Delta Dream Rises

CHINA

20 million yuan X%(b) HK$200 million Land valued at 160 million yuan

50% (b)

Managerial expertise

(a) "A Hong Kong based association with expressed charitable intent"; will establish subsidary investment vehicle for future fund-raising purposes (b) About to change; Guangzhou's stake will be about 5%

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dream rises Tom Mitchelllooks at the prospects for tycoon Henry Fok Ying-tung's hometown ambitions

IN THE SOUTHEAST corner of Nansha, an island in the upper reaches of the Pearl River Delta, a 243-hectare plot of land lies barren. In about a year's time, this unlikely site will be home to the first stage of the Nansha Information Technology Park, an ambitious joint venture involving businessman Henry Fok Yingtung and the Hong Kong University of Science and Technology. Bids have been tendered and construction' of a conference and training centre, office buildings and residences is set to begin in a few months. Nansha IT Park lies at the heart of the Hong Kong and Guangdong authorities' controversial intention - announced after their fourth cross-border Co-operation Joint Conference on July 25 - "to discuss the overall direction and substantive plans ... to develop Nansha". In the past 10 years Mr Fok has invested HK$2.5 billion - and plans to invest another HK$1.3 billion - in Nansha, where he has already completed a wide range of high-quality but little-used recreational facilities including a conference centre, shopping mall and 36-hole golf course. Mr Fok's wider aim is a noble one. Nansha is in his hometown of Panyu, a district of Guangzhou. He wants to bequeath Panyu the very model of a modern mini-city. However, an obvious conflict of interest exists. Mr Fok played an instrumental role in the mid-1980s bailout of Chief Executive Tung Chee-hwa's financially troubled family shipping company, Orient Overseas Container Line. And so, is the Hong Kong Government's vague announcement concerning Nansha Mr Fok's reward for past services rendered to Mr Tung? There is no evidence to substantiate this suspicion. "We didn't know that the [Hong Kong and Guangdong] governments were talking about this. We were quite surprised," said Mr Fok's son Ian Fok

Chun-wan, a governor of the Fok Ying Tung Foundation, the non-profit organisation through which Mr Fok has channelled his Nansha investments. Hong Kong Government officials maintain privately that Guangdong province brought the issue to the fore. They hope for nothing more than to put Nansha on the back burner until it fades away. Interviews with sources close to the project endorse assertions that there was no quid pro quo. However, they also reveal that any hopes that Hong Kong has heard the last of the Nansha initiative are misplaced. A complex set of forces has been put in motion in the past four years, and powerful interests - each with unique motivations - want Nansha to emerge as a world-class high-technology and residential area. The principal actors include the Fok Foundation, the university and the Guangzhou municipal government. The story begins in November 1997, when the Fok Foundation and the university announced an agreement to collaborate on the construction of Nansha IT Park, the project on which Nansha's development hopes are riding. Nansha needs a successful hi-tech park filled with executives, programmers and researchers to provide it with a core population that will also give life to the Fok Foundation's recreational facilities. The park ownership structure decided on by the Fok Foundation and the university was complicated. In Hong Kong, the Fok Foundation and the university established Nansha IT Park Foundation, which held 50 per cent of Nansha IT Park. The other half was controlled by Nansha Development - a Nanshabased joint-venture investment company 51 per cent held by the Fok Foundation and 49 per cent by the Panyu government. Nansha IT Park Foundation contrib-

uted HK$200 million in cash - all of which university officials say was provided by the Fok Foundation. The university, meanwhile, seconded two staff members to oversee the park's construction, marketing and management. Nansha Development provided ,land valued at 160 million yuan (about HK$150 million) for the park. This ownership structure presented Nansha IT Park with its first major challenge. Because Nansha IT Park Foundation is a Hong Kong-based entity and Nansha Development a foreigninvested enterprise, the park was technically owned by "foreign" parties. It made Nansha IT Park unique. Before its establishment, all mainland IT parks had been owned - usually outright - by local governments. "This is a very special model," said professor Otto Lin Chui-chau, the university's vice-president for research and development. "It will be the first nationally recognised hi-tech park of its kind. Its management structure is unlike any other park on the mainland," adds John Wong of the university'S Applied Technology Centre, who has day-to-day management responsibility for the park. Securing all the central government approvals necessary to run an IT park is a complicated endeavour even for local governments on the mainland. It was a nightmare for foreign investors. Could, for example, a foreign-invested IT park operate network services given the tight restrictions on foreign investment in China's telecommunications industry? As it turns out it cannot, and Nansha IT Park will have to establish a mainland-controlled company to run its network services. As the university and the Fok Foundation were, wrestling with such complications in 1998, a white knight appeared in the form of the Guangzhou municipal government. Guangzhou had the knowledge and

clout to shepherd Nansha IT Park through Beijing's approvals' process. "Guangzhou knew how to do it, we didn't. We never knew what ministry to go to for approval," Mr Wong said. "For this to become possible the Guangzhou government had to take this up in Beijing." As a result Nansha IT Park received crucial approval from the Ministry of Science and Technology in August 1999. Finally, to cement its relationship, Guangzhou ordered one of its venture capital companies to invest 20 million yuan in the park in return for a small stake. Yet even with obstacles finally falling by the wayside, the parties involved in -the project shared a similar frustration. They believed the park would benefit from stronger regional co-operation and economic integration in the Pearl River Delta. However, they also felt the Hong Kong Government's inherited laissez jaire tradition and perceived "one country, two systems" constraints were preventing it from exercising necessary leadership in the region. "Everyone just says 'One country, two systems. Don't cross the line!'" laments Timothy Fok Tsung-ting, another of Mr Fok's sons. For their part, university officials believe their institution has a responsi-

'Everyone just says One country, two systems. Don't cross the line!'

bility to step into the vacuum and help the Pearl River Delta evolve from its messy collection of six independently minded cities, two special economic zones and two special administrative regions and become one of the world's great regions. "We were very concerned for the future of Hong Kong," said Mr Lin. "We asked 'how can Hong Kong sustain its prosperity?' If we view Hong Kong as [a singular entity] the future is pretty dim. You have to view Hong Kong as part of a larger region. By working closer with the Pearl River Delta we can help the delta and we can help Hong Kong." University officials maintain that they did not lobby the Hong Kong Government on Nansha's behalf. "I think [Hong Kong] should be interested in Nansha. It's a natural place for business, technology and people to meet," said Mr Lin. "But [the Hong Kong-Guangdong statement] came as a surprise to me." Sources say Guangzhou, which lacks the channels to approach Hong Kong directly, urged the Guangdong government ,to press the issue at the crossborder co-operation talks. "Once it is on the agenda the governments can at least start talking about what can and cannot be done," said a source close to the project. "Guangdong and Hong Kong have considerations beyond our imagination. Whatever happens does not have to be in Nansha. "Our project is not a big thing in the overall scheme of things," he added, pointing out Nansha stood to benefit from any and all measures taken to enhance regional co-operation in the Pearl River Delta. "Large projects are not possible without government leadership these days. Businesses should take care of themselves but government has to create the environment." •

Tomorrow - can one family build a city? The Foks' Nansha vision I