The opulent K11 Musea, known as the “Silicon Valley of Culture,” stands out even in the wealthy city of Hong Kong. Adrian Cheng, a member of one of the city’s wealthiest families, spent 10 years and $2.6 billion to bring his vision for the luxury retail and art hub to life on a prime harbor-front property. However, after just five years, Cheng’s ambitious plans for his family’s New World Development Co and for himself have come to an abrupt halt.
At 44 years old, Cheng has unexpectedly stepped down as the third-generation leader of New World, a major player in the business dynasties of Asia. He has been replaced by an outsider, the company’s chief operating officer, causing a shock among the upper-class society of Hong Kong. This sudden change has raised questions about the state of the city’s real estate market and its impact on the billionaires who dominate it.
The 77-year-old patriarch of the Cheng family, Henry Cheng, has reportedly resumed a more active role in the family’s vast empire, including New World. He has also assigned key responsibilities to his daughter, Sonia, and two other sons, Brian and Christopher. This decision suggests that the family is concerned about the younger Cheng’s leadership and is determined to avoid the old Chinese saying, “Wealth does not pass three generations.”
Despite being a prominent figure in the Hong Kong art scene and a Harvard graduate, Adrian Cheng has struggled to measure up to his grandfather and father’s success in business. His grandfather, Cheng Yu-Tung, who started as an apprentice in a gold shop, became one of the wealthiest people in Hong Kong. He passed on the business to his son Henry, who initially incurred heavy debts, similar to his own eldest son’s challenges many years later. The father and son worked together to turn the company around, and the Cheng family is now worth $22.6 billion, making them one of the richest families in Asia.
However, since Adrian Cheng took over as CEO in 2020, New World has faced financial difficulties, with its debts reaching record levels. The company incurred an annual net loss of $2.5 billion, its first in 20 years, indicating a sharp decline in its fortunes. This performance has raised concerns among family members, who believe that Cheng’s focus on cultural ventures, such as K11 Musea, may have contributed to the company’s struggles.
Experts in family businesses suggest that third-generation successors often face immense pressure, especially during economic downturns, with high expectations from family members and intense scrutiny from the business community. As New World’s financial situation worsened, doubts grew among the Cheng family about whether Adrian Cheng, the eldest son of Henry Cheng, was the right person to lead the company. Henry Cheng even mentioned in a television interview last year that he was still looking for a successor, despite Adrian having been CEO for several years.
Representatives for the Cheng family’s investment vehicle, Chow Tai Fook Enterprises Ltd, Adrian Cheng, and New World, have not responded to requests for comment.