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The Interview: Hing Chao

The Interview: Hing Chao

New Wah Kwong chairman Hing Chao took an interestingly inland bound path before eventually finding his way back into the family-owned traditional ship owning business. He explains how his experiences have shaped his vision for the company for the future

New Wah Kwong chairman Hing Chao took an interestingly inland bound path before eventually finding his way back into the family-owned traditional ship owning business. He explains how his experiences have shaped his vision for the company for the future   

NEW Wah Kwong Maritime Transport chairman Hing Chao has come to the leadership of the old traditional family-owned ship owner through not the most conventional of routes but yet emanates a quiet confidence and composure that gives credence to the adage that shipping is in the blood.

Bookending a fascinating conversation about the shipping industry and his vision to take Wah Kwong into the future, Mr Chao talks about his “ecological view of the world” gained from the time he’s spent in China among the nomadic peoples of Inner Mongolia in northern China.

He elaborates that this means looking at the world in terms of cycles and the flow of relationships and this eventually segues into the shipping cycles and his vision for the business in the future. “Evolution, not revolution” is the mantra that his sister Sabrina Chao, who was chairman of the 70-year-old company before him, instilled in Mr Chao before he took over.

With this in mind, he has combined the grounding in shipping his father, legendary Wah Kwong chairman George Chao, gave him by placing him in various shipping companies such as Pacific Basin Shipping, Bocimar and Bureau Veritas soon after he finished university, with the experiences gained from working and living among the nomadic hunters of northern China which he pursued from 2003 onwards.

Looking at things in terms of cycles has meant an understanding of the cyclical nature of the industry and seeing where value can be created. “As a traditional ship owner I started to look at ourselves as a company and our position in this entire value proposition,” he says.

The traditional ship owner’s role of ordering newbuildings, chartering them out and then selling them off is a relatively small part of a much bigger value chain, Mr Chao says and the depth of knowledge and expertise can also be used to become a service provider. So as he came back into the business, he tried to extract more value from the competencies and expertise the company has built up over the years.

The concept of creating “economic capital value” is one that has evolved into the creation of what Mr Chao calls the “Wah Kwong Lite” model, which he describes as the opposite side of Wah Kwong’s traditional role as an investment-heavy ship owner.

This has come out of a recognition that there are better ways of making use of the institutionalized knowledge within the organization as leasing companies start entering the shipping market with huge amounts of capital.

“Traditional ship owners need to adjust our positioning; we need to be smarter and think of new ways of working with other partners and we need to be more intelligent… and there is so much more that can be done here,” he says.

One of the key initiatives Mr Chao has driven since taking over has been the division of the company into two discrete business units – the investment or ship owning side, and the asset management side, where Wah Kwong ties up with asset owners to manage their shipping assets for them.

There are many synergies between the two sides of the business, he explains. One of the reasons why the company is valued is that they are seen approaching the ship management business from the perspective of owners as well and thus are more commercially savvy.

Mr Chao’s holistic view of the industry also encompasses his views on the direction shipping must take as it moves towards a low-carbon future. “Ship owners will have to work much more closely with charterers and the shipyards to come up with a solution,” he says.

“We have to be proactive but at the same time we need to balance that with prudence because our own funds are at stake,” Mr Chao reiterates. In this way they are a critical part of the conversation on shipping playing its part in conserving the environment, he adds.

This fine balance filters into Wah Kwong’s newbuilding plans. While Mr Chao says that the company is not retrofitting scrubbers, a select few of its recent deliveries and upcoming newbuildings will have them installed. This is purely a commercial opportunity to establish a hedging position to exploit a short window where they will be profitable. However this window will rapidly close beyond 2021, he believes.

He notes that the two recent kamsarmax deliveries have scrubbers fitted while the first few of a series of very large crude carriers to be delivered in 2021 will also have them partially due to the wishes of its joint venture partner in the project.

Other opportunities also exist in the gas trades that Mr Chao does not rule out exploring. Among these he sees liquefied natural gas as holding more potential than some of the other new fuels.

Giving a glimpse into his thinking Mr Chao says in one breath “as a ship owner we are very conservative and we can only do things which are proven” but yet also notes that “at Wah Kwong, we like to be opportunistic”.

Asked about the way in which the company might get involved in the LNG market, he points to Wah Kwong’s history in which it has operated gas vessels in the past and says: “Never say never… we are at an interesting moment in time where the global order is being shaken with a lot of uncertainty but also a lot of opportunities”.

This however comes with the proviso that for whatever project it embarks on there must be a viable counterparty. “We are not going to speculate,” he emphasizes.

Turning next to the future of the company at a time where the city it is based in is in turmoil, Mr Chao says “the potential of Hong Kong is so much greater”.

“For a lot of people the mindset has become insular whereas the genes in Hong Kong have always been global and international,” he says, pointing to the city’s long established role as the connector between the world and mainland China.

The Greater Bay Area presents a once in a lifetime opportunity to bring Hong Kong to reach its true potential and overcome the constraints that stifle its development as a global maritime city.

“If Hong Kong fails to deliver on its destiny, it has no future,” he says emphatically.

In this respect, Wah Kwong is making sure it is a part of that brighter future. It has begun by investing in an office in one of Shenzhen’s newer special economic zones in Qianhai which will initially focus on building up manpower resources. He has a vision to eventually develop this into a key centre for the company, bringing together industry, research and education.

The weight of a long legacy in shipping weighs on his shoulders but yet Mr Chao brings innovation and a new vigour to the company as he takes it into the future.

“We feel ready and primed for the future,” he concludes.

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