A century-old wealthy family that rose from Shanghai

Upon returning to Hong Kong, accompanied by Chan Man-kit, Chan Kwong-leung inspected the new site of the Shangri-La Hotel on Connaught Road in Central.

Standing below Shangri-La Square, Chen Guangliang looked up at the Shangri-La Hotel, whose exterior resembled a sailboat, and couldn't help but feel a sense of pride.

The Shangri-La Hotel (new) has a total height of 56 floors. It is the first skyscraper in Hong Kong (more than 40 floors) and also the tallest skyscraper in Asia.

Because the upper level of the Shangri-La Hotel features a sailboat-like curved shape, the building was extended by four stories to maintain the required floor area. (The plot ratio is generally fixed and determined based on the surrounding environment, meaning the floor area is standardized from the outset.)
With its 56-story height, sailboat-like shape, and azure glass curtain wall, the Shangri-La Hotel has become the most eye-catching landmark building on both sides of Victoria Harbour.

“Father, we’ve set the opening date for May of next year,” Chen Wenjie said from the side.

The new hotel opened in May, and my father's birthday was in June.

Chen Guangliang nodded. At this time, the Shangri-La Hotel had completed its renovation and was undergoing interior decoration and new employee training. After all, it was much larger than the current Shangri-La Hotel, with twice as many guest rooms and several times the area.

"What do you plan to do with the original Shangri-La Hotel building after the relocation?"

Chen Wenjie immediately said, "Let's convert it into office space and continue using it. We'll consider building a new generation of buildings in the 1980s. After all, the construction of the new Shangri-La Hotel building, including alarm, air intensity regulation, water supply, lighting, security, and communication systems, requires integrated circuits for commercial computer control. However, integrated circuits are developing rapidly, and we estimate that many new technologies will emerge in the construction field in the 1980s."

Chen Guangliang said with satisfaction, "Yes. All non-essential reconstructions will be postponed to the 1980s, including the current Shangri-La Hotel on Des Voeux Road, the Universal Group Building on Des Voeux Road, and the Ping An Bank Building at No. 1 Garden Road."

Buildings like Yangtze River Plaza, Poly Plaza, and Lane Crawford, which were built 60 years later, will generally not be rebuilt in the future; at most, they will undergo major renovations and upgrades.

The purpose of rebuilding a building is to increase its floor area. Updating and iterating the interior decoration does not require rebuilding the building. For example, skyscrapers in Manhattan, USA, which were built in the 1920s and 30s, can last for a century. Of course, the later maintenance is indeed quite expensive and time-consuming.

The two then entered the interior of the new Shangri-La Hotel, where some interior decoration was underway, and Shangri-La Hotel management was organizing and training new employees in an orderly manner.

The training started six months in advance, which shows that only Shangri-La Hotels place such importance on service. Of course, during this period, I also interned at the Shangri-La Hotel on Des Voeux Road.

In Hong Kong, there are already five five-star hotels: the Peninsula Hotel and Sheraton Hotel in Kowloon, and the Shangri-La Hotel, Hilton Hotel, and Mandarin Oriental Hotel on Hong Kong Island.

But the highest quality hotels are always the Shangri-La and Peninsula. The Shangri-La is a modern luxury hotel, while the Peninsula is a traditional aristocratic hotel.

In 1966, Princess Margaret visited Hong Kong, staying at the Shangri-La Hotel and attending the opening ceremony of Ocean Terminal. This was naturally related to Chan Kwong-leung, given their past relationship.

"Chen Sheng" is a common way of addressing Chen Guangliang and Chen Wenjie.

Chen Wenjie nodded, indicating that there was no need to pay attention to them, and continued his on-site inspection.

The two then entered a presidential suite, where Chen Wenjie explained, "I had the Shangri-La Hotel reserve this presidential suite for my father as his private suite, and the decor is also based on your preferences."

Chen Guangliang nodded in satisfaction and said, "Yes, I like it!"

Standing in front of the floor-to-ceiling windows, the unbeatable view overlooking Victoria and Kowloon is breathtaking. Construction on the New World Centre has already begun.
Later, Chen Guangliang said, "How are you prepared for Cheung Kong's issuance of new shares in exchange for Cheung Kong Holdings' territory?"

Cheung Kong Properties is a privately owned, unlisted company owned by Chen Guangliang. It also owns land for approximately 45 residential buildings in the city, which can accommodate 9000 residential units.

Chen Wenjie said, "We're ready. We'll increase your shareholding back to 75%, and then inject six plots of land that can be used to build 15 buildings with about 3000 residential units. Cheung Kong Property still has two-thirds of the land left, so we can only consider developing it ourselves later."

Even now, Cheung Kong's market capitalization has fallen to HK$23 billion, a drop of more than 50% from its peak. This is considered the best-case scenario. Many listed companies in Hong Kong have fallen to 10% of their peak value. Companies that can maintain 20% or 30% are considered high-quality companies. Of course, there are also a few that can maintain 40% or 50%, which are considered the best of the best.

Chen Guangliang said, "There's no rush for the rest."

This increase in holdings is mainly because at the peak of the stock market, Cheung Kong raised 3 million, reducing Chen Guangliang's personal stake to 67.5%; now, the injection of land simply brings his stake back to 75%.

Stocks have fallen sharply, with even Cheung Kong Holdings losing 50%; however, the prime residential land held by Cheung Kong Property Holdings has only fallen by a little over 30%.

The gap in this area is naturally suitable for asset injection.

In the suite, only the two of them remained. Suddenly, Chan Kwong-leung said, “Next year, I will establish a ‘Chan Kwong-leung and Chan Man-kit Trust Company.’ I will inject two-thirds of Cheung Kong’s shares into this trust company, with you and me each holding half of the trust shares, and your children as beneficiaries. As for the remaining one-third of Cheung Kong’s shares, I plan to entrust them to the ‘Chan Kwong-leung Foundation’ for long-term charitable causes.”

Chen Wenjie was afraid to hear the word 'succession', so he quickly said, "Father, isn't it a bit too early? Of course, I have no objection to your arrangements, but your health is so good, there's no need to rush into these arrangements."

Chen Guangliang waved his hand and said, "You're already in your early forties, so this arrangement is very reasonable for me. From now on, the dividends from this father-son trust company received by Cheung Kong Holdings will be split 50/50 between us. You can then use it for some personal investments."

In fact, Chen Guangliang started giving half of his profits to Chen Wenjie two years ago. As for Chen Wenjie, he received a salary before he turned 39, though he would occasionally receive a bonus.

Chen Wenjie looked at the serious expression on his father's face and said, "Yes, I will follow Father's arrangements. Father's arrangements are very reasonable and conducive to succession. This trust company should stipulate that my descendants can only enjoy the dividends of the trust and have no right to compete for the controlling stake in Cheung Kong Holdings."

Since his father brought it up, he also wanted to share his opinion.

The father feared power struggles and disunity among his various branches of the family, and he also feared disunity among his four children. He lacked his father's ability to create numerous companies and businesses; his four children could only rely on the Cheung Kong Group's trust, with the family office also providing significant security.

Chen Guangliang smiled and said, "You don't need to worry about that. We'll take it slowly, step by step."

"Okay, Father."

In every listed company, Chen Guangliang would ultimately inject one-third of his shares into the 'Chen Guangliang Foundation' for charitable purposes. The father and son had many topics to discuss.

Taking the opportunity, Chen Wenjie said, "Father, I plan to privatize Hong Kong Resorts starting early next year. In addition, we will buy back 35% of Cafe de Coral by the end of the year, and I plan to continue to increase our stake to over 40%."

Even a friendly privatization of Hong Kong Resorts, with a 30% premium, would not cost more than HK$1.5 million (the amount raised from the IPO); this HK$1.5 million would allow CK Asset Holdings to borrow for two years for free and repay less.

As for Cafe de Coral's repurchase of shares, it's a case of buying low and selling high.

Chen Guangliang said, "There are no problems with these plans. Overall, Cheung Kong Group is going to start a new round of property price increases. Although there are some overseas investments, the overall focus is still on investing in Hong Kong."

This overseas investment includes numerous projects, such as a shopping mall project in Singapore, a Shangri-La hotel, shopping mall, and office buildings in Japan; however, the overall development is still mainly based in Hong Kong.

“Okay, I understand. Cheung Kong Property Holdings has already started new construction projects, and it is expected that sales in 1975 will not be less than 1000 residential units, with sales concentrated in the middle and later years.”

There's no problem. As long as the timing is right, CK Asset Holdings will become stronger and stronger.

In mid-December, the Ping An Index fell below 200 points, closing at 198 points, marking its lowest point of the year.

At this point, retail investors had already handed over their shares, some went bankrupt, others incurred debts, and there was a general sense of despair.

Yan Zuhe, accompanied by his eldest son Yan Dakang, arrived at the general manager's office of Cheung Kong Holdings.

"uncle"

"cousin"

Chen Wenjie warmly invited Yan Zuhe and Yan Dakang to sit on the sofa, and then sat down with them.

Yan Zuhe then said, "Wenjie, I am very happy that Cheung Kong is returning to Cafe de Coral Catering. Two board seats have been vacated. When do you think you should send someone to take office?"

Chen Wenjie smiled and nodded, saying, "Okay, I'll have someone from the Shangri-La Hotel Management Group take over later. It's just a formality; they won't interfere with the operations of the Cafe de Coral Catering Group."

At this time, Cafe de Coral Catering had 36 fast food outlets, 2 upscale Cantonese/Western restaurants, investments in Jumbo Seafood Restaurant, and more than 20 shops throughout Hong Kong.

Yan Zuhe immediately said, "The people from Cheung Kong Holdings are very capable. It would be very helpful for them to give us some guidance on our operations. By the way, do you think Cafe de Coral has a shortage of shops? I'm currently buying some shops at rock-bottom prices."

After briefly glancing at the shop information, Chen Wenjie said, "Uncle, feel free to buy at the bottom price. Shops have always been an important investment for the Dajiale Catering Group."

Yan Zuhe was delighted; the signal was quite clear.

By following in the footsteps of his brother-in-law and nephew, he successfully sold off his shares at a high price in 1973. For example, at the peak, he held only 25% of the shares in Cafe de Coral and 43% of the shares in Ho Shing Properties, cashing out a considerable amount of cash for himself. At the same time, he used part of the funds from Ho Shing Properties' listing to purchase rental properties and part to buy securities. During this period, he also issued new shares to exchange for new shares of other companies. In the end, he almost completed the cashing out at the peak.

Just as my brother-in-law and nephew predicted, the stock market crash and oil crisis caused many companies' market value to fall to one-tenth of its peak, and some even went bankrupt.

Meanwhile, Yen Tsu-ho's Ho Shing Properties also took the opportunity this year to buy several rental properties, further increasing its strength.

“I’ve learned a lot! Sheng Property and I also want to continue investing in the real estate industry. We have about HK$1500 million in cash flow. If there are any land projects available, I will seek cooperation with Cheung Kong.”

Chen Wenjie didn't think there was anything wrong with it. His uncle's Hesheng Real Estate found a project and then cooperated with Cheung Kong Holdings, with each party owning 50%, and in the end, both parties profited.

However, this time he took the initiative to say, "Perfect timing. Our Cheung Kong Group has a plan to acquire industrial land next year, and then release it off as pre-sale apartments when the time is right. The funds obtained can then be used to invest in real estate. If you are interested, Uncle, we can each contribute HK$1000 million in cash to form a joint venture. Later, we can borrow heavily from banks to continue acquiring more industrial land."

Yan Zuhe did not immediately agree upon hearing this, because industrial land prices had fallen the most this time due to the impact of the oil crisis, which led to a decrease in demand from Hong Kong industrial manufacturers.

However, he quickly added, "Good. The oil crisis will eventually be a thing of the past. In fact, global oil supply has long been restored; it's just that prices have gone up. Industrial buildings have a bright future!"

Chen Wenjie laughed and said, "We won't keep them for rent. Instead, we'll wait for the right opportunity to sell them all off-plan."

“I understand,” Yan Zuhe said with a smile. “Industrial land prices have fallen the most, but they might rise the fastest when they recover. Once we make money from industrial land, we can invest it in residential land. It’s a really good idea.”

Watching his cousin and father chatting and laughing, Yan Dakang was filled with admiration. His cousin was 15 years older than him, but his father seemed more like a 'junior in business' in front of him. Judging from his father's expression, he was enjoying himself and even cherished the moment very much.

He left Cheung Kong Holdings.

Yan Zuhe taught his eldest son, Yan Dakang, while they were in a car: "When it comes to investing in real estate, we should do exactly what the Chen family does, and we will never make a mistake!"

Yan Dakang said suspiciously, "Doesn't the Chen family make mistakes? After all, they have abundant capital, so their mistakes won't have much impact; but for small and medium-sized enterprises like ours, a single mistake can severely damage our vitality, or even lead to bankruptcy. I used to think that our conservative approach of leasing out 60% and selling 40% would allow us to survive in the long run."

Yan Zuhe laughed and said, "As long as your uncle is alive, it will be difficult for the Chen family to make a wrong judgment. You don't need to worry about this. If you really take power one day, renting out 60% and selling 40% would be the right approach."

Regardless, he never doubted his brother-in-law Chen Guangliang's judgment. That was a remarkably astute judgment he possessed even in the 1920s and 30s, and his most brilliant move was transferring assets to Hong Kong after World War II.

Many of the wealthy figures of Shanghai's high-society district back then have long since passed away, but my brother-in-law's family has only grown stronger, even becoming a world-class family. Even if he himself invests alongside his brother-in-law, his own wealth may gradually surpass the assets held in the family trust. (End of Chapter)