October 8, 2013 5:16 pm

Adrian Cheng adds shine to Chow Tai Fook brand

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Adrian Cheng runs his hand over a glossy brochure for Chow Tai Fook’s exclusive “haute couture” collection – 15 pieces of jewellery auctioned in May to a select group of customers for a total of $4m.

He is explaining that the goal of the collection was to burnish the brand image of one of Greater China’s biggest high-street jewellers.

He says it is “a new kind of facelifting” for the entire Chow Tai Fook brand. “Look at this, beautiful work,” he says, lighting on a very large and intricate diamond, opal and tourmaline necklace that sold for $385,000.

For a young man seen by many as heir apparent to a vast family-controlled conglomerate that spans property, retail, transport and infrastructure, he is surprisingly involved in the detail of these pieces. The 33-year-old Hong Kong scion somehow found time to act as creative director for this collection, overseeing its crafting in Turkey and its photographing in Milan.

Adrian Cheng recently took on the top job of general manager at New World Development, the biggest listed entity in the family’s private Chow Tai Fook Holdings empire. He also runs his own start-up shopping mall business called K11 within the group and is a board member of Chow Tai Fook Jewellery, the listed retail chain and the world’s biggest jeweller by market capitalisation.

Jewellery was the starting point for his grandfather, Cheng Yu Tung, who in 1943 married the daughter of the owner of what was then a Macau-based jewellery business.

The haute couture collection exemplifies Mr Cheng’s focus within the conglomerate over the past few years: catering to the tastes and desires of younger, typically Chinese consumers with rapidly growing spending power and a desire to be treated as special and different.

“I represent the new generation and I have to talk with . . . [that] new generation,” he says. “I’m not doing it just because I like it, I’m doing it because the customer wants it.”

The world has changed greatly from the one in which his father and grandfather before him built the Chow Tai Fook empire, said by Forbes to be worth $16bn, so Mr Cheng and his siblings have adopted a much more global approach.

Younger sister Sonia Cheng, who runs New World Hotels, in 2011 led an $800m deal to take over Rosewood Hotels & Resorts of the US and buy five of the most valuable properties it runs, including The Carlyle in New York. She added that to a previously acquired smaller, budget chain in Europe.

Brian, the youngest sibling, runs the infrastructure business and helps manage relationships with groups including Veolia of France.

Cheng Yu Tung, now 86, moved to Hong Kong after the second world war to build the jewellery business in the British colony, taking over the group after his father-in-law died. His fortune was boosted in the 1960s by the purchase of a highly lucrative stake in the Macau gambling monopoly of Stanley Ho and Henry Fok, two other budding tycoons.

From there, he and his son Henry Cheng, now 66, followed the typical path of Hong Kong tycoons with successful commercial and residential property investments, but also branched out into businesses including hotels, telecoms, water treatment, road building, and bus companies – all in Hong Kong, Macau and southern China.

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Local bankers who have dealt with the family describe them as very professional and pleasant to work with, always interested in a new investment or fundraising idea.

One banker highlights the family’s nous by pointing to investments in businesses such as Liaoning Huishan Dairy, which listed in Hong Kong last month, and its early-stage stake in Ping An, the mainland’s biggest insurer. The Cheng family also invested alongside Quintain of the UK to develop social housing around the London Olympics site.

Although Adrian Cheng has been marked out as the future family leader, at least one banker says Henry Cheng retains a firm grip on the reins of the private side of the empire.

Asked if he sees himself stepping into that role in future, Adrian Cheng says: “You can’t really predict . . . and I think there’s no point in even thinking about that.”

He claims his family position does not afford him special protection in his role at New World Development. “Because it is a listed company, you have to perform and you really need to be capable,” he says.

I represent the new generation and I have to talk with . . . [that] new generation. I’m doing it because the customer wants it

- Adrian Cheng

Some Hong Kong investors might view that statement with scepticism. The family attracted criticism in 2005 for taking private New World TMT, a separately listed telecoms business, at a price minority shareholders felt was too low. This was particularly galling because they did not benefit from the later lucrative settlement of a US court case that had been outstanding at the time of the privatisation.

“Shareholders in New World Development [the parent that controlled TMT] did all right out of that settlement, but the lesson as always for investors in these conglomerates is to be at the top, or as near to the top of the pyramid as you can,” says David Webb, a Hong Kong corporate governance expert.

Adrian Cheng insists he has brought more transparency, better governance and shareholder protection to the listed businesses.

But this is not a generational difference, he says. His very western education in the US at the Taft School, Connecticut, and then Harvard, is not so different from his father’s. Henry Cheng attended Richard Ivey School of Business in Canada, graduating in 1971, and as chairman of New World Development likes to open annual reports with thoughts from obscure European philosophers.

Adrian Cheng, who like his sister followed Harvard with stints in investment banking and finance, says the group must adhere to international standards if it is to be truly global.

“It’s about globalisation, it’s about global citizens, it’s not about just the city of Hong Kong,” he says. “The vision of building an international company is key. Your market can be in Greater China or in Asia . . . but your mindset and your vision has to be global.”

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The businesses

Chow Tai Fook Holding is the main private vehicle for the Cheng family’s empire and holds stakes in listed businesses including:

New World Development – the group’s biggest listed vehicle includes property development and is 39 per cent owned by Chow Tai Fook Enterprises, a private vehicle

New World Department Store – a Hong Kong and China-based retail business, 72 per cent owned by New World Development

New World China Land – a China-based property development business,
69.9 per cent owned by New World Development

NWS Holding – a group covering services, transport and ports in Hong Kong, Macau and mainland China, 61 per cent owned by New World Development and connected entities

Chow Tai Fook Jewelry Group – a retail chain 86 per cent owned by Chow Tai Fook Holding. The world’s biggest jeweller by market capitalisation

The family

Cheng Yu Tung, Patriarch, 86, entered the jewellery business in Macau in 1943

Henry Cheng Kar Shun, 66, chairman of New World Development, son of Cheng Yu Tung

Adrian Cheng Chi Kong, 33, joint general manager of New World Development, first child of Henry Cheng

Sonia Cheng Chi Man, 32, heads Rosewood Hotels, part of New World Development, second child of Henry Cheng

Brian Cheng Chi Ming, 30, oversees infrastructure business and M&A at NWS Holdings, third child of Henry Cheng

William Doo Wai Hoi, 68, director of various family businesses, brother-in-law of Henry Cheng

William Junior Guilherme Doo, 39, former corporate lawyer, director of various businesses, son of William Doo Wai Hoi

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