Success ingredientChan Ka-fai

China’s growing shipbuilding market

is full of potential, says Chan

32 September 2015

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Safe HarbourWith two of his company’s three main businesses – shipping and energy – in the doldrums, Chan Ka-fai, could have reason to be worried. But the Lloyd’s Register’s Financial Controller in Greater China still sees clear sailing ahead, as George W. Russell reportsPhotography by Daniele Mattioli

F rom his office in Shanghai’s Ocean Towers, Chan Ka-fai enjoys commanding views

of the dark ribbon that is the city’s busy Huangpu River. Many of the constant stream of ships that dot the waterway on their way to and from the world’s biggest container port have probably been inspected by Lloyd’s Register staff before being allowed to set sail.

“Safety remains Lloyd’s Reg-ister’s top priority,” says Chan, the company’s Financial Controller, Greater China and a member of the Hong Kong Institute of CPAs. “We succeeded in reducing our total recordable injury incident rate to just 0.39 per 200,000 worked hours globally in the last financial year.”

Founded in 1790, Lloyd’s Register was originally established to survey and classify merchant ships. “In the 1900s, we began to apply our skills and experience to other sectors, and our management systems and services now enhance safety, quality and performance across a wide range of marine and energy industry sectors.”

Nowadays, as well as servic-ing the marine and energy sectors, the company’s business assurance services help clients ensure their assets and processes remain safe. “We stringently check vessels’ steel

exteriors and onboard housings plus anything integrated inside – from the engine to the anchor and propellers,” explains Chan.

Lloyd’s Register’s clients range from small local businesses to huge multinational companies who generally manage large, high-valued assets where mistakes in terms of worker, community and environmental safety are likely to prove far more than just finan-cially damaging.

In 1764, Lloyd’s Register began printing an authoritative “register” detailing ships’ seaworthiness and has since expanded into one of the world’s largest quality assurance provider. “Our earliest efforts were focused on giving both insurance underwriters and merchants a reliable overview of the condition of the vessels they insured and chartered,” says Chan. To this end, ship hulls were graded by a lettered scale (with A being the best), while fittings such as masts and riggings were graded by number (with 1 being the best). The most highly prized “classification notation” of them all was A1, which is still used worldwide to this day.

The company is wholly owned by a United Kingdom-based charity, the Lloyd’s Register Foundation, which is dedicated to research

and education in science and engineering. This philanthropic spirit extends into Lloyd’s Register Greater China and its staff. “Last October, I joined two other colleagues in braving Beijing’s smog to complete my first ever marathon,” says Chan, “Our collective efforts at the Beijing 2014 Marathon helped raise around 5,640 yuan for UNICEF to help provide safe drinking water to underprivileged children worldwide.”

The company has undergone significant change and growth in recent years: It purchased consultancies ODS, Human Engineering, ModuSpec, Scandpower and subsea systems specialist West Engineering. In 2013, Lloyd’s Register made its largest ever investment in energy services company Senergy to expand its range of technical assurance and consulting services. “We will continue to look for growth opportunity organically and inorganically,” Chan notes.

As well as its London head-quarters, Lloyd’s Register has two other major regional offices in Houston, running the Americas, and Hong Kong, which oversees Asia-Pacific operations. Shanghai is the site of the company’s Greater China headquarters.

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Success ingredientChan Ka-fai

Weathering the economic downturn“Having served clients here for almost 150 years, China remains a vital market for Lloyd’s Register,” says Chan, adding that today’s Lloyd’s Register Greater China is probably best known for its marine division. “In supporting our prog-ress, I work in finance with around 30 other specialist professionals in eight branches nationwide.”

With its home market now established as the world’s foremost manufacturing economy, Lloyd’s Register Greater China’s office network supports enormous growth in asset management and quality assurance work. With some 900 staff across 14 offices in not only the Mainland but also Hong Kong and Taiwan, Greater China remains among Lloyd’s Register’s largest global operations.

Despite the ongoing uncertainty many experts predict for the world’s shipping and energy industries, Chan remains optimistic. “Because oil prices have plummeted, the out-look for the energy business is not as promising as it was a few years ago. In countering this, we will continue to deliver a high level of added-value for clients via our deeply ingrained safety culture, technical expertise and impartiality. Our ultimate aim is to ensure our clients can success-fully navigate their way through periods of cost-tightening down-time,” he adds.

Texas-style welcomeChan acknowledges that he had not heard of Lloyd’s Register – or its major business activities – before he was recommended for his present job. But he did have some useful energy sector experience as a result of a fortunate secondment

“One thing I learned is that the auditing standard in Hong Kong, and the professionalism, was

actually higher than in Houston.”

34 September 2015

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The number of shipyards in China had fallen to about 1,600 at the end of 2014 from more

than 3,000 in 2012, according to the

China Association of the National

Shipbuilding Industry.

early in his career.He first studied accounting dur-

ing his secondary education: in the third form at Kowloon Technical School, a government institution in Sham Shui Po, where notable alumni include former HSBC chairman Vincent Cheng, former security secretary Ambrose Lee and broadcaster Albert Cheng.

“For some interesting reason they had a class, which we called com-mercial class, that offered account-ing, economics, commerce, things like that, which was pretty unique. I continued my studies at Hong Kong Polytechnic and after I graduated I went to what was Deloitte Haskins & Sells at that time.”

Chan’s life-changing experience came four-and-a-half years into his stint at Deloitte. “The big firms all have programmes to exchange pro-fessionals among offices. You had to finish four years with Deloitte Hong Kong before you could be seconded. I was fortunate enough to be accepted and sent to Houston.”

The science-and-technology-obsessed Houston is not an average U.S. city. “Houston is in south-eastern Texas, and it was not the America I had in mind,” says Chan. “Houston is very hot and although Hong Kong is hotter, Houstonians think their weather is the worst in the world,” he says with a chuckle.

“Houston is very much about energy so I did have the chance to audit some oil and gas related com-panies, such as Saudi Aramco. One thing I learned is that the auditing standard in Hong Kong, and the pro-fessionalism, was actually higher than in Houston.”

Chan quit Deloitte soon after his secondment ended. “Instead of finding another job I went back to Houston to take a master’s in busi-

ness administration course at Rice University,” he recalls. “Another reason was that I met my wife-to-be at that time in Houston and I really wanted to go back if possible.”

He returned to Hong Kong to work in a charity, at half his Deloitte salary, and then went back to Texas to work for a real estate company, then at the Coffer Corporation that made pipe flanges for the oil and gas industry. “I spent almost seven years with that manufacturer as the only Asian in that company. Hous-ton is quite a friendly city. People treated me very well.”

The human factorThe early 2000s saw a significant fall in the price of West Texas Intermediate, the benchmark oil contract. In Houston, Chan wit-nessed a plunge in the selling price of flanges of almost 40 percent. The company was eventually sold to Ameriforge (itself later bought by private equity groups and renamed AFGlobal Corporation). “I was retained by Ameriforge and continued to work there until my former chief financial officer called me and told me there was an opportunity in China.”

It was Chan’s first encounter with the Mainland since he had worked as an audit junior with Deloitte. He joined Benchmark

Electronics, a provider of contract electronics manufacturing services and integrated engineering design and test services located in the China-Singapore Industrial Park in Suzhou.

“The job was very, very tough. It was a new factory, everything had to start at zero,” he recalls. “I worked in a factory that was quite remote: no public transport, no restaurants. There was no canteen – our meals were lunchboxes brought to the park from the city and the food was so bad. I had food poison-ing three times.”

After 18 months he decided to move to Shanghai and take up a posi-tion quite different from his manu-facturing background: as financial controller of the China unit of Bates, the advertising giant. “Bates was the first company I worked for that had no inventory,” he says.

“Advertising is not complicated but the uniqueness of the business is that it’s all about people. Advertis-ing people are very creative,” Chan adds, “and somehow they would expect finance to be creative too – and you cannot be.”

When Chan’s boss left to join Lloyd’s Register, Chan joined him soon after. Like advertising, Chan soon found that his new job was also very people-centred. “It has always been a very human, very labour-intensive industry,” he says. “You can use equipment for testing but it still requires a person to be present because we really have to look at everything. There is no way we can automate the processes.”

As the expanding Port of Shang-hai unfolds on the horizon, Chan believes the company can weather the current economic chal-lenges. “The future is bright for Lloyd’s Register,” he says.

“ It has always been a very human, very labour-intensive industry... There is no way we can automate the processes.”

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