Thursday, April 2, 2009

One who saw the recession coming

Instead, the 81-year-old Taiwanese founder of the world's fourth-largest containerised shipping company started preparing for an economic downturn three years ago.

He had sensed then that a downturn was going to hit in a few years and that it would be a very bad one.

'I didn't have any special deduction, but I had a presentiment,' said the former seafarer in Hokkien at an interview on Monday.

He had also thought then that the shipping industry had massively over-ordered new ships and that there would be a capacity glut in time to come.

Dr Chang also rejected an offer of cooperation to build super-large container vessels from CMA, France's largest shipping conglomerate, last year.

'I asked (the CMA chairman), 'What will you do in bad times?' ' he recounted. It was a big risk to take, he said, adding that those who went into it were 'gua hang' or 'amateurs' lacking in understanding of the industry. The ultra-large container ships would be very difficult to fill in times of recession, he reckoned.

Many in the shipping industry, however, thought then that he was making a grave mistake in not building the very large ships that brought down unit costs.

Events since then show that he was right after all: The industry has slumped as a result of the global financial crisis that has hit consumption and manufacturing and therefore demand for transport of goods.

With great prudence, preparing for bad times during good ones, he has ensured that Evergreen, while adversely affected by the current downturn, is able to weather it without taking the drastic measure of retrenching any of its 18,000 employees or cutting their salaries, as many firms in Taiwan have done. He refuses to retrench because he believes in taking care of his employees' livelihood.

But he is not merely sitting out the downturn which he believes will last till 2012. He has plans to start building new ships next year or the year after next depending on the situation, in order to be ready for the upturn when it comes. He believes the best time to build ships is during a downturn when costs are low.

Despite the slump in global trade, he has started a new container shipping company here, the Evergreen Marine (Singapore), to take advantage of Singapore's standing as a flag of quality. It will initially have a fleet of 13 vessels re-registered from Panama and will have new ships added later.

Evergreen dealt a blow to Singapore in 2002 when it moved its regional transshipment business from Keppel to Tanjong Pelepas in Johor. Dr Chang said on Monday that he has no plans for expansion there.

At 81, he displays great spirit and vigour, which must have sustained him through his younger days when he struggled against great odds to build his shipping business. He had started out in 1968 with just one rickety second-hand vessel and little else apart from his strong business instincts, deep knowledge of the maritime industry from his days as a sailor, and his voracious reading.

In 40 years, he has developed Evergreen into a multibillion-dollar transport conglomerate that runs a gamut of transport and travel-related service companies including shipping, air and trucking services, port terminals, hotels and resorts.

Along the way, through sheer doggedness, he broke through the Far Eastern Freight Conference - a cartel of major shipping companies that closed down last year - to ply the Asia-Europe route successfully as an independent from 1979.

However, he eschewed beggar-thy-neighbour tactics and repaid more than fully kindness shown to him when he was most in need of it.

In his memoirs Tides Of Fortune, he recalled how a shipping agency boss lent him NT$100,000 (S$4,400) when he was facing cash-flow problems. He later invited this man, who had fallen on hard times, to join one of his firms as a shareholder and appointed him board chairman.

It is this sense that one has to lead a life of moral integrity that motivated him to start a magazine to promote traditional Chinese values at a time when he thought Taiwanese society morally degenerate.

The monthly Morals magazine started publication in January last year. Through stories of good deeds, generous acts and inspiring events written in simple Chinese and illustrated by cartoons, it hopes to transmit moral values to young and old Taiwanese. The 12-page, paperback-size magazine is handy to carry around. There are no advertisements. The Chang Yung-fa Foundation foots the bill for publishing the magazine and postage, which last year exceeded NT$10 million.

Distributed free through subscription, it was meant for Taiwanese and the first print run was just 20,000. But subscription quickly shot up to the current 220,000, with ethnic Chinese from all over the world also requesting copies. It was the response from overseas Chinese that gave Dr Chang the idea of raising awareness of the magazine among Chinese communities outside of Taiwan, beginning with Malaysia and Singapore.

-Shipping boss saw the recession coming

Smart entrepreneurs hold key to bubble prediction?


  1. I recently came across your blog and have been reading along. I thought I would leave my first comment. I don't know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.


  2. dear spammer,
    this is actually your second comment


Note: Only a member of this blog may post a comment.