Jimmy Lai Won’t Back Down

Fire bombed and tear gassed, Hong Kong’s most combative tycoon is pressing ahead with his fight against Beijing to expand voting rights in the former colony.

Jimmy Lai, photographed in his Hong Kong home.

Jimmy Lai, photographed in his Hong Kong home.

R.D./Bloomberg Markets

At 3:30 a.m. on a chill January morning, Hong Kong media magnate Jimmy Lai was awakened by a housemaid. Police were at the door of his British-colonial-era mansion. “I thought they had come in the middle of the night to arrest me,” Lai, a former child sweatshop worker, says matter-of-factly later that day, sipping tea in a sitting room decorated with brilliantly colored paintings by Chinese-American artist Walasse Ting.

Lai’s assumption was hardly far-fetched, given his front-line role when pro-democracy protesters seized control of much of Hong Kong’s central business district for almost three months late last year. On this predawn visit, however, the cops had other matters in mind. Unbeknownst to the slumbering Lai, arsonists had attacked his home, hurling a Molotov cocktail that exploded spectacularly against the steel-barred front gate. Unfazed, Lai delegated the task of meeting police to an assistant, rolled over, and went back to sleep.

Such are the life and times of Hong Kong’s most combative tycoon and owner of its feistiest media outlets, Bloomberg Markets reports in its May 2015 issue. And such is the fearless disdain he shows for his foes, be they China’s all-powerful Communist leaders, bomb-throwing triad gangsters currying favor with Beijing, or the authors of a fake obituary published last year in a rival newspaper (to which Lai, now 66, riposted in a video, “Sorry to disappoint you”).

Hong Kong police officers detain Lai during raucous street protests in December.
Hong Kong police officers detain Lai during raucous street protests in December.
Lam Yik Fei/Bloomberg

Beginning in September, tens of thousands of protesters occupied downtown streets for 79 days. It was the biggest threat to the Chinese Politburo’s control since it regained sovereignty of the former British colony in 1997. The shock troops were mainly students, but Lai’s role was pivotal.

His donations have long funded pro-democracy groups. During the occupation, his tall, burly frame was an imposing presence almost every day, braving tear gas, pepper spray, and, on one occasion, pigs’ entrails hurled by unidentified men. And his raucous tabloid Apple Daily is the loudest media voice of anti-Beijing protest. “When it comes to media influence, Rupert Murdoch is a toddler compared to Jimmy,” says Robert Chow, co-founder of the pro-Beijing Silent Majority for Hong Kong. “While Murdoch tries to control things from the shadows, Jimmy is right out there. He’s the brains behind it all.” Martin Lee, a co-founder of the main opposition Democratic Party, says, “Jimmy Lai is indispensable to the democracy movement in Hong Kong.”

Lai sees things differently. “It’s a movement initiated by the people,” he says. “Seeing these kids gives you great hope,” he says of the student protesters. “There’s no leadership, and that makes it very powerful. It is spontaneous, God-sent.”

Lai and the pro-democracy movement could do with some divine intervention. Their central demand is the right to freely elect Hong Kong’s leader, known as the chief executive, in 2017. Chinese President Xi Jinping is insisting on having the candidates vetted first to ensure they are pro-Beijing. The Chinese plan will have to be approved by a two-thirds majority of the city’s quasi-democratic legislature in a vote likely to be held by the end of July, and minority groups financially backed by Lai may well be able to muster enough votes to block it. Should that happen, Xi’s government has said the next chief executive will be selected just as the previous three were—by a Beijing-anointed committee of just 1,200 people. Announcing final details of the Chinese plan today, the Hong Kong government confirmed that the Occupy Central protesters failed to win any significant concessions. “They have lost in the short term, and that’s unfortunate,” says Douglas Paal, a vice president of the Washington-based Carnegie Endowment for International Peace and a former adviser on Asia to U.S. President George H.W. Bush.

However, shock waves from the occupation continue to reverberate around Zhongnanhai, the walled compound abutting Beijing’s Forbidden City where Xi is establishing himself as China’s most powerful leader since Mao Zedong. By crushing democratic aspirations, Xi could endanger Hong Kong’s role as China's international financial center—a position it holds in large part because of its existing freedoms, says Kerry Brown, head of the University of Sydney’s China Studies Center. “Hong Kong is still incredibly important as the primary portal for capital flows in and out of China,” Brown, a former senior British diplomat, says. “Beijing may have won in the short term, but in the long term it cannot win if it wants to preserve Hong Kong as the distinctive place it is.” In a city that can seem all-business and money obsessed, Lai has helped to politicize an emerging generation of Hong Kong’s brightest and push them to challenge Beijing’s idea of democracy. “The young people in Hong Kong have a very different value system, and they are prepared to fight for it,” he says. “Democracy, freedom of information is like air to them. If they can’t have it, they can’t breathe.”

Many in the business community agree. “Hong Kong’s core values are absolutely critical to its success,” says Peter Levesque, chairman of the American Chamber of Commerce in Hong Kong. “This is a defining moment. Is Hong Kong committed to maintaining the characteristics that have made it so successful? Or is it destined to become just any other city in China?”

The struggle for Hong Kong’s future is being closely watched by foreign investors whose enthusiasm for Hong Kong shares has made the $5.03 trillion stock exchange the world’s third largest by market value. While the stock market lost only 1.6 percent during the protest compared with a 3.4 percent decline in the MSCI World Index, the broader economy took a hit. Growth slowed to 0.4 percent in the fourth quarter from 1.4 percent in the previous three months.

The protests aren’t going away, says David Webb, a Hong Kong–based investor and shareholder activist who supported them. “The government will have to expect, so long as it lacks legitimacy, to face more challenges to its authority and possibly more-organized ones,” he says.

While Hong Kong was never a democracy under Britain, it did enjoy free speech and an independent legal system. Under an agreement known as “one country, two systems,” China guaranteed those freedoms would be retained for 50 years from 1997, when the colony returned to Chinese sovereignty. Eighteen years later, some appear under threat—in part because of efforts to muzzle Lai. While successive Chinese governments have left the former’s legal system intact, Hong Kong plunged from 12th place in 2002 to 61st in 2014 on the World Press Freedom Index of 180 countries compiled by Paris-based Reporters Without Borders.

Lai and his allies are riding a wave of protest that isn’t only about freedom. Hong Kong (population: 7.2 million) is one of the world’s most unequal societies. Ten of the world’s 200 wealthiest individuals live within the 1,104-square- kilometer (426-square-mile) enclave, according to the Bloomberg Billionaires Index. In a city that has more Rolls-Royces per capita than any other, multibillionaires live practically cheek by jowl with old people who live in cages—bunks stacked on top of one another in tenement rooms, separated only by metal bars. Government figures show that more than one in seven Hong Kongers lives in poverty and half earn less than $1,700 a month in a city with the world’s highest property prices.

Hong Kong’s economic and political elites have a cozy relationship with the leadership on the mainland. On the eve of the protests, President Xi called on the city’s most powerful business figures to do their patriotic duty and pledge their solidarity with Beijing. Lai wasn’t invited; he hasn't been allowed to enter mainland China since 1993. But about 40 others, including Asia’s richest person, Li Ka-shing, piled into private jets and flew to Beijing to take part in a photo op with Xi in the Great Hall of the People. “In Hong Kong, there is a very ugly alliance between the Communists and the rich people,” says Cardinal Joseph Zen Ze-kiun, a former head of the Catholic Church in Hong Kong. Lai’s personal story exemplifies the wealth gap. He has amassed a $900 million fortune, according to Mark Simon, a U.S.-born aide who handles his finances. And the garden suburb in which he, his wife, Teresa, and the youngest of his six children live with their pet golden retriever is a stone’s throw from teeming Mongkok, the neighborhood with one of the highest concentrations of cage dwellers. Lai, who also has a similar family home complete with matching retriever in Taiwan, is unapologetic about his fortune. Of income inequality, he says: “It is happening everywhere where there’s an economic transition.” Lai is also not in agreement with many fellow democracy activists who believe the system is now so weighted against the poor that it’s impossible to replicate the rags-to-riches path taken by Li Ka-shing and other older tycoons, including himself. Citing better education possibilities, Lai says, “The opportunity actually is more now than when I was young.” 

Lai was born amid civil war and starvation in Guangdong province, just across the border from Hong Kong. At the age of 12, he arrived in the British colony in 1960, hidden in the bottom of a smuggler’s boat. “I had no money, but the smuggler took me to my mother’s sister and she paid him,” Lai says. “A few hours later, I was taken to a factory.” It was a garment sweatshop, and Lai slept on the premises. He was paid $8.50 a month. “It was like heaven,” he says. “All of a sudden, there was hope.’

In 1966, Mao plunged China into the turmoil of the Cultural Revolution, and the following year, deadly rioting spread across the border, with Maoists battling British colonial police. Equity and property markets crashed. Lai, who had been promoted to better-paying jobs, bet on beaten-down stocks. The benchmark Hang Seng Index surged 2,900 percent in six years. Lai says he and a friend turned a $2,000 bet into $150,000, which they used to buy a textile factory.

In 1981, Lai launched a fashion retail chain, naming it Giordano after a New York pizza restaurant he had eaten in while visiting the factory’s U.S. customers. By then, Lai had taught himself English, a language he now commands well enough to devour the cerebral works of a favorite author, the 20th-century English poet and philosopher Owen Barfield.

Lai’s politicization came in 1989, when China’s military sent tanks into Tiananmen Square. “My heart opened up,” he says. Lai began producing T-shirts lauding the doomed pro-democracy students of Tiananmen. Then, in 1990, he launched Next magazine, a weekly combining sex and crime with hard-hitting anti-Beijing rhetoric. In one 1994 issue, Lai called China’s then premier, Li Peng, a “turtle’s egg,” Chinese slang for “bastard.”

Giordano Stock Price
Giordano Stock Price
Bloomberg

Within a month, Chinese authorities started closing down his stores, which had expanded into the mainland. Lai says he had no option but to sell his entire 37 percent shareholding for $280 million. Today, Giordano International, a publicly listed company, has grown to 2,600 stores in 30 countries. Lai shrugs off the loss. “The most important thing is I did what I believed in,” he says. Having lost one business empire, Lai proceeded to build another, Next Media. In 1995, he launched Apple Daily, with a layout like USA Today’s and news content similar to Murdoch’s New York Post. Sales soared.

As the 1997 handover approached, many pro-democracy activists feared they would be jailed. The thought crossed Lai's mind. Never a particularly devout man, he says the uncertainty of those times, together with the influence of his deeply religious wife, may have prompted him to embrace Catholicism. Lai was baptized by Cardinal Zen in 1997.

In 2003, Hong Kong’s then chief executive, Tung Chee-hwa, attempted to impose anti-subversion laws. Urged on by Lai’s publications, some 500,000 people took to the streets in protest. Tung backed off and two years later resigned. Similarly, in 2012, when current Chief Executive Leung Chun-ying tried to introduce elements of the Chinese education system into schools, Lai again sided with tens of thousands of students who besieged government headquarters for 10 days. Once more, the government backtracked.

Will that happen again? Michael DeGolyer, a U.S.-born political science professor at Hong Kong Baptist University, says public opinion will pay a crucial role in answering that question. When the protesters first took to the streets, they attracted a wave of sympathy following the heavy-handed police response. Occupy Central was romantically rebranded the Umbrella Revolution after the rain gear protesters used to fend off tear gas. And student activists such as baby-faced Joshua Wong, who turned 18 on the barricades, became heroes overnight.

However, public support eventually turned to anger at the inconvenience and financial losses caused by the disruption. The fragmented protest leadership, which also included academics and opposition politicians, bickered. After six weeks, polls showed 64 percent of people wanted the government to clear the protest sites, which a month later it did. Now, November local government elections loom large. “It will be a key test,” says DeGolyer. “If the democrats get less than 50 percent of the vote, they will lose a lot of credibility.” To some in Hong Kong, Lai has a credibility problem of his own. Last year, when newspapers published details of donations Lai had made to pro-democracy groups and politicians, the city’s Independent Commission Against Corruption began an investigation. The ICAC said in August that it began its probe after receiving complaints that some lawmakers had received inducements in breach of the Prevention of Bribery Ordinance. The commission has since declined to make any further comment. Lai, who says his financial records were stolen by hackers, confirms he made the donations, but says they were legal. "I am not worried," he says. "If they put me in the prison, my conscience is not in the prison." Pro-Beijing media delight in painting Lai as a stooge of the U.S. government. WikiLeaks cables made public in 2011 showed that U.S. diplomats had met with Lai and other pro-democracy activists, prompting the official China Daily to brand Lai and three others The Gang of Four, a term of deep opprobrium in China that was originally applied to Mao’s last wife, Jiang Qing, and three associates blamed for the worst excesses of the Cultural Revolution.

Next Media Stock Price
Next Media Stock Price
Bloomberg

Lai says that although he can handle the dirt thrown at him, he won’t ask any of his children to succeed him at the helm of Next Media. They range in age from 8 to 38; three are in school, and the other three have businesses of their own. “I came from the streets and have been a fighter all my life,” Lai says. “They have always lived a comfortable life. How can I expect them to start where I finished?”

So far, Lai has survived China’s attempts to silence him. “It comforts me that Jimmy is there,” says Victor Shih, a Hong Kong–born Harvard Ph.D. and China scholar at the University of California at San Diego. If Lai were somehow sidelined, that would be a sign that the status Hong Kong enjoys under “one country, two systems" is doomed, Shih says: “He’s the canary in the coal mine.”

This story appears in the May 2015 issue of Bloomberg Markets. With assistance from Natasha Khan in Hong Kong.

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