-related -- for example, our co-location and data center businesses [which entail hosting websites and housing and maintaining computer servers of other companies]. We have the advantage of owning premises and having very strong project- and facilities-management skills. We have plans to build half-a-million square feet more [of co-location and data-center premises] in Hong Kong. We have good property investments in Shanghai and Beijing, so we can build our co-location centers [in China] quickly too.

Is Sun Hung Kai moving out of property?
We have an excellent team in our core [property] business. My two brothers [chairman Walter Kwok Ping-sheung and vice-chairman Thomas Kwok Ping-kwong] spend a lot of time -- especially Thomas -- on the core business. My drive into high tech doesn't involve a lot of people -- just me and a very small team. If you ask around in New York and Silicon Valley, property prices are very high, much higher than in Hong Kong. So, the new world [of technology] will benefit the old world [of property]. Five years down the road, our core business looks very bright. Our second core business looks brighter.

Tell us about Sunevision's strategy.
We like partnerships. We like acquisitions. We will play by the rules of the new game. We will be recruiting good people. Our company's strength is our ability to ally with partners. We have worked with international partners like British Telecom on SmarTone, AT&T, China Telecom, Sun Microsystems, Bank of China, China Travel, China Resources.

You have portals, you have an auction website, you have data centers. Aren't you going in different directions?
For a lot of the projects, we rely on our core competence, which is property. [Co-location and data-center company] iAdvantage leverages our project management skills and our property volume. [Consumer portals] Superhome.net and Propertystreet.net build on property too. We would like to move into China with our red-dots.com [auction site], that's why we need to develop business-to-business expertise.

You must be asked to evaluate a lot of Internet ideas.
Ideas are cheap. The difficult part is finding the team to execute them. The good news is that we can tap the resources in China. Given the right incentive, we can also draw people from the U.S. We can offer them share options and the opportunities of the China market.

It is difficult to keep up with all that's going on.
That is why every night I have to look at the Internet to chat, surf, check the news. In the beginning, during the thinking process, I used to attend a lot of tech conferences. I still go to some -- I'm going to a conference in France to look at all the new mobile devices. We need to learn because the China market is becoming more important. And I work longer hours. Not 24-7 [24 hours a day, seven days a week] -- I still have my family life -- but in the past I didn't do any company work during weekends. Now I do.

Investors are going crazy over tech stocks. Are you worried?
There can be overvaluation of specific shares. But the Internet is real, so we have to adapt ourselves to capitalize on the situation. It's just like Andy Grove and Bill Gates. Even if they are so big, they worry about their competitors. When you move into the new business, there is so much opportunity. We have to be a paranoid company.

What does all this mean for Asia?
It's going to change our way of life. As far as Sun Hung Kai is concerned, initially we felt that there was a lot of uncertainty ahead. But now, after 12 months of clear-thinking, we see this as a great opportunity. We can embrace the technology and then move into China in a big way. In the past, if you wanted to move into commerce in China, it would take a long time. Now, with the Web we can move very quickly.

Maybe you can walk us through how you personally became convinced that it was important for Sun Hung Kai to embrace this revolution?
I'm interested in new things. I like to learn. But we didn't just get into technology. We've been doing it a long time.

When did technology stop being a tool to make the property company better and start to be a business in itself?
Looking at it from a very simple angle -- there is the IT world and there is the bricks-and-mortar world. The IT world wants a convergence with the bricks-and-mortar world, and the bricks-and-mortar world realizing what the IT world is doing. There's a convergence of competition now. In the past, IT was only a business enabler. Now, using the Internet, they want to go into the traditional world. Now the bricks-and-mortar world is just realizing what has happened, so, ok, they will also want to go into the future world which is web-enabled businesses.
Going forward, can we expect to see announcements about the company in terms of purchases or mergers instead of start-ups?

Definitely. We'll be recruiting good people, we'll be building alliances with partners.

Is that Internet business all-consuming for the company?
In our core [property] business, we have a very excellent team. The rules are already made. It's very cohesive. We have strong managers; that's the strength of our company. Our eyes are still very much focused on our property business.

Do you see how your company is going to change in the future? You've changed a lot in just the last month.
We change not because we want to change but because there is so much opportunity. If we don't change, if we stay at status quo, if you are old world and status quo, the old world is dark and these IT guys want to come into my business. When you move into the new business, there is so much opportunity.

That's very Andy Grove [Intel founder]. Have you read his book?
Yeah. Paranoid, right? You have to be a paranoid company.

He also says he stays up late many nights worrying, worrying , worrying. Are you like that?
Yes, that's the strength of a lot of Hong Kong companies. Since the 1970s, Hong Kong was always a modern economy. We always have to worry when things are too good.

Now the stock markets are going crazy, are you worried?
I am. The Internet is real but there can be overvaluation in the market of specific shares and sectors. But the Internet is real, so we have adapt ourselves to capitalize on the situation. It's just like Andy Grove and Bill Gates. Even though they are so big, they worry about their competitors.

You're asked to evaluate a lot of Internet ideas.
Sure, there are a lot of them -- most of them [no good].

What do the bad ones lack?

Management and market.

One complaint I've heard in Hong Kong with so much activity in technology is that companies are finding it difficult to locate good people. Have you had that problem?
There are a lot of over-valued situations where people just come up with the idea and try to [sell it].

All the efforts you have launched, you have portals, you have a datacenter. They are all in different directions. Is there a strategy here?
For a lot of the projects, they are relying on the core competence, which is property. Like iAdvantage, we are relying on our project management skill and our property volume. Superhome.net and property street. We need to develop the expertise. For red-dots, we would like to move into China, that's why we need to develop the skill to we can move into b2b.

With all this that is going on, it must be very difficult for you to keep up to date with technological advances and so on. How do you do that?
That is why every night I have to look at the Internet and consult these news pages. To chat. To surf. To check the news. Use the mobile phone. Use the palm pilot.

You have been going to a lot of tech conferences. Are you finding that is a good way to keep up?
It was especially important in the beginning. In the thinking process. But now, it's the execution part. I still go to some -- for example I am going to a mobile conference in France before Chinese New Year and look at all the mobile devices available. We need to learn because the China market is becoming more important. We can also learn through our private discussion. There are many ways to learn. Reading newspapers, talking to people.

Do you spend much time thinking about where the world is going, where your business is going?
From time to time, sure. But for the Internet game, the game now is in its expansion stage. This is the beginning. That's why we are forming this holding company so that people in the new organization can think about the Internet. We also have this property business which I'm sure when Hong Kong does well will do even better. That is our strategy.

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