When Maria Lee’s kingdom of sweets collapsed 11 years ago, all of Hong Kong knew that times were hard

THE WOMAN KNOW affectionately as Hong Kong’s Queen of Cakes built her kingdom from the ground up. Starting with a single modest bakery in 1966, Maria Lee Tseng Chiu-kwan created a global, billion-dollar chain of confection shops, Maria’s Cakes, which at the company’s pinnacle included dozens of outlets in Hong Kong and Taiwan, as well as in Chinatowns in New York City and Los Angeles. In recognition of her business savvy and considerable charitable work, she received an award from US President Ronald Reagan, and, in 1975, an MBE from Queen Elizabeth.

Then in April 1998 – 11 years ago this month – Lee’s empire of delicacies crumbled. The Asian financial crisis sent Hong Kong’s economy into a tailspin. In the retail equivalent of a bank run, customers holding coupons from Maria’s Cakes lined the streets in front of the shops, clamoring to redeem millions of dollars worth of sweet treats. Those queues became one of the most enduring images of the financial crisis in Hong Kong. Lee, unable to repay her creditors, was forced to liquidate the company she had painstakingly built.

The deposed queen could have easily declared bankruptcy. Instead, Lee, now 80 years old, went back to work. The executive who had once ran a global company took jobs as a cook and even a tour guide. The chef whose confections were once admired by thousands lived on rice and free samples from supermarkets. She was determined to pay back every cent she had borrowed. To do any less, she says, would let down both herself and Hong Kong. Lee’s recipe for thrift and responsibility may be especially worth heeding now as the global economy tries to recover from its own borrowing binge.

How did you build your business to begin with?
I was just interested in making cakes. I opened the shop. At that time we didn’t have cake shops in Hong Kong.

Where was the first one?
It opened on Prince Edward Road in 1966. It’s where New Century Place is.

And then you eventually built up to 70 outlets in Hong Kong.
One time we had gone up to about 80. We had more than 100 in Taiwan. I think we had 10 cake shops in Los Angeles, all in Chinatown. We had also over 10 in New York.

In 1997, what was your company turnover?
I think about HK$5 to $6 billion.

What brought about the collapse?
There was a guy who worked in the bakery. He had lots of ideas to promote the business. I appointed him to manage the Taiwan business. He was very, very ambitious and the business was good in Taiwan, so he thought: “If I can manage these shops and the business is so good, why not open shops that belong to me, and I could be the boss.” So he did that without letting me know. He was using our name to order all this machinery. Eventually I found out. I tried to sue him, but he was very smart.

That was the beginning.
That was the beginning. And at the same time, the economy in Hong Kong was having problems. And because we couldn’t get any money transferred back from Taiwan, we did not have enough to run the business. And the banks refused to give credit, so we got stuck.

So it became a cash flow problem.
We did not have enough money to continue to run the business. That was the problem. At that time I was 70 and my partner was 60. So I thought we’d better sell it. Finally, we found a buyer. He gave us a deposit. On the day the buyer went to the bank to get the credit the bank had promised, it refused because economic conditions had become so bad.

The buyer walked away from the deal?
Yes, he walked away.

And then what happened?
Within two hours, we had to decide what to do. I said, “In this case, we don’t have any cash to continue the business, so we might as well just liquidate the company.” So in April 1998, we decided to liquidate the company.

You also had a large amount of loans, right?
Yes, because we borrowed from the bank and I was the guarantor.

A total of $47 million from three banks?
Yes.

So that was your worst day, that day in April.
Yes.

And the coupons …
The coupons were another problem. We sold many coupons so they became a liability for the company.

How much were they worth?
I think around $19 million, about 90,000 coupons. When a customer bought coupons we gave a discount. They were basically prepaid coupons.

So you had to honor these, right?
No, I didn’t have to honor those coupons because we liquidated the company. But I had to pay back the $47 million in debts.

But other stores accept the coupons.
That was a miracle! They were just trying to help me. You know why people respected me so much? They didn’t know me personally, but they knew who I was. Many people knew that I had done lots and lots of charity work. They called me “Queen of Cakes.” I was using the cake business as a bridge for my charity work. I made money from the cake shops and used the money for charity work. I have been doing charity work for 55 years.

We built eight homes for senior citizens in Hong Kong and we have schools for retarded children. We have kindergartens. I have established a charitable foundation. Every month, I put almost three quarters of my salary into the foundation. My life is very simple. I don’t buy brand-name clothes, shoes or handbags. If you see me with a brand-name handbag, it’s a gift from one of my three children. I tell them it’s wasting money. I can use that money to help lots of people.

How many coupons were redeemed by shops, cinemas and restaurants?
Quite a lot. There was a Chinese restaurant that accepted the coupons as cash. There was a local restaurant that did the same. There was also another restaurant where you could have dim sum and a banquet using the coupons. Also a beer bar opened by a celebrity accepted the coupons too. At some cinemas you could use the coupon as ticket.

As guarantor you had to pay back the $47 million. You sold some properties, right?
In the US, but not in Hong Kong. In Hong Kong property prices were so low, so I did not sell anything. The US properties were worth around HK$10 million.

So how did you repay the rest?
Every day I worked very hard. You cannot believe how my life had become so different from the days when I still had the cake shop. When I had the cake shop, I lived like a queen because I made lots of money. My husband had passed away, so I had two maids, a car and a driver. My apartment in Yau Yat Chuen was 3,500sq ft. This one [her present apartment] is very small, only 1,000sq ft. It was my own property, my home. But because the company was running out of cash, I sold it for $12 million. I didn’t have to do this as it was a limited company, but I wanted to save the company because it was like my own baby. I established it and I let it grow. I moved to an apartment in Kadoorie Avenue, which I rented. At that time I still hadn’t liquidated my company, so I could live comfortably. I gave parties and invited friends around. I had a very good life. But after that, I could no longer afford the house in Kadoorie Avenue. So I had to move to a smaller apartment.

After two years, they raised the rent and I could not afford it, so finally I went to China and stayed there. But during the time in Hong Kong, as my cooking was very famous, I opened a private kitchen. I created some very fancy dishes and they became very popular. I was the first one to start this kind of business, which I learned from Europe.

I was thinking why couldn’t I open my home and serve people with something different from the restaurants outside? I served Chinese food, but different from the ones served in the restaurants, because I created the dishes myself. And just like in Europe, I would be sitting with the guests and talked to them on all sorts of topics.

But it was reported that you paid the banks $170,000 each month, how did you manage that?
You cannot believe how hard I worked, and you cannot believe the lifestyle I had compared to before the liquidation. I would buy a rice box that cost $20 and I could use it for three meals. In the morning, I used a little bit, maybe two tablespoon to cook congee and I would eat the congee with salty fish or something like that. Then the rest was for lunch and dinner. That was my life. So all these 10 years, I am proud to tell you that I never paid back the banks one cent less than what I owed. Sometimes when I didn’t have enough money I went to the supermarket for food samples. Sometimes they had hamburgers, sometimes they had chicken wings. When I walked over to the counters, they recognized me and asked if I would like to try their food. When I had a bite, I would say, “It’s so good, it’s so tasty!” And they would be very happy that I liked it, because I was known as a very good cook. They would offer me another piece and they would say to the people standing around the counter, “You see, Mrs Lee says it tastes good! This is her second piece!” They really thought that I liked the hamburger, but in fact I just wanted to stuff my stomach!

That was my life. And also, I was a tour guide when I went back to China. I had a house in China, and it was pretty nice. I built it in early 1980s when everything was cheap.

But you were 70 years old in 1998 and your company was a limited liability company, there was no reason why you had to pay the money back.
Yes, that’s what all the people said. They said why don’t you just file for bankruptcy and go live with your children. They were all outside Hong Kong: one in Australia, one in England, one in the US. But I said I don’t want to do that, because I feel like I’m cheating. I’m cheating the company, I’m cheating society, I’m cheating myself. Because I still had assets. They were worthless at that time but I still had them,

I could not say that I did not have anything.

I knew myself that I still had properties and I still had assets. I could not file bankruptcy because if you did that it meant you had nothing – it was cheating. And another thing was I felt very uncomfortable filing bankruptcy because it was unfair to the bank and not fair to myself. My principle is that honesty is the most important thing in a person’s life.

Any advice for Hong Kong people?
Nothing is impossible. You just have to be patient and eventually you will see the rainbow.