HONG KONG — Emboldened by the legend of Silicon Valley, Hong Kong is creating dot-coms, setting up venture capital funds and scouring the region for cash-hungry start-ups.
But unlike America, where unknown engineers and programmers transformed themselves into a new corporate elite in classic rags-to-riches fashion, Internet development here is being led by familiar faces--the same families that earned their billions turning this tiny rock outcropping into a wealthy gateway to modern China.
And it's not just Hong Kong. The presumption that technology will inevitably empower the little guy is getting a stiff test across Asia. Here, the shift to an information-based economy has strengthened the hand of those with money and guanxi--connections.
There is the Kwok family in Hong Kong, the Koo family in Taiwan, the Riady family in Indonesia, the Kim entertainment group in South Korea. And occupying a class of its own is the Li clan of Hong Kong, an empire spawned by tycoon Li Ka-shing which, under his youngest son, Richard, has nearly overnight become Asia's foremost Internet power outside Japan.
"Older families tend to rule in business in Asia; it's the way business has been done for generations and generations," said Matthew McGarvey, an IDC-Asia Pacific analyst in Hong Kong. "This is a classic case of how the Internet is being adapted to traditional Asian culture."
It's also a cautionary tale for those who say the Internet will inevitably democratize the way power is acquired, decisions are made and wealth is distributed around the globe.
To be sure, this notion is not all myth in Asia. The Internet is accelerating a move toward greater openness, efficiency and modernization in the region's economies. And there are isolated examples of bootstrap billionaires such as Masayoshi Son, founder of Japan's Softbank Corp.
Meanwhile, Singapore's censors are losing their battle to control the Internet, rural Chinese factories are locating online buyers for their excess inventory, and South Koreans have taken to online stock trading like junkies.
But evolution, not revolution, is the modus operandi for a part of the world whose business dealings reflect centuries-old cultural traditions, strong familial ties and a Confucian respect for seniority.
And those with a ready-made network of personal ties can move quickly to create the regional alliances that form the backbone of these new Asian Internet conglomerates.
Take 33-year-old Richard Li.
In 1990, he used a $125-million investment from his father to launch Star TV, the Asian satellite television network, and sold it three years later for nearly $1 billion to Australian media magnate Rupert Murdoch.
That pile of money became seed capital for the fledgling Pacific Century CyberWorks Ltd., or PCCW, whose inflated stock value Li used to acquire Hong Kong Telecom, the territory's venerable phone company, earlier this year in a deal valued at $38 billion. This month, he is hosting glitzy parties in Hong Kong and New York to launch his Asia-wide interactive television network, the immodestly named Network of the World.
Powerhouse in Hong Kong
Add up the Li family businesses, and they control 97% of Hong Kong's fixed telephone lines and represent a staggering one-fourth of the value of Hong Kong's benchmark Hang Seng stock market index.
For years, it has been a popular bar stool pastime in Hong Kong to imagine a day that didn't somehow enrich the Lis, whose empire reaches deep into global real estate, retailing, port operations, telecommunications and more.
"Sometimes I feel as if I am just working to make that gentleman richer," says Andrew Jarvis, a Hong Kong consultant whose personal rent, utility and phone payments all eventually wind up in the coffers of Li Ka-shing.
The Li family's aggressive expansion into Asia's "new economy" has intensified anxieties over the impact of these emerging high-tech oligopolies on competition in the increasingly digital world.
The Hong Kong government insists that it can protect competition in telecommunications by licensing new carriers and stepping up policing of predatory pricing and other areas of potential abuse.
But critics fear that the Li family's clout in the Internet and telecommunications dealings will lead to higher prices and discourage high-tech entrepreneurship by making it tougher for small firms to get the attention of investors, partners or customers.
"We've got to get a big name investing in us, otherwise [PCCW will] move into our space and suffocate us," frets one young Internet entrepreneur.
He is not necessarily imagining things.
Indeed, in its latest annual report on the best places to do business, the Economist Intelligence Unit, a London-based business research service, dropped Hong Kong from first to sixth place, in part because of concerns that the government had favored the Li family in several recent high-tech deals.