Category Archives: Trading

King of Hong Kong: John D Hutchison

Douglas Clague built Hutchison into one of the largest trading houses in Hong Kong.

Establishment of John D Hutchison
John Duflon Hutchison (1855 – 1920) established John D Hutchison & Co, a Hong Kong trading house, in 1877.

Thomas Ernest Pearce (1883 – 1941) joined the firm in 1903, and acquired a controlling stake in 1917.

Pearce was joined in partnership by his brother-in-law, Philip Stanley Cassidy (1889 – 1971), from 1922.

Pearce was killed in action during the Battle of Hong Kong in 1941, and Cassidy became the chairman of the firm.

Duggie Clague
John Douglas “Duggie” Clague (1917 – 1981) was born in Bulawayo, Rhodesia (now Zimbabwe) and raised on the Isle of Man. He originally worked as a bank clerk. He was a convivial man, with a passion for horse racing.

Clague joined the British Army and was stationed in Hong Kong during the Second World War. After the Japanese invasion he was captured and held in a prisoner of war camp. With three others, including John Pearce (1918 – 2017), the son of Thomas Ernest Pearce, he made a daring escape into China. There he joined, with Pearce, the British Army Aid Group, a MI9 unit engaged in assisting POWs to flee Japanese internment camps.

Clague ended the war as a Colonel honoured with a Military Cross and a CBE. He returned to Hong Kong in 1947 with a sterling reputation and an excellent network of acquaintances.

Embed from Getty Images

Presumably aided by an introduction from John Pearce, Clague was appointed deputy to Philip Cassidy. At the time John D Hutchison & Co focused on its import export business, and was dwarfed by the Hong Kong trading houses of Jardine Matheson and Wheelock Marden.

Cassidy retired in 1952, and Clague was appointed chairman of John D Hutchison. He would go on to develop the company into a business with an international scope.

Clague bought out a 50 percent stake in J D Hutchison owned by Wheelock Marden in 1963. He renamed the company Hutchison International, and embarked upon the acquisition trail.

A S Watson, with interests in soft drinks, was acquired in 1965. Other acquisitions included Davie Boag, a specialised trader, and Oriental Pacific Mills, a textiles business.

Hutchison gained control of Hong Kong & Whampoa Dock Company, one of the largest companies in Hong Kong, in 1969. Amidst the cultural revolution in China, and riots in Hong Kong, Clague found that assets could be acquired at a relative discount.

Following the takeovers, Clague confidently proclaimed in 1969 that Hutchison was now the largest trading house in Hong Kong.

Clague was firmly embedded in the Hong Kong establishment. He held the prestigious role of chairman of the Royal Hong Kong Jockey Club from 1972 to 1974.

The Financial Times described Clague as “one of Hong Kong’s most remarkable entrepreneurs” in 1974. Clague boasted, “I am Hong Kong’s Rock of Gibraltar”.

The downfall of Clague, and the rise of Li Ka-shing
A global recession in the mid-1970s hit Hong Kong’s export-driven economy hard. This, combined with heavy losses at an Indonesian subsidiary, high-risk financial speculations and overpayment of directors, led Hutchison to enter into cash-flow difficulties.

Hutchison was rescued by the Hongkong and Shanghai Bank (HSBC), which acquired a one third stake in the company for £15 million in 1975. The bank lent the money on the condition that Clague would relinquish his executive responsibilities.

Clague was replaced by William Wyllie (1932 – 2006), an Australian businessman with a reputation as a turnaround specialist for Hong Kong companies. He regarded Hutchison as “a cowboy outfit”.

Wyllie reduced expenses, and divested 103 subsidiaries in 1976.

To the annoyance of Wyllie, HSBC sold its stake in Hutchison to Li Ka-shing (born 1928) for less than half of its book value in 1979. Wyllie left Hutchison in 1981.

Li Ka-shing (born 1928) in 2010

Clague died in 1981 following a battle with cancer.

Ka-shing brought professional management principles to Hutchison, and expanded its operations into overseas markets.

Hutchison remains one of the largest companies in Hong Kong, and Clague deserves credit for his faith in the Hong Kong economy and for establishing the strong foundations at Hutchison which Ka-shing subsequently built upon.