The Executives

Lui Che-woo: Asia’s second richest person

by Editor

February 21, 2014 | 12:54 am
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Lui Che-woo, Asia’s second-richest person, smiles infectiously and chuckles at the question: does luck play a part in business success?

“There is a Chinese saying,” the 84-year-old casino tycoon begins to respond through his interpreter. The saying is broadly translated thus: “Man proposes, God disposes.” In other words, you can strive all you like but success is down to fate.

Or as Mr Lui puts it: “Luck plays a role in business but whether you succeed or fail depends on many other factors. I haven’t really had a failure.”

According to Bloomberg’s billionaire index, Mr Lui’s net worth is $22bn. That puts him about $7bn behind Li Ka-shing, the property magnate. Phenomenal growth at Galaxy Entertainment, his Macau casino business, has catapulted him up the personal wealth rankings.

Mr Lui, who always sports a flat cap, is not himself much of a gambling man. His hobbies are golf and Chinese calligraphy; he says he needs about five hours of sleep a night, spends a lot of time catching up on the news and weighs up a business decision four or five times before reaching an outcome.

The only gaming activity he owns up to is mah-jong, certainly not baccarat, the card game beloved of the Chinese high rollers that is driving astonishing growth for all of the six casino operators in Macau.

Born in Jiangmen in Guangdong province, southern China, he is something of an accidental gambling magnate. His family left for Hong Kong in the mid-1930s.

Two images from the second world war left an indelible impression. Near his home, he saw a couple of dozen corpses. “They did not die because of sickness or anything but because of hunger. I remember that and how people suffered,” he says.

He also recalls seeing a moment of cannibalism in wartime Hong Kong. He was 12 or 13 at the time.

Out of the wreckage of war came his first wealth – from the import of construction materials abandoned by American forces on the Japanese island of Okinawa. From this was created K Wah, a conglomerate of construction, property and hotels businesses.

These included the Stanford hotel chain in the US, but the main wealth was derived from the acquisition of land and the construction of luxury complexes mainly in Hong Kong and Shanghai. It listed on the Hong Kong stock exchange in the 1980s.

And then came Macau. When in 2002 the Chinese government opened up the gambling market on the former Portuguese colony, Mr Lui took advantage and was awarded one of the six prized gaming concessions.

He was 73, an untypical age to start a career as a gambling baron. “At the very beginning I actually felt a bit nervous. I didn’t have much experience in gaming,” he recalls.

“Terrible story,” says the billionaire in a rare venture into English, a smile across his face that is full of sadness and experience. “You don’t forget.”

“Obviously I knew it was a great opportunity but I wasn’t expecting something as big as right now, what we see in Macau.”

He describes the Las Vegas operators who descended on Macau, the likes of Sheldon Adelson and Steve Wynn, as “good friends” who respect each other and are part of a “harmonious competitive environment”.

It is a sign of Macau’s astonishing growth that Galaxy after 12 years is worth 20 times more than K Wah’s property arm by market capitalisation. The Lui family are 51 per cent shareholders in Galaxy, which has six gambling emporiums. It had sales of HK$57bn in 2012, up more than a third on the previous year, and net profit of HK$7.4bn.

The company’s flagship is the HK$16.5bn (US$2.1bn) Galaxy Macau, a casino and hotel resort on the island’s Cotai strip which has six big cupolas adorned in 24-carat gold. It took five years to build.

With 2,260 rooms, a swimming pool that generates 1.5-metre waves, an artificial beach and, most importantly, 1,500 slot machines and 450 gaming tables, it handles 30,000 people daily.

This, though, is what Galaxy calls “phase one” of the resort. Phase two will double the resort size. It opens next year. “And we are hoping to start phase three and four very soon,” says Mr Lui. “It should be quite fast.”

While Mr Lui does not himself enjoy a flutter, he acknowledges the Chinese fondness for gambling. “It seems to be a habit about Chinese people,” he says.

He talks about casino opportunities on the neighbouring island of Hengquin, in Japan, Taiwan and other parts of Asia, depending on the willingness of governments to open up their gambling markets. He hopes Macau’s development will not be hindered by labour supply problems and that the Chinese government will bring in more workers. After all, the tax take that Beijing gets from Galaxy is “quite handsome”.

Key to the development of Galaxy’s gambling plans is the growth of the “mass market” of players, as opposed to the high rollers or “VIP market” that drive up the profits of all operators. He wants to develop more leisure and hospitality facilities to complement the gaming activity, “diversifying gaming into a more complete tourism product”, he says. “We are planning shopping, hotel and sports facilities. With this development of the mass markets into Macau, more families can come.”

Mr Lui recognises the pace of progress in China and its impact on Chinese society but does not necessarily like it.

“When thinking about the Chinese, we talk about morals, we talk about ambition, we talk about happiness within a family and then within yourself,” he says.

“Nowadays people are competing really fiercely and it’s people fighting for money. We should go back to the education system. Maybe in China there should be more subjects about morals and how people should look for happiness within themselves rather than from others.”

An admirable moral code, but it does not exactly sit squarely with Macau, the lure of gambling and the business of Galaxy Entertainment. He responds that maybe gambling in the past was “not a good thing” and that Galaxy promotes responsible betting.

People are “becoming informed about learning not to spend all one’s fortune on gambling but to look at it more as an entertainment”, says Mr Lui. “The future of gambling is as an entertainment business.”

• Culled from FT

by Editor

February 21, 2014 | 12:54 am
  |     |     |   Start Conversation

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