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Lesson #4: Never Compromise Your Principles in Any Relationship
Article Overview: When Li Ka-shing says “yes” to someone, he means yes; he has entered into a contract and he intends on keeping his promise. In 1956, when he was just beginning in the plastics business, Li received an order for a three to six month production. He calculated a profit of 20 percent and agreed to the deal. Soon after, a large American competitor of Li’s buyer approached him, offering to pay an extra 30 percent profit for the merchandise Li’s original buyer had ordered.
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Lesson #4: Never Compromise Your Principles in Any Relationship
When Li Ka-shing says “yes” to someone, he means yes; he has entered into a contract and he intends on keeping his promise. In 1956, when he was just beginning in the plastics business, Li received an order for a three to six month production. He calculated a profit of 20 percent and agreed to the deal. Soon after, a large American competitor of Li’s buyer approached him, offering to pay an extra 30 percent profit for the merchandise Li’s original buyer had ordered.
Li knew that with that extra money, he would be able to expand his factory, but it was a deal he just could not commit to. “‘Look, I am also a businessman,’” Li told the competitor. “‘I’ll make a deal with you. I will start another factory in nine months’ time, a much bigger one, and I will take your order. But this time, I have already promised this buyer, and I will finish the order for him, as I am his only supplier.’”
When Li’s original buyer heard about the incident from a third party, he went to Hong Kong to pay Li a visit. He asked Li why he did not take the extra profit from his competitor, and Li simply replied, “I already promised you.” When the buyer asked why Li did not even request a price increase, Li said, “Next time, I will increase the price.”
After that, the buyer never brought his business to anyone except Li, and the two continue to be good friends to this day. The incident is just one of many in which Li demonstrates what he considers one of the golden rules of business: “Reputation is the key to success. You have to be loyal to your customers.” Li does not consider himself a good businessman, namely because he dislikes entertaining, and because he is extremely trustworthy. But, over the years, it is precisely those unlikely qualities that have pushed his business forward.
Li’s principles extend not only to his customers, but also to the very people working alongside him. Whereas foreign companies tend to focus on efficiency, Li says his lean toward compassion. CEOs who fail to perform are rarely fired. Instead, Li looks at the various reasons why the company might not be doing as well as its competitors. Li also offers his staff attractive salary packages and benefits, and understands the importance of valuing his workers. “I was once an employee myself,” he says, “so I know what employees want.” Perhaps that is why the turnover rate for senior positions at Li’s company is the lowest of any major company in Hong Kong.
Li’s principles are also such that he refuses to get involved in any business venture in which he does not believe in the merit of. When the Bahamas Government offered Li a highly coveted casino license as a gesture of thanks for a recent investment he had made on the island, Li politely declined it. “I have set boundaries for myself,” he says. “There are certain business I won’t get into…This is my principle and I will stick to it.”
Over the years, Li has come to understand that success is the result of the efforts of many, and to that end, those many should be treated with respect. “In the Han Dynasty, Xiang Yu was very brave and won many battles, but in the end he failed,” says Li. “Treat people with sincerity and build a good organization. Otherwise, it doesn’t matter how famous or how capable you are.”
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