Thomas Fung’s Wonder Years
December 5, 2013
Shopping mall and media magnate Thomas Fung presents me with a plate that is a rainbow of macarons, running the gamut from lavender to salty caramel to cucumber. We are seated in the mall he owns, Aberdeen Centre, inside a new bakery chain he owns, Baker One. Fung owns around 15 shops inside the mall, although that's only a guess because he's lost count. For many Asians, the Richmond mall is a home away from home, filled with brand-name retailers from Hong Kong, Seoul, Shanghai, and Tokyo. Since he redeveloped the mall into a glass palace more than a decade ago, it's become such a hugely successful business model, developers in other cities have invited him to do the same for them. So far, he has declined, although he did briefly consider a mall in Calgary.
In the last couple of years, Aberdeen Centre has expanded into a residential tower and another retail and office complex with a Canada Line station attached. Phase III-Aberdeen Square, as it's known-opens next summer, but the strata-owned office spaces sold within three days. Before construction was completed, the value of many of the units had soared more than 60 percent. Some owners paid the 25 percent down payment, flipped them, and more than doubled their investment in less than a year. That kind of speculative purchasing hasn't been seen since 2006.
Fung's Fairchild Group is a conglomerate with extensive multicultural TV, radio, and print media holdings, as well as real estate, e-commerce, retail, food and beverage, and marketing interests. If he sold off all his assets, including the opulent Endowment Lands house he shares with wife Amy Chan, Fung figures he'd be worth about $400 million. He doesn't say this to show off. In fact, he comes up with the figure only when pushed; he has an answer because he's frequently asked by bankers.
For now, he's more interested in macarons. The plate before us falls far below the standard he's got in mind. To carry out his goal, he's launching a bakery chain to be based in mainland China; he's partnered with the development director from France's famous Pierre Hermé pastries. They will create the top-of-the-line confections with flavours like marbleized ice cream, for the new bakery, to be called Aimee, after his wife. A bakery chain is not a departure for Fung-he got his start with the St. Germain chain in 1986, before he'd entered the world of commercial development-and he's already made serious inroads as supplier to Overwaitea Foods and Save-On-Foods, as well as caterer to 15 airlines and international hotel chains.
But the Chinese market is his new focus; the St. Germain name being taken there, he's rebranding. The flagship Aimee will open in Shanghai in late March, although Fung says he's only going into Shanghai and Beijing for their big, expensive appeal, much in the way high-end retailers lease space on Robson Street; the real profit-"the cream"-is to be found in China's suburbs and smaller cities.
The macaron I'm offered tastes perfectly light and sweet, but Fung tells me the Aimee macarons "will be much better quality." Still, he gives me a box of 20 more to take with me.
Why would a man with assets worth $400 million spend hours deliberating over a meringue cookie? In the high-stakes world of Vancouver real estate development, Fung is a bit of a lone wolf. While Bob Rennie, Ryan Beedie, Joe Segal, and others hold meetings at the Four Seasons, he's more likely to be found at his mall, meeting at a restaurant table with the eager young staff who work round the clock in the spirit of their boss. Continue reading…
It's not just a question of making more money, but one of keeping his imagination engaged. Fung, who is 63 but looks at least a decade younger, has reached that enviable stage of a storied career when he can attempt to fulfill his whims. He's at a new phase of life and career, he tells me, living more to the max, taking more risks. He's even gotten his son, Joseph, to quit a lucrative Hong Kong job to help him with all the projects he's juggling. In all, more than 1,500 work for the Fairchild Group at offices in Vancouver, Toronto, Los Angeles, Hong Kong, Beijing, and Shanghai.
Fung knows how to build a shopping mall that's so niche he's got the market to himself. If big boys like Nordstrom or Target come to town, he only shrugs. He's hand-picked a tenant mix at Aberdeen Centre suited to particular young Asian tastes, and none of those American stores can compete. In terms of Fairchild radio, television, and print for the Asian community, he's got the Canadian market cornered as well. That's malls and media.
What he wants now is a challenge, to become wildly successful as a filmmaker or an entrepreneur, a maker of love stories, vending machines, and, yes, macarons-and that's just the beginning. He envisions a top-end private school in B.C., Ontario, or the U.S., wherever the government makes such a venture easiest. He's been in talks with St. George's School and Crofton House. He's also working on a luxury Club Med-style retirement home complex, complete with a theatre, ballroom, fishing pond, golf course, and kitchen whose chefs will do room service. It will take its residents from the good life to end of life, with a palliative care unit. He thought up the idea when his mother-in-law died last year. He's currently in talks with a couple of local Native bands to lease some West Side or West Vancouver property for the venture.
Increasingly, Fung is looking to Shanghai and Beijing for his emerging markets, and so he's strategizing. When overseas, to woo Chinese buyers, he capitalizes on the Canadian image. In China, we're perceived as a safe country: economically sound, politically stable, and filled with endless food and water resources. It's an appealing image for a country that has become used to dealing with corrupt business practices. He also knows that Aberdeen Centre will remain attractive to the Chinese retail market if it cultivates a westernized approach, which appeals to young Chinese consumers. For example, he knows that westerners are enchanted by Japanese pop culture, and for that reason, he wants to raise its profile at the mall. He's the Canadian licensee for huge Japanese two-dollar-store chain Daiso- the Aberdeen Daiso brings in $1 million a month in sales. Recognizing a trend when he sees one, he's been in discussions with ultra-hip Japanese clothing retailer Uniqlo, which said it's waiting to see how sales go with its 89,000-square-foot Manhattan store. And now he's seeking Japanese partnerships for China. Because of his strong connections with Japanese businesses, other entrepreneurs wishing to do business there seek his help. In that cautious business culture, even a powerful executive has to jump through hoops.
"That's why even the big boys in Canada or Hong Kong or China, who want to meet with the CEOs in Japan, they ask for my advice and my introduction and my referral. I am a conduit."
Aside from potential revenue, he also marvels at the Japanese work ethic, which pays close attention to detail and micro-manages franchisees.
Before heading to the mall, Fung begins his mornings at his tiny, private office in a two-storey building on Cambie Street, located next to a gas station, where he answers personal emails and works with his in-house design team on logos and marketing. At the office, he also thinks up projects big and small-some that make sense and others that are completely out of left field. For example, vending machines. When he was last in China, driving from one factory to another, he discovered there was no place to stop for food. In China, food hygiene is a major concern, with restaurant cleanliness and food safety practices less regulated than in Canada. Gas stations offered only semi-rotten fruit; nothing was safe to eat. In order to fill that void, he and Joseph are searching for a manufacturer who can build a vending machine to supply hot noodles and rice dishes in public places such as service stations. The next hurdle will be negotiating with government-owned spaces for the right to install the machines. It's going to be a series of bureaucratic challenges, but when Fung gets on the trail of a winning idea, he doesn't deviate. Continue reading…
He's already gone through a bureaucratic nightmare trying to negotiate the lease his Shanghai bakery. Several times, he met with mall representatives who'd ask him to sign a lease and make a payment only to turn out to be frauds. After exhaustive research, he managed to secure a space that he hopes will launch Aimee and Baker One into a 100-store franchise operation throughout mainland China. At that point, he'll take the chain public.
Before the bakery and the vending machines, however, there is Love Is Sweet. (Fung, who graduated with film and commerce degrees from New York University, wrote the synopsis.) Of all his projects, it would seem to be the riskiest of all. A businessman can realize marketable ideas, but can he make art? And can it possibly add money to the bank? "But that's why I want to do it," he says. "For the challenge of it."
He recently sent the script to a Beijing film studio. They tested it with a focus group of young people, and it quickly became apparent that this new generation of Chinese doesn't want plots about gushy love stuff, so he rewrote chunks. The movie will go into production in China next spring, starring Chinese newcomers. About 80 percent of it will be shot in Vancouver, the rest in Shanghai.
Romance isn't a stretch for Fung, who fell for Amy when they first met. He invited her to a little party on his yacht, but when she got there he'd "forgotten" to invite anyone else. Because he was from a rich family and she wasn't, the couple lived "in exile" in New York and quietly married four years later, in 1979.
Fung isn't your straightforward businessman, as anyone who's worked with him knows. He tends to go to great, obsessive lengths when he embarks on a project. When he couldn't attract western retailers to his mall, he created western-style stores of his own. When he couldn't lure high-profile Asian retailers to an unknown entity somewhere in Canada, he offered a 49 percent equity partnership, with the option for retailers to take back full control once they became profitable. And when designing the food court for his new Aberdeen Square, he and former assistant Danny Leung scoured North American food courts for the perfect chair. They found their quarry in a forgotten basement cafeteria in Toronto. They photographed it, re-created it, changed its finish and colour, and today have a stylish, curved food court chair that's modern and sleek-a huge step up from the usual plastic, tubby ones. Bing Thom Architects principal Michael Heeney says with a laugh that he might be considering that chair for another shopping centre job.
BTA designed the three phases of Aberdeen Centre and survived the economic downturn because of it. While other developers were scaling back, Fung was in full production. When they first met, Heeney recalls, he told Fung that they weren't shopping mall architects. "That's perfect," Fung responded.
"I think he definitely thinks outside the box," says Heeney, who's known Fung for 16 years. "He is not an ordinary developer. He is a man of a broad range of interests. In terms of concept stuff, he's very much the driver. I think he knows what's going on all the time." Continue reading…
The bigger challenge would seem to be finding the time to do everything he wants. For that, he's brought onboard Joseph, 32, who worked at Morgan Stanley as a senior analyst before joining communications tech company PCCW. He's now based in Shanghai, where he's helping his father launch the Baker One chain as well as radio ventures. It took Joseph a while to appreciate his father's mini empire, says Fung.
"He helps me with outreach and going into different projects. He speaks seven languages, and he cold-calls everybody around the globe and knows how to deal with new people. He's got experience in the telecom industry. Now he's in the radio business for me, doing radio expansion. And also the bakery, all the franchise."
Fung had a different relationship with his own father, the famous Hong Kong self-made billionaire Fung King Hey, who made his fortune starting with gold jewellery and real estate before cofounding Sung Hung Kai bank, followed by the largest security brokerage firm in Asia. He then became the single largest shareholder of Merrill Lynch in the U.S. If Fung has remained humble about his own successes, it's because as a child he knew the kind of bleak existence that had him and his brother sleeping on thin canvas cots under the stairs in a ramshackle building. King Hey worked relentlessly to claw his way out of the meagre labour jobs that barely put a roof over their heads, and by the time Fung was a teenager, his father had achieved the American dream. The family relocated to Vancouver, and Fung attended Magee secondary on the West Side.
Author Ronald Chan, who spent two years writing about Warren Buffett, has begun work on a book about Fung King Hey and has approached Fung for details. Fung says he may not be the greatest source.
"I only recall ever talking to him twice," says Fung of his dad. And one of those talks took place while they walked to a business meeting. In an awful case of irony, Fung senior, encouraged by friends and family to finally take a break, suffered a fatal stroke while on a cruise ship to Alaska, aged 63. He'd worked around the clock-the price he paid was not knowing his children. "That said, I have the utmost respect for my father, and unconsciously, I am following in his footsteps in terms of job dedication, business ethics, self-discipline, and attitude towards others."
Fung works nearly as hard as his father did. He's known for firing off emails past 1 a.m., and expecting a response. Not responding within a certain amount of time is considered rude; I tried to remember that over the several months we communicated for this story.
Because of his hard beginnings, he's disappointed with the younger generation of rich people, the ones who speed around in BMWs with the N decal on the back. He calls them "the parasite generation." They have little appreciation for their good fortune or for the misfortune of others, he says. For his part, he only started indulging in fancy cars in the last couple of years.
So, to celebrate the huge success of Aberdeen Square, he's just purchased a Ferrari to go along with the Maserati and the Bentley that he drives to work every day.
"I decided I'd better buy a Ferrari now, before I get older and I start to look silly driving such a car."