A JEWISH DYNASTY IN A CHANGING CHINA

For more than a century, the fortunes of the powerful Kadoorie family have been a barometer of Chinese openness to the worl

  

By Jonathan Kaufman

 

The Wall Street Journal

May 28, 2020

 

Since 1880, when an Iraqi Jewish refugee named Elly Kadoorie arrived in Hong Kong, China has gone through a series of revolutions—from domination by Western powers to independence, from Nationalist to Communist rule, from colonialism to capitalism to communism. Through it all, the Kadoorie family have been a barometer of the country’s openness to the world, rising to become the richest Western family in China. Leaders have been seeking their advice for generations, drawn by their combination of business skills and political acumen. Now, as China cracks down on dissent in Hong Kong and defiant protesters again take to the streets, the problem facing the family—like other companies and governments seeking to deal with a more repressive and nationalistic regime—is whether China will continue to welcome them.

The Kadoories built their first fortune in Shanghai between the world wars, when the city became a global crossroads. When the communists took over in 1949 and expelled foreigners, they lost almost everything, fleeing to British-ruled Hong Kong to make a new start. Over the next 25 years they grew richer than ever, amassing an $18 billion portfolio that includes China Light and Power, which provides electricity to 80% of Hong Kong’s residents, and the luxury Peninsula hotel chain.

When the People’s Republic began to open up in 1972, after President Nixon’s visit, one of the first calls the communist leadership made was to the Kadoories, seeking their help in building a nuclear power plant. The Kadoories, who remain British citizens, became one of the country’s biggest foreign investors, returning to Shanghai triumphantly to build a new Peninsula Hotel. Today they meet regularly with top Chinese leaders, including Xi Jinping.

It has been a steep ascent since Elly Kadoorie landed in Hong Kong at the age of 18. He had been recruited to work for a major trading firm owned by the Sassoons, another Jewish family that had come to China from Baghdad 35 years earlier, just after the Opium Wars. But Elly soon struck out on his own, steering clear of opium, one of the main commodities the Sassoons transported between India and China. Instead he invested in hotels, land and utilities, building the infrastructure for the growing city of Shanghai as it became the “Paris of the East.” In time he built the grandest mansion in the city—43 rooms for just three people—and entertained celebrities like Charles Lindbergh. The Kadoories’ hotels hosted the world’s elites, including the wedding of Chiang Kai-shek.

The Kadoories were what Americans would call Reform Jews; they attended High Holiday services and spoke about religion in terms of Jewish history and values. Privately, many British businessmen disparaged the Kadoories with anti-Semitic slurs, mocking them as “hook nosed,” members of the “Jew boys club.” But in the early 20th century, as China opened up to Western ideas and students and officials began to travel abroad, many Chinese intellectuals developed a fascination with Jewish culture. Sun Yat-sen, the first president of the Republic of China, wrote to Elly Kadoorie that the Jews were a “wonderful and historic nation, which has contributed so much to the civilization of the world.” Kadoorie, an active Zionist, helped persuade him to endorse the 1917 Balfour Declaration, which laid the groundwork for the founding of the state of Israel. Like the Jews, the Chinese knew what it meant to be powerless and lose control over their homeland.

During World War II, the elderly Elly Kadoorie was imprisoned in a Japanese camp, and he died in captivity in 1944. Soon after the war ended, the Chinese communists swept through Shanghai, seizing the family’s buildings and art collection. Most Westerners in China, including the Sassoons, fled to Europe, Australia or the Americas. But Elly’s grown sons, Lawrence and Horace, stayed close by, moving to the family’s hotel in Hong Kong. “If we sit down and worry, not only will no progress be made but everything will get worse,” Lawrence wrote to Horace in 1946. “If we go ahead optimistically, and in the belief that Hong Kong has a great future before it…we shall recover our losses and progress.” Hong Kong, Lawrence declared, “may become another Shanghai.”

He turned out to be spectacularly correct. Over the next 70 years, through the Cold War and China’s economic rise, the Kadoories rebuilt their fortune in Hong Kong. They also concluded that businessmen of their father’s generation, isolated and wealthy, had been blind to the rise of communism and paid a terrible price. “The best protection against Communism is to provide living conditions that are better than those in China proper,” Lawrence declared. The Kadoories poured millions into helping displaced Chinese farmers and refugees set up small farms in Hong Kong. Research supported by the Kadoories led to the breeding of a new strain of pig that provided more meat for the city’s booming population. The Jewish Kadoories, the Chinese farmers joked, “know everything about the pig except the way it tastes.”

At the same time, the Kadoories were convinced that one day China would open up again. They maintained covert ties with the mainland and never publicly criticized the communist regime. The strategy paid off in 1978, when the Kadoories were welcomed back by Deng Xiaoping and invested a billion dollars in China’s first nuclear plant. Later they helped to keep Hong Kong calm as the British negotiated its handover to China, which took place in 1997. “You have always been a friend to China,” an aide to Xi Jinping told Michael Kadoorie, grandson of Elly and the current head of the family.

Michael Kadoorie still believes that Hong Kong’s business community must work with China. Last summer, as the city was racked by increasingly violent anti-China demonstrations, he wrote a full-page advertisement that ran in local English and Chinese newspapers. “It is disheartening to see what has overtaken the city recently,” he wrote. “I do not support violence nor do I believe this should be the way to resolve conflicts.” Instead, he pleaded, China must “find solutions in mutual respect, understanding and open dialogue.”

It’s a familiar dilemma for the Kadoories. Whenever China has been open and engaged with the world—in Shanghai in the 1920s and 1930s, in Hong Kong under British rule, and in mainland China after 1978—the family has prospered. Their success is a testament to China’s ability to absorb foreign influences and benefit from foreign investment. But as the country turns more assertive and nationalistic, the tightrope the Kadoories walk is growing thinner.