Goodyear (嘉年): The Rise and Fall of a Real Estate Giant

November 26, 2018 York Lo Articles, Hong Kong Companies, People, Property

York Lo: Goodyear(嘉年): The Rise and Fall of a Real Estate Giant

Pang Kwok-chan’s lecture for the HKU Department of Extramural Studies (precursor of SPACE) in 1966 about the 5 stages of post-War development of the HK real estate industry with the only picture of him available in the public domain (香港工商日報, 1966-10-26)

Goodyear was a major Hong Kong real estate developer for three decades from its inception in 1955 until its collapse in 1984. Its founder Pang Kwok-chan (彭國珍), like his friend and classmate Eddie Chan of Tai Cheung Properties (see article), was a pioneer of the HK real estate industry and buildings he developed such as the Man Wah Sun Chuen housing complex in Kowloon waterfront and the luxury apartment buildings Fontana Gardens and Grenville House in HK island remain major landmarks today and many buildings in town with the Chinese character “Ka” (嘉, the first character of Goodyear’s Chinese name) in its name were also developed by the firm. One of the first HK developers to go overseas, the group’s famous projects outside of HK include the White Swan Hotel in Guangzhou and the suburban city of Subang Jaya near Kuala Lumpur in Malaysia.

The Good Years (1955-1972) – the development of Eight Man, Central, Fontana and Grenville

Relative to Eddie Chan, Pang Kwok-chan was even lower profile and the only picture that is available of him in the public domain is the one in above article taken during a rare talk he gave in 1966. Little information is available about Pang’s early life and career – he was a prefect at Queen’s College in Hong Kong in 1939 and attended Lingnan University in Canton. Like Chan, he became a governor of the Church sponsored Lingnan College and Chung Chi College later in life.

In 1955, Pang incorporated Goodyear Investors (嘉年企業) as a property developer and holding company and other key subsidiaries in the group such as Montana Lands Ltd (文華地產, which was renamed Goodyear Estates in 1972 and went public in the same year), Hing Kee Construction (興記建築) and Fontana Estates (豐華地產) were incorporated in 1959 and 1960.In 1957, Pang teamed up with Hui Oi-chow (許愛周, 1881-1966) of Shun Cheong Shipping, tea merchant Kwan Fan-fat (關奮發, 1897-1983) and others to acquire the site of Hong Kong Hotel on Pedder Street in Central and built the 17 story Central Building (中建大廈), which was completed in 1958. For many years, Goodyear operated out of Room 1602 at the Central Building.

Goodyear advertisement about the first four of the eight “Man” buildings in Man Wah Sun Chuen – Man Ying, Man Wai, Man Wah and Man Yuen – which were in various stages of development

In the late 1950s, building codes were being modified in Hong Kong and tall residential buildings were coming up on both sides of Victoria Harbor to meet the soaring housing demand. Goodyear came up with the concept of developing a large waterfront private housing estate in Kowloon and acquired the site of the Jordan Road Gas Works at the junction of Jordan Road and Ferry Street(渡船街)next to the former Jordan Road ferry pier from HK & China Gas. The site was also enlarged with reclamation and between 1961 and 1970, eight residential buildings –Man Wah (文華樓), Man Ying (文英樓), Man Wai (文蔚樓), Man Yuen (文苑樓) being the first four and Man King (文景樓), Man Fai (文輝樓), Man Yiu (文耀樓) and Man Cheung (文昌樓) being the last four – each story tall were developed and streets with corresponding names were created as well. Collectively known as “Man Wah Sun Chuen”(文華新村), it was one of the first private housing estates in Hong Kong. Since all eight buildings had the word “Man” (文) in them, they are also referred to as the “Eight Man Buildings” (八文樓). The top floors of the eight towers were laddered to maximize sunlight into each unit and before the West Kowloon reclamation in the late 1990s, the complex was surrounded by waters on three sides. Due to its proximity to the Yaumatei ferry pier (which was critical to cross harbor traffic in HK before the launch of the Cross-Harbor Tunnel in 1972) and harbor view, Man Wah Sun Chuen was popular with upper middle-class buyers when it was first developed. Buyers included many overseas Chinese from countries such as Vietnam and the popular 60s actress Connie Chan (陳寶珠) and the famous martial arts teacher Yu Jim-yuen (于占元) and his famous students Jackie Chan, Sammo Hung, Yuen Biao, Yuen Qiu, Yuen Wah and Corey Yuen were former tenants. The 3400 units of Man Wah Sun Chuen collectively fetched a total of HK$160 million, an astronomical sum at the time and put Goodyear on the map.

Highly stylized ad for Fontana Gardens in 1962 without any sketch of the building or description except for the Chinese calligraphy which reads “living in Fontana Garden – the best in a perfect life” with the Chinese seal of Goodyear (WKYP, 1962-1-9)

Another significant project which Goodyear was involved in during this period was Fontana Gardens(豪園) at 1-25 Ka Ning Path in Tai Hang over in the HK island side, which was completed in 1964-1971. The 280-unit luxury apartment complex, which generated sales of $66 million (averaging over $200,000 per flat, a record at the time),was one of the first private housing complex in HK to feature a large private garden for its tenants and one of the first to apply advanced caisson techniques to build high rise buildings on a slope in HK. Another Goodyear luxury project was Skyline Mansion (年豐園) on 51 Conduit Road in Mid-Levels, which was completed in 1971. Goodyear also teamed up with Henry Fok’s National Investments and developed Grenville House (嘉慧園) at 1-3A Magazine Gap Road in the Mid-Levels, which was completed in 1971-72. The famous luxury apartment building which counts many famous residents such as the former Chief Executive Tung Chee-hwa, broke the record for the most expensive flats in HK when it was first offered for sale.

By 1972, the Goodyear Group was a vertically integrated real estate concern covering all aspects of the real estate business. Its Hing Kee Construction not only built all of Goodyear’s projects but was the contractor for other projects with total contract value of over HK$100 million. (In 1972, Goodyear even organized a consortium of HK, Macanese, Malaysian and Thai businessmen to bid for the construction of HK’s new Mass Transit System) From inception up to 1972, Goodyear’s sales organization had sold HK$450 million worth of properties, including its own and buildings developed by others. To generate recurring revenues to supplement the short-term profits of new developments, Goodyear formed Goodyear Property Management (嘉年物業管理, entity originally incorporated as Po Cheong in 1963 and renamed as such in 1970) to provide property management services to the projects it developed and other buildings. (WKYP, 1972-5-19)

Left: sign outside the construction site of Grenville House; Right: Sale ad for Grenville House by Goodyear and Henry Fok’s National Investments.

With his profits from real estate, Pang Kwok-chan began to diversify into other businesses in the early 1970s. In 1970, he entered the printing business and incorporated Goodyear Printing Press (嘉年印刷)which also controlled Ah Yuen Photo Service (亞源攝影, incorporated in 1973). In August 1971, he formed Sociedade Pelota Basca Jai-Alai Macau Sarl (澳門回力球企業) in Macau with capital of 18 million patacas in partnership with Hoh Paak (何栢) and three owners of the gambling monopoly at the time – Stanley Ho (何鴻燊), Teddy Yip (葉德利) and Yip Hon (葉漢). Pang as the majority shareholder served as chairman while Hoh who ran the day to day operations served as managing director. Construction of what was billed to be the largest jai-alai stadium in the Far East commenced in 1972 and after a total investment of HK$60 million, Pelota Basca Jai-Alai opened its doors in June 1974 to poor reception.

Financial service was another area of interest for Pang. From the 1950s, Pang had served on the board of the HK Chinese Bank (香港華人銀行) and China Underwriters Life (其昌人壽), both chaired by Sir S.N. Chau. In 1972, he and Leo Lee Tung-hai (Tung Wah Group of Hospitals chairman and head of Tung Tai Group) were appointed directors of the Overseas Trust Bank (OTB), the rapidly expanding bank controlled by Malaysian Chinese tycoon Chang Ming-thien (張明添, 1917-1982). (KSDN, 1972-8-15) and also entered the finance and insurance business himself with the formation of mortgage lender Advance Finance (億萬財務) in 1972 and Goodyear Insurance (嘉年保險) in 1973.

Directors and spouses of OTB at a branch opening in 1975. Left to right: Tsao Yao (曹耀), Mrs. Pang Kwok-chan (Kwan Tai-cheung), Wong Ker-lee (黃克立), Ong Tjin-tjio (王振墻), Mrs Chang Ming-thien (張明添夫人, aka Goh Seen-looi吳嬋蕊), Kui Hoa-san (桂華山), Central & Western district officer Ng Wing-fui (吳榮奎), Ho Lok (何洛), Huang Tiong-chan (黃長贊). Source: Kung Sheung Evening News, 1975-10-6

Going Public and Going Abroad (1972-1978)

Coming off the success of the projects mentioned above in the 1960s, the Goodyear Group listed Goodyear Estates in May 1972 during the height of the stock market bubble on the Far East Stock Exchange.The IPO – which involved new issuance of 1.9 million shares at $5 per share – was 97 times oversubscribed (60800 subscriptions – $1 billion), a record at the time and the stock quickly doubled to $10 per share, setting off a wave of property IPOs in the second half of the year which included the property giants of today such as Cheung Kong, SHKP, Hang Lung, Great Eagle, Sino and New World.

For fiscal year ending June 1972, Goodyear Estates recorded profits of HK$10.9 million. In the year of the IPO, Goodyear developed Chu Kee Building (珠璣大廈) at 433-437 King’s Road in North Point, Ka Wing Building (嘉榮大廈) at 534-538 Nathan Road in Yau Ma Tei and Ka Ming Building (嘉明大廈) at 56 Belcher’s Street in Kennedy Town.It was also involved in the development of a 20 story, 400 rooms hotel located at the intersection of Nathan Road and Jordan Road in Hong Kong which the site alone was worth over $37 million. Other projects include a 53% interest in an office building project in the intersection of Wyndham and On Lan Street in Central, projects in Wanchai and 67-69 Chatham Road in Kowloon. (Kung Sheung Evening News, 1972-11-26) Aside from Pang Kwok-chan and his longtime lieutenant Alex Wai Tse-hang (韋子恆, who was also a director of Union V-Tex Properties, covered earlier in another article), the board of Goodyear at the time also included Ronald Li and Woo Pak-hay, co-founders of the Far East Exchange and Chang Ming-thien, the Malaysian Chinese founder of OTB. Aside from OTB (which Pang was a director of), Chang also controlled Faber Merlin, the largest hotel chain in Asia (e.g. Hotel Merlin on Nathan Road which existed from 1962 to 1982) at the time and United Malayan Banking Corporation, the third largest bank in Malaysia. Chang and OTB were close with Goodyear as OTB appointed Goodyear as project manager for the development of its head office building in Wanchai in 1974 and the Goodyear group also shifted its focus from HK to Malaysia in the mid-1970s with its biggest project yet.

In August 1972, Goodyear Investors formed Intercontinental Housing Development (明輝發展, IHD), which through United Estates Projects Sdn Bhd (UEP, now Sime Darby Property) began the development of a new township in Selangor in Malaysia near Kuala Lumpur known as Subang Jaya (“Subang City”). The project, which was designed by town planner/politician Goh Hock-guan (吴富源) and comprised of 18 sections and 15000 units of terrace houses and shops, was estimated to cost HK$348 million with projected revenues of HK$850 million at the time of launch. Construction commenced in 1976 and was not completed until 1988, 4 years after the collapse of Goodyear. Ten blocks of the project are still known as “Goodyear Court” today. In 1980, IHD which had by then become a separate listed entity formed a joint venture with the Urban Development Authority of Malaysia called Syarikat Pertama to develop a 6-hectare parcel of land in central Kuala Lumpur into an office and shopping complex.

Left: Appointment of Brian Cheung Nam-chung as managing director of Goodyear Estates in 1978 (WKYP, 1978-12-7); Right: Goodyear Group vice chairman Stephen K.C. Wong appointed Justice of the Peace by the Sultan of Selangor in 1979 for the firm’s development of Subang Jaya (WKYP, 1979-4-2)

By the 1970s, the Goodyear Group had over 60 subsidiaries across Asia and Pang was supported by a group of younger executives to manage its widespread operations. The vice chairman and managing director of the group was Stephen Wong Kie-chung (黃奇松), the son of Filipino Chinese banker Wong Ching-yau (黃呈佑) and a graduate of Dalhousie University in Canada. According to court records, Wong controlled 15% of the holding company Goodyear Investors (the rest owned by the Pang family) and served as a director of Goodyear Estates from 1974 to 1981.In 1978, Goodyear Estates appointed the 34 years old Brian Cheung (張南中) as managing director. Other members of the management team included Pang Kwok-hee (彭國熙), likely a brother of Pang Kwok-chan, Wilson Chan Tai-kwan (陳大鈞) and Anthony Tsui Yiu-wah (徐耀華).

Perhaps due to the shift in focus away from HK, the profitability picture for the first couple of years after Goodyear’s listing was disappointing relative to other property developers, with earnings going down from the peak of $19.2 million in FY 1973 (fiscal year end June 30) to $4.6 million in FY 1977. During this time, Greenville (嘉苑) at 14-17 Shiu Fai Terrace was completed in 1975.In 1974-75, Goodyear Investors became an investor in the Fairview Park development in Yuen Long led by Clifford Wong.

To boost earnings, Goodyear Estates re-focused on HK where it made a series of acquisitions during fiscal year ending June 1977 – in September 1976, it acquired 65% of a 24-story residential/commercial project on 102-108 Chun Yeung Street in North Point – this was developed into Ka Bo Building (嘉寶大廈). In January 1977, it bought 25% of a property firm which owned 65% of Western Center located at 40-50 Des Voeux Road West. In March 1977, it bought 50% of a 54000 sq ft site in Silverstrand in Sai Kung where 16 houses were being developed. In May 1977, it bought 70% of Carter Estates which owned a 9000 sq ft site in Aberdeen and 50% of a 25000 sq ft site in Pokfulam where a 30-unit luxury condo was being developed. The same month, Goodyear Estates acquired 70% of Goodyear Printing Press through issuance of 1.2 million new shares (Kung Sheung Evening News, 1978-3-20). Other projects in 1978 include Ka On Building (嘉安大廈) at 8-14 Connaught Road West, Carprio Mansion (嘉業大廈) in Lai Chi Kok, Carson Mansion (嘉新大廈) at 61-63 Kimberley Road in Tsim Sha Tsui, Ka Ning Mansion (嘉寧大廈) in Aberdeen. With labor and material costs rising at the rate of 25% p.a., the construction business in HK in the late 1970s was particularly challenging. In 1979, Goodyear’s subsidiary Hing Kee Construction suffered significant losses associated with the Phase II of the government sponsored Shun Lee Estate (順利邨). (TKP, 1979-12-26) But thanks to all the acquisition efforts, profits rebounded to $16.5 million for the fiscal year ending June 1980.

In 1981, Goodyear sold IHD to Bandar Raya, an affiliate of Multi-Purpose, a conglomerate led by Malaysian Chinese Association president Tan Koon-swan. Although the Goodyear Group continued to provide property management services to Subang Jaya, the focus had shifted back to HK and China.

Going North and Going South (1979-1984)

Brian Cheung (third from left) and Pang Kwok-hee (second from left) at the press conference for Goodyear Printing Press in 1979 (TKP, 1979-7-20)

As China began economic reform in 1978 with southern China as the testing ground, Goodyear was one of the first HK investors to go north and participated in many major projects.

In April 1979, Goodyear entered into agreement with Guangdong Packaging Import Export Co and Shenzhen Light Industry Ltd to form Shenzhen Goodyear Printing Press (深圳嘉年印刷廠) using compensation trade arrangement. With investments of HK$30 million and state of the art printing equipment imported from West Germany, Japan, Italy and the US, production commenced in October 1981. In September 1982, the setup was converted to a joint venture and the factory had 280 workers producing color printed goods and carton boxes.

In 1978, Pang Kwok-chan formed Wai Cheong Development (維昌發展) with Henry Fok, his partner in the Grenville House development and in 1979, the duo through Wei Cheong signed an agreement with the Guangdong Tourism Bureau to develop the White Swan Hotel (白天鵝賓館, originally known as the White Swan Lake Hotel) in Guangzhou. According to records, Fok contributed HK$50 mil while Pang provided HK$12.5 mil to the project which was also backed by US$36 mil in loans from Bank of China. After 3 years of planning and construction, the White Swan Hotel opened on February 1983 and Fok bought out Pang’s shares after his death a month later.

In Shenzhen, Goodyear invested $50 mil to build the East Lake Hotel (東湖賓館), which opened in 1982 and in 1983 announced plans to invest $40 mil to developthe Sai Chung Yacht Club (西涌遊艇會)which would include pier and a hotel.

Left: signing of co-operation agreement for the development of the White Swan Hotel in Guangzhou, seated left to right: KC Pang, Henry Fok, Lu Shuizhang (TKP, 1980-4-28) Right: The opening of Shenzhen Goodyear Printing Press in 1983. Left to right: Goodyear chair Loretta Pang, Shenzhen mayor Liang Xiang, head of External Trade Bureau for Guangdong province Feng Xueyan (TKP, 1983-8-15)

Back in Hong Kong, Goodyear continued to expand in the early 1980s. In 1982, Goodyear signed a deal with Chung Chi College (which Pang was a governor of) to develop land in Tao Fung Shan (小道風山) in Sha Tin that was donated to the school by fellow College governor Reverend Herbert H. Pommerenke (龐萬倫) into a residential complex. The deal which covered over 1 million sq ft included 60,000 sq ft of housing for retired Chung Chi staff at completion. The group also started a residential project with the government on the Peak to build 14 houses on Mt. Kellett Road and developed Ka Shun Building (嘉順大廈) at 196 Tai Po Road in Sham Shui Po, Ka Yu Building (嘉裕大廈) at 1-7 Nam On Street in Shau Kei Wan and Ka Hay Building (嘉熙大廈) at 19 Tseng Hoi Street in San Hui, Tuen Mun that year. The firm even bought and sold units of unaffiliated projects such as Fortuna Court in Repulse Bay in attempt to boost profits. But the confidence crisis over the future of Hong Kong that year resulted in a free fall in the property and stock market, and flats of Ka Hay Building for example could only be sold for HK$380 per sq ft, significantly lower than the cost of HK$550 per sq ft.

Article about Goodyear Group’s 25^th anniversary and 9^th inter-company games at True Light Middle School in 1980. Other corporate participants include SHK Securities, Barclays, BNP, Credit Lyonnais, Henry Fok’sYau Wing, Ayala Finance and Oriental Lease (Kung Sheung Evening News, 1980-12-2)

To hedge against the downturn in the real estate market, Goodyear Investors began to shift the business mix of Goodyear Estates. In early 1982, Goodyear Estates increased its stake in Advance Finance, its commercial and residential lending affiliate from 46% to 85%. The construction arm Hing Kee took on more non-affiliated projects such as the Lok Fu public housing estate and City Gardens in addition to working on Goodyear projects such as East Lake Hotel in Shenzhen. In the fiscal year ending June 1982, Goodyear reported profits of HK$43.6 million, a jump from $28 mil from the previous fiscal year. By year end, property development, finance and construction each represented 30% of the firm’s turnover while the remaining 10% came from its insurance and printing business. (TKP, 1982-12-9)

On March 7, 1983, Pang Kwok-chan died at King’s College Hospital in London. He was survived by his wife Kwan Tai-cheung (關大璋), a fellow alumna of Lingnan and three daughters, including Loretta Pang Sze-mui (彭思梅) who succeeded him as chairperson of Goodyear. A graduate of DGS and the University of Geneva, Loretta worked as an interpreter for the UN in New York from 1973 to 1979 and had limited business experience when she took over. On the surface, business continued to expand and in June 1983, Goodyear announced plans to develop a resort in Big Wave Bay in Lantau Island on a 300 hectares site it acquired back in 1981. The project would include a 300 rooms hotel complete with man-made canal leading up to its front door and a series of 5-6 story residential buildings and the total investments were projected to be over HK$600 million and expected to take 5-6 years to complete. (Kung Sheung Daily News, 1983-6-15)

However, behind the scenes, all of Goodyear’s businesses were under stress including the finance business whose ability to receive deposits was negatively impacted by new banking regulations and the insurance business was hit by claims. By August 1983, Goodyear needed capital infusion and began talks with an investment group led by Cyril Fung (馮慶炤), the son of Sir Kenneth Fung, which at one point expressed the interest to purchase 34% of Goodyear Estates for HK$100 million, making them the second largest shareholder behind Goodyear Investors. But the deal never materialized as the problems was much bigger than expected and in December, Goodyear Estates reported losses of HK$90 million for the fiscal year ending June 1983.

Article about the collapse of the Goodyear Group in 1984 (Kung Sheung Daily News, 1984-1-18)

On January 16, 1984, Goodyear Estates and related companies went into liquidation as it was unable to recover debts of HK$380 million from its parent company Goodyear Investors. As it turned out, Goodyear Estates through entities such as Advance Finance had quietly provided substantial loans to Goodyear Investors and other group companies between January 1981 up to that point to keep the Group afloat. With Coopers & Lybrand as liquidator, bits and pieces of the Goodyear Group were sold off. In July 1984, Mandarin Resources Corporation (德智發展, then controlled by Jenks & Cattell Plc from the UK, later the flamboyant broker and legislator Chim Pui-Chung) acquired 75% of Goodyear Printing Press and its 50% interest in Shenzhen Goodyear Printing Press and its manager Anthony Tsui Ting-sun stayed on board. Today, Shenzhen Goodyear remains a leading color printing and packaging solutions provider in Shenzhen. Mandarin Resources also acquired Goodyear’ jai alai operations in Macau which was losing money year after year and eventually was converted into a regular casino and sold to Stanley Ho. IHD ended up under the control of Malaysian Chinese financier Ch’ng Po (莊寶).

Back in HK, the Tao Fung Shan project was picked up by SHK Properties, which developed it into Pristine Villa (曉翠山莊) in 1995.Goodyear Property Management Ltd which managed 50 buildings at the time of Goodyear’s collapse was acquired by the Fung Ping Fan Group and the British conglomerate Grand Metropolitan and was renamed GF Property Services (豐嘉美物業管理). As for Loretta Pang, she had dedicated her life to the promotion of higher education in Greater China in the past three decades through her work with the University of East Asia in Macau, HKUST and the HK Pei Hua Education Foundation.

Sources (in addition to that listed above):

工商晚報, 1972-05-31

大公報, 1983-03-10

https://zh.wikipedia.org/wiki/%E6%96%87%E8%8F%AF%E6%96%B0%E6%9D%91

https://zh.wikipedia.org/wiki/%E5%98%89%E5%B9%B4%E5%9C%B0%E7%94%A2

New Nation, 22 December 1972, Page 18

https://hk.news.appledaily.com/local/daily/article/20060424/5858132

https://www.hongkongcaselaw.com/category/goodinvest-limited/

https://www.macaudata.com/macaubook/encyclopedia/html/19306.htm

http://www.sohu.com/a/117084711_526351

https://archives.ust.hk/dspace/bitstream/9999/19500/1/pao-03b-a269.pdf

This article was first posted on 26th November 2018.