Gao Yanming was born in Shandong in 1957. After graduating from Dalian Ocean Shipping College, he was assigned to Hebei Provincial Administration of Shipping.
Gao subsequently moved to the company where he’s made his name, Hebei Ocean Shipping Co (HOSCO), a state-owned company established in 1980 with just a single ship that had plied its trade no further than Hong Kong.
Gao spent the early nineties in Hong Kong, setting up the HOSCO shipping line to northern China, before returning to the mainland in 1998 to take over HOSCO at large. The company was still far from a top performer: in 1997, with a fleet then made up of five aging ships, it notched up a loss of Rmb21 million ($3.1 million).
Getting ship shape
Gao adapted a strategy that he dubbed “low-cost expansion” for increasing tonnage volume. The Asian financial crisis provided the opportunity. As other shipping enterprises were downsizing, Gao started to his expand his own fleet on the cheap. In 1998, the company launched its first Panamax-size ship, marking its entry into the bulk shipping market.
Profitability improved, and more orders were made for larger vessels. And as the ships got larger, so too did the potential markets: in 2003, HOSCO entered the bulk shipping market, and in the following year it began shipping oil. As Chinese demand for commodities grew, HOSCO found itself well-placed to carry the increasing tonnage of iron ore, oil and coal. HOSCO now has more than 100 vessels in its fleet, with a combined dead weight tonnage of 10 million tonnes, making it one of the largest in China.
Surviving the storm
As exports plummeted during the most recent financial crisis, the shipping industry was badly hit. Gao reacted by sending 10 of his older dry bulk vessels to be broken up, while appealing to his shipping company peers to cooperate more in dealing with the problem of surplus capacity. Then in the middle of this year, Gao changed tack, putting in an order for 14 further Panamax vessels, for a total bill nearing $500 million. Industry analysts say he is capitalising on general gloom in the industry about oversupply of vessels to lock in construction contracts at competitive prices. Just as he managed in 1997/8, Gao is pushing HOSCO into another phase of low cost expansion.
After a share reorganisation in 2006 – when the company became private – Gao became a major stockholder. He was ranked 18th in the 2010 Hurun Report with assets worth Rmb25 billion.
© ChinTell Ltd. All rights reserved.
Exclusively sponsored by HSBC.
The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.