Chow Tai Fook's Gold, New World's Debt

On September 26, 2024, a filing out of Hong Kong’s Central district settled, in a few bland sentences, the fate of a dynasty’s third generation. Adrian Cheng, born in 1979, grandson of the founder and long presumed heir to the Cheng family empire, resigned as chief executive of New World Development—to devote more time, the announcement said, to public service and personal affairs. The same day, the company reported results for the year through June 2024: a loss attributable to shareholders of about HK$19.68 billion, its first annual loss in roughly two decades and the largest since its founding in 1970.

Nine months later, in June 2025, Adrian gave up his remaining seats as non-executive director and vice-chairman, exiting entirely the flagship his grandfather had built. Almost simultaneously, New World completed a loan refinancing of about HK$88.2 billion—some $11.2 billion—a sum with few precedents in Hong Kong corporate finance. The family name still glowed; the balance sheet had gone taut. Net debt stood near HK$123.7 billion—a gearing of 55 percent by the company’s measure, close to 96 percent by the market’s preferred one. The family still ranked third on the 2024 Forbes Hong Kong list, at $22.4 billion, behind only the Li Ka-shing and Lee Shau-kee clans. But New World’s market value had lost more than half since its 2019 peak.

Is this simply a story of a third generation failing the first? Wind the clock back—to a village in Shunde in 1925, an obscure Macau gold shop in 1940, an unwanted Repulse Bay mansion in 1968, an “art mall” in 2009—and the answer gets more interesting, and harder.

A Pact Over Rice Wine

In 1920s Guangzhou, two senior clerks at a silk shop—Chow Chi-yuen, the elder, and Cheng King-po—drank late one winter night over a pot of rice wine. Both men’s wives were expecting. If one child is a boy and the other a girl, Chow proposed, let our houses be joined. Cheng slapped the table: agreed—rich or ruined, in-laws forever. Chow’s wife bore a daughter, Chow Tsui-ying; Cheng’s bore a son, Cheng Yu-tung.

In 1929 Chow moved to Macau and opened a gold shop with a partner: Chow Tai Fook. In 1940, with the Japanese army occupying the western Pearl River Delta and no school left to attend, fifteen-year-old Cheng Yu-tung was sent to Macau as a shop boy. His father’s parting instruction ran to eight characters: say nothing of the betrothal; keep your head down and work.

He swept floors, emptied spittoons, ran bills. His future father-in-law granted no favors and never mentioned the engagement. The turn came at a ferry pier, where the boy, sent to meet a relative, noticed a Southeast Asian merchant asking where to change money and steered him into the shop. Chow began sending him to the pier daily to solicit trade—an education in nerve and in reading faces. In 1942 the boy went missing from work for days; he had been standing in rival gold shops, transfixed, studying their displays and their patter. Instead of punishing him, Chow gave him license to roam the street and study competitors whenever business was slow. Half a century later Cheng told an interviewer that even as a young manager in Hong Kong he spent only five hours a day in his own shop; people called it laziness, but he was simply curious why the neighbors did better.

In 1943, at eighteen, he married Chow Tsui-ying. It looked like a poor boy marrying up; it reads equally as a shrewd long bet by a father whose three sons wanted nothing to do with the gold trade. The marriage lasted more than seventy years, essentially without scandal—a rarity among Hong Kong’s great fortunes, where Stanley Ho kept four households and Henry Fok three—and its stability became the quiet foundation of everything after. To this day, two offshore trusts bearing Cheng Yu-tung’s name sit atop the family’s holdings.

Four Nines

When Japan surrendered in 1945, Macau’s refugee trade drained away, and the firm needed a new base. Cheng argued for Hong Kong—low taxes, stability, a free port—and in June 1946, aged twenty-one, opened the branch on Queen’s Road Central. He did three things rivals thought reckless: he spent heavily to make the shop look opulent, reasoning that a seller of precious things cannot look shabby; he kept slipping out to study the competition; and he modernized the guild-era titles—managers instead of shopkeepers, trainees instead of apprentices—nudging an old family house toward a modern firm. In 1956 the aging co-founding partner sold him his stake for a million dollars; when his father-in-law offered to sign over his own shares as well, Cheng refused, telling the old man to keep them, live on the dividends, and keep an eye on the juniors. Yield a step first, then walk a hundred: it became the pattern of his life.

In 1960 he reorganized the business as a limited company—among the first in Hong Kong’s jewelry trade—and distributed shares to longtime colleagues, treating loyal staff, as one account puts it, like brothers. Then came the move that remade the industry. Hong Kong gold was customarily 99 percent pure, and plenty on the market was far worse. Cheng introduced 999.9 fine gold—99.99 percent—over the protest of his own managers, who warned it would cost hundreds of thousands more. Count it as advertising, he replied. Within two years, pawnshops were automatically valuing Chow Tai Fook gold above the rest, wholesalers competed for it, and the trade eventually adopted his standard outright. He had discovered that a merchant too small to change the rules could instead set a higher rule and force everyone to follow—a play he ran again with fixed, no-haggle pricing in the 1970s and diamond 4C grading in the 1990s.

Diamonds made him the “King of Jewelry.” Watching wealthy Western women in his Central shop ignore the gold cases and wear diamonds, he concluded that the West’s present was Hong Kong’s future. But rough stones were controlled by De Beers, whose licenses were nearly unobtainable—Hong Kong held exactly one. In 1964 he flew to Johannesburg and bought a financially distressed cutting factory outright, acquiring with it more than ten De Beers licenses. By 1977 he could boast that he imported about 30 percent of Hong Kong’s diamonds. Speaking no English, he ran the international side through his eldest son-in-law, a University of California graduate trained at De Beers operations and in Antwerp—an early sign that this family, in its first generation, assigned work by ability rather than blood.

Shark Guts

Cantonese has a word for his kind of nerve: shark guts. After the riots of 1967, with mansions selling for a song and capital fleeing the colony, Cheng bought. He took 12 Repulse Bay Road from the military for HK$970,000 and picked up more than twenty other sites in 1968, fortified by the banker Ho Sin-hang, founder of Hang Seng Bank, who told him the slump could not last. By 1994 that one house was worth HK$300 million, a three-hundred-fold gain. You can never buy at the bottom or sell at the top, Cheng liked to say; but every trade is cyclical, and buying in the trough is rarely wrong.

In 1970 he co-founded New World Development, with Ho as chairman and himself as managing director; it listed in 1972, raising HK$194 million, and promptly stunned the colony by paying HK$131 million—a record for Kowloon land, at a time when a large Chinese developer’s entire assets might total two or three hundred million—for the old Blue Funnel wharf site in Tsim Sha Tsui, some 200,000 square feet. With a French architect and American engineers he built the New World Centre complex between 1978 and 1982; by 1986 its Regent Hotel ranked among the world’s most profitable, and by the 1990s the site was worth HK$3 billion to HK$4 billion. Just as consequential was the model: hold and operate rather than build and sell—stable rents, low asset turnover, and, decades later, the root of New World’s lag behind faster-churning rivals.

His boldest stroke came in the panic after Margaret Thatcher’s 1982 visit to Beijing, when no developer would touch a Wan Chai waterfront site for fear of 1997. Cheng negotiated with the Trade Development Council and its chair, Lydia Dunn, and in December 1984 agreed to build the Hong Kong Convention and Exhibition Centre—budgeted at HK$1.8 billion, ultimately costing HK$2.75 billion. The land came free as a public project; the exhibition halls went to the council; two hotels, offices, and luxury flats went to New World, which sold the hotels to its own joint venture for HK$1.56 billion, booking roughly HK$400 million in profit, while the retained property yielded over HK$500 million a year—returns above 25 percent. Queen Elizabeth broke ground in October 1986; eleven years later the building hosted the handover ceremony itself.

He lost, too. A Tehran racecourse built with Stanley Ho in 1978—the largest in West Asia—vanished into the Islamic Revolution along with the partners’ $50 million; the moon waxes and wanes, Cheng shrugged, and Ho pronounced him a true high roller who could afford to win and to lose. A $20 million plunge into shipping in 1983 caught the industry’s longest slump and was dumped in 1989 for HK$800 million, two years before freight rates soared. The pattern was plain: inside jewelry and property, his daring compounded; outside them, the odds collapsed. And because he waved failures away with proverbs, the family never institutionalized the habit of post-mortem—a graciousness that would cost the generations after him.

The Price of Succession

On January 1, 1989, Cheng, sixty-three, handed the managing directorship to his elder son, Cheng Kar-shun—Henry—then forty-three, holder of a Canadian MBA from the University of Western Ontario and a veteran of seventeen years inside the company. The trade nicknamed the reticent son “the Official,” a study in contrast with “Shark-Gut Tung.” But the son had watched Li Ka-shing and Pao Yue-kong win takeover wars while his father’s caution let chances pass, and he burned to prove himself. In fourteen months he committed close to HK$7 billion: stakes and buyouts from Hong Kong Resort to the Ramada hotel chain in America (HK$2.77 billion) to a hostile run at Wing On, the department-store house founded in 1907—buying a 25 percent block from Singapore’s OCBC at HK$11.52 a share and bidding HK$17 for the rest, only to watch the founding Kwok family sweep up shares and declare majority control within two days. A newspaper columnist pronounced the son more shark-gutted than the father.

Then the bills came due. Profit fell 9.6 percent in the year to June 1990, then 54 percent the next year, to just over HK$500 million—last among the five big Chinese developers—while debt swelled from under HK$1.5 billion at the handover to nearly HK$9 billion, past 50 percent of equity. By 1990 New World ranked nineteenth among Hong Kong’s twenty largest listed companies. In 1991 the father quietly resumed his desk on the thirty-first floor. His medicine was unsentimental: he sold the Wing On stake for HK$700 million—booking a HK$160 million profit and burying his son’s adventure—then sold shop units and flats floor by floor, HK$435 million here, HK$479 million there, repeating to the young that debt is not family wealth. And he turned the company north: after Deng Xiaoping’s southern tour in 1992 he became one of the earliest Hong Kong tycoons to pour money into the mainland—roads, bridges, power plants, the beginnings of New World China Land. By 1992 the market value had climbed back to fourteenth. Old ginger, the trade said, is hottest.

The mainland was sentiment as well as strategy. He had first gone home to Shunde in 1978, thirty-eight years after leaving; shaken by its poverty, he and Lee Shau-kee funded a hospital and schools, and in 1982 he endowed a scholarship in his father’s name. I am no imperial scholar, he said, but my money can make Shunde produce more of them. The commitment became the family’s deepest exposure: when China’s property cycle turned, no Hong Kong dynasty stood closer to the blast. His last great act came on November 25, 2011, when Chow Tai Fook Jewellery listed in Hong Kong at HK$15 a share, raising HK$15.7 billion at a valuation near HK$150 billion; the family’s two trusts held about 74 percent, worth HK$111 billion. He chaired meetings until a stroke in August 2012, at eighty-seven—sixty-six years at the helm—and died on September 29, 2016, at ninety-one. At the farewell the family displayed three characters in his own hand: diligence, honesty, honor. It was a creed, not a constitution—personal virtues never converted into institutions. And his very longevity had a cost: Henry became the true final decision-maker only at sixty-six, without the decades of independent trial and error that Li Ka-shing deliberately engineered for his own heir.

The Grandson’s Wager

Adrian Cheng was groomed from birth as the third generation’s core: Harvard, a degree in East Asian studies, a year in Kyoto studying Japanese art, stints at Goldman Sachs and UBS, an executive directorship at New World in 2007, at twenty-seven. In 2008 he created K11, the “art mall”—museum and retail fused—opening the first in Tsim Sha Tsui in 2009 and the second in Shanghai in 2013, and building around it art and craft foundations, offices, serviced apartments, and the flagship K11 MUSEA. He called himself an entrepreneur, not an heir, and spoke of building Asia’s next cultural-IP empire after Disney. Time named him among the world’s hundred most influential people in 2018; in May 2020 he took over as chief executive.

The concept dazzled critics and drew crowds—a Monet show at the Shanghai K11 logged 350,000 visitors in three months and over a hundred million yuan in merchandise sales—but the business carried three flaws. Each project cost upward of HK$5 billion, with MUSEA alone consuming more than HK$20 billion, on payback periods far longer than a conventional mall’s; the bespoke art-retail formula resisted replication; and it produced little of the steady cash flow the parent needed. Worse, the expansion rode straight into the downturn—mainland property sliding after 2018, Hong Kong sapped by unrest and pandemic—while New World kept leveraging up.

His sister ran the counter-experiment. Sonia Cheng, a year younger and Harvard-trained in applied mathematics, built Rosewood Hotel Group from about nineteen hotels at its 2011 start to more than fifty across some twenty countries—mostly management contracts, asset-light, modestly but durably profitable. Same family, same schooling, same cycle; only the capital model differed, and the fates diverged accordingly. The other siblings each held a lane—Brian at the infrastructure arm NWS, Christopher over North Asia at the family office—and in 2024 a cousin, Cheng Chi-heng, was elevated beside Sonia at the jewelry company: a deliberately dispersed succession that prevented fratricide but left no one with the authority to command in a storm. Henry said publicly in 2023 that a successor must possess both virtue and talent, and that he was still looking.

The storm arrived in 2024. With the record loss disclosed and the market voting no confidence in the heir’s stewardship, Henry—seventy-eight, in the last strong exercise of second-generation authority—decided someone had to answer for it. Adrian resigned, and New World sold its K11 brand-management business to his private company for about HK$209 million with a thirty-year trademark license, letting him carry the cultural-retail dream out the door. By June 2025 he was gone entirely, just as the HK$88.2 billion refinancing spared the company default—credit extended, in effect, against trust the family had banked over two generations, and no longer extended to the grandson.

The Ninety-Sixth Year

In 2025 the original Macau shop is ninety-six years old; New World has been listed for fifty-three years; Cheng Yu-tung has been dead for nine. Chow Tai Fook still runs more than 7,000 stores on the mainland; Rosewood receives guests in thirty-three cities; the convention centre still anchors the Victoria Harbour skyline. The founder spent ninety years proving that shark-gutted daring can build an empire. His son spent thirty proving that daring is hard to copy. His grandson spent fifteen proving that daring, mistimed, devours its own. A family begins with blood and endures on promises; wealth can be inherited, but judgment must be retrained in every generation, and what outlasts persons is institutions. The family constitution Cheng Yu-tung never wrote remains the homework his son, at seventy-nine, is still completing.