25 October 2016
Lau Ming-wai finds himself at the center of a storm after giving home-buying tips for his poorer peers. Photo: RTHK
Lau Ming-wai finds himself at the center of a storm after giving home-buying tips for his poorer peers. Photo: RTHK

Survival guide for ‘second generation rich’ and poor youngsters

“Go less to movies and travel less to Japan.”

This advice to young people from Lau Ming-wai, son of Joseph Lau Luen-hung and chief of Chinese Estates Group, has drawn some hefty backlash, although commentators note that what he meant is nothing more than the hackneyed, twice-told truth: save more, make sacrifices and shed unnecessary expenses if you want to own a home.

There’s nothing wrong with his remarks.

What’s “wrong” was the tip came from Lau, a member of the “second generation rich” whose dad is a realty tycoon. That explains the storm of criticism accusing Lau of “talking nonsense” and “being detached from reality”.

The fact is, a mature economy like Hong Kong is going to see more of the second generation rich, a situation that these young elites, members of the public and the government all have to adjust to.

Personally, I totally agree with what Lau said. Saving money and being austere are a basic wealth management skill and a virtue as well.

If you are not lucky to have a tycoon for a dad, then you have to sacrifice your short-term pleasures and save up.

Young job starters do not need an iPhone; cheaper Chinese brands that cost just HK$2,000 will do. Neither do they have to splurge on numerous Japan excursions; backpack trips to less costly destinations can also enrich their experience.

Certainly there’s nothing wrong with going to movies but perhaps they can be more selective. If young people are not willing to make small sacrifices, then they can blame no one for being unable to save money with a HK$10,000 monthly salary.

Many disdain Lau’s advice to save at least HK$3,000 a month. They argue that an entry-level, shoebox home now costs HK$5 million on the market so young people need 50 years to save for the down payment.

Obviously, they are ignoring some factors such as pay increments and periodic down-cycles in the home market.

I do believe that with the looming interest rate hikes in the United States and a fresh round of new home supply, it’s possible to see home prices tumble by 20-30 percent.

If the price tag of an entry-level home comes down to HK$3 million and if first-time homebuyers apply for maximum mortgage cover of up to 90 percent, down payment including other miscellaneous charges will be just around HK$350,000.

A young couple may only need five years to save that amount if they follow Lau’s “save HK$3,000 a month” tip.

But if our young people don’t save for the future, they won’t be able to seize the chance when there’s an adjustment in the home market. (Ironically, past experiences show that youngsters suddenly become not so desperate to buy a home when property prices plunge.)

That is the plain truth, but when Lau utters it, he is immediately rebuked for knowing nothing about the pain and suffering of young people. And that’s because Lau comes from a super-rich family.

Veteran financial columnist and Hong Kong Economic Journal chief adviser Cho Yan-chiu recently urged youngsters not to let themselves be content with a 500-square-foot home, and he won quite a lot of likes on Facebook. Now if Lau says exactly the same thing, the responses, I suspect, will most probably be harsh and nasty.

Hong Kong has a large cluster of billionaires and their offspring are now taking the stage.

In Europe or the US, there are lots of high-profile members of the “third generation rich” or even “fourth generation rich”. One example is Paris Hilton, a member of the fourth generation of the Hilton clan known for her uninhibited lifestyle.

Yet in these societies there is no such negative attitude towards the rich or even hatred thanks to laws and systems that ensure equal opportunities for all citizens.

My advice to the everyman — to our younger generation, in particular — is that unless you can trigger a revolution, you have to accept reality, stay diligent and industrious, seek self-improvement to earn a place in society, and only after that can you look for ways to enhance the system towards a fairer society for your generation and the next.

You need to strive for your own sake and then contribute to make the city better. Whatever you choose, harboring spite towards the rich won’t help. In an Op-Ed article he recently wrote in the Wall Street Journal, Warren Buffett reminded people that “no conspiracy lies behind this depressing fact: The poor are most definitely not poor because the rich are rich. Nor are the rich undeserving”.

As to members of the “second generation rich” elite club, if they do not want to be seen as a collateral target, more than others, they must mind what they say and how they behave. They need to remember that words they utter may trigger a PR disaster even though nothing will happen if average Joe says the same thing.

They need to make efforts too, as sooner or later the society will come to its fair judgment of what they have done.

One good example is Josie Ho Chiu-yi, daughter of the “King of Gambling” Stanley Ho Hung-sun, who has been acknowledged for her achievements in the entertainment industry over the decade.

In Lau’s case, we appreciate his willingness to serve the public on top of his family business. He should not be discouraged for being rebuked this time. In today’s culture and public discourse dominated by instant sharing and swapping of scoops and hearsays, any public figure may be demonized today and idolized tomorrow.

The best thing these young elites can do is to stay honest and upright, and make sure their family’s glory and success will continue to flourish in their hands and be passed on to succeeding generations.

The authorities have to play their part, too, by providing fair opportunities, a level playing field and upward mobility for the grassroots youngsters to advance on the social ladder, so that even though they may fall behind at the starting line, at least they won’t lose faith in society and rock the boat to ruin the entire race.

This article appeared in the Hong Kong Economic Journal on May 26.

Translation by Frank Chen

[Chinese version 中文版]

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Lau Ming-wai, a close ally of Chief Executive Leung Chun-ying, has been appointed chairman of the Commission for the Youth. Photo: GovHK

Hong Kong Economic Journal columnist

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