South Hoi An project back on a rough path?

The South Hoi An project in the central province of Quang Nam, a complex including a residential and a commercial area, a resort, and various gaming facilities, was licensed in December 2010.

VinaCapital and VinaLand Limited, a closed-end fund managed by the former, planned to develop the project with Malaysian company Genting Berhad. However, in September 2012, Genting withdrew from the project, leaving VinaCapital to adjust the project plan in mid-2013, rescheduling the first phase to start operation by the end of 2015.

In September 2015, VinaCapital announced its newfound partnership with Hong Kong company Chow Tai Fook in the project. According to their arrangement, Chow Tai Fook and VinaCapital are the strategic investors and SunCity, which is 70 per cent owned by Chow Tai Fook, will cooperate in the management of the resort.

The construction of the first phase then started on April 24 last year. The plan was for the first phase to open for operation in early 2019 and for the whole complex to be complete in 2035. In December 2016 VinaCapital announced that the property would be called, "Hoiana".

"Hoiana is set to rank among Asia's most renowned resort destinations, bringing a self-contained world of entertainment, leisure, pleasure and luxury lifestyle," said Hoiana chairman, Don Lam, in an announcement.

Construction has only started for less than a year when a power change at Chow Tai Fook started brewing. Chairman Henry Cheng has recently taken an abrupt leave due to an unspecified illness.

While rumours of an alleged stroke are categorically denied, no information is forthcoming and the business community stands at the ready for son Adrian Cheng, heir apparent to New World Development Co. and Chow Tai Fook Jewellery Group Ltd., to take over the family empire earlier than expected.

CEO Adrian Cheng - source: Bloomberg

When the relatively young Adrian (36) takes over, he will find himself in charge of one of Hong Kong’s largest property developers, which had a revenue of HK$59,570 million ($7.7 billion) in the 2016 financial year, and a jewellery chain that was reported by Bloomberg to generate about 80 per cent more revenue than Tiffany & Co. globally.

Despite clearly having been groomed for succession and being solidly embedded into the management of the group’s companies and affiliates, experts gave voice to concerns that the untimely and unprepared transfer could cost the family and the empire dearly.

The principal concern is that Adrian would be taking over at a difficult time, when New World Development is experiencing declining margins and Chow Tai Fook sees falling demand for its jewellery products.

Exacerbating troubles, a succession of this magnitude usually causes great disturbance in company operations, as even at the best of times crucial personal connections get tangled up and lost. Arriving largely unprepared to the table, retaining his father’s personal ties and maintaining investor confidence may just be too hard a task.

The Cheng empire is present in Vietnam principally via its subsidiaries. Besides the South Hoi An project, on November 20, 2015, the property development arm acquired 36 per cent in Beames Holdings Limited, which owns equity interests and operates various hotel properties in Hong Kong and Southeast Asia. Through the acquisition, New World Development Co. gained interest in Renaissance Riverside Hotel Saigon and New World Hotel Saigon, both in Ho Chi Minh City.

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