Pictured at the opening of Sinotrans Shipping's Hong Kong base are, from left: president of China National Foreign Trade Transportation Group Zhang Bin; Chief Executive Tung Chee Hwa; deputy director of the Liaison Office, Central People’s Government in Hong Kong, Liu Shan Zai; and managing director of Sinotrans Shipping Wang Chun Lin

Hong Kong's role as a maritime hub for the region, along with its favourable investment environment, were cited as prime reasons for the decision.

According to Wang Chunlin, the unit's managing director, the "low tax and the flexibility of carrying out business activities in Hong Kong, which is also a traditional maritime centre in Asia", presented major advantages for the company.

Sinotrans Shipping came into being on February 25 this year following the merger of the group's China Business Marine Co. Ltd and Worlder Shipping Ltd.

 "Charter hire is our main income and any development that affects our fleet is based on that factor," said Mr Wang, further explaining the rational behind setting up the business in Hong Kong. "The US currency is the unit of shipping and the lack of currency controls in Hong Kong creates a very flexible investment condition and favourable trading environment for ship owners."

Before the creation of Sinotrans Shipping, Worlder Shipping carried out the major ship management functions for the group like crewing, technical supervision, ship operations, insurance and claims consultancy, procurement and accounting, at its Hong Kong office. The commercial operations such as chartering, sales and purchase were done by the Beijing office.

Demand set to increase

Sinotrans Shipping's activities will now include raising capital, construction, sales and rental, repair and maintenance, merchandising, insurance, and crew management for the group's two-million tonne, 1,000-crew bulk carrier and container fleet.

Mr Wang expects China's entry into the World Trade Organisation to "inevitably increase the demand for sea transport", noting that Sinotrans is well placed to meet that demand. "Sinotrans has its own very well-established port agency network in all Chinese ports and this gives us a priority in enjoying sound facilities at competitive tariff rates. We anticipate more and more new clients will consider chartering our vessels on a long-term basis."

Another factor influencing the choice of Hong Kong for the headquarters is its pool of human talent. "Human resources are crucial to adding ever-growing value to the enterprise," Mr Wang said. "Our human resources include an experienced team of Hong Kong-based professionals who manage and operate our fleet on a worldwide basis."

The company is also able to draw on ship management professionals from the mainland. "The standard of ship management professionals in China has significantly improved when compared to the old days, and this is very important as shipping is a global business," he said.

Mr Wang added that Sinotrans Shipping currently has no plan to spin off from the group and seek a public listing.

Related link:
Sinotrans www.sinotrans.com