WHEN Chavalit Tsao, 38, took over the leadership of IMC Holdings from his father in January he did so with the full knowledge that he may have a tough act to follow. Frank Tsao Wen-king, 70, who stepped down as chairman after 23 years as founder and chief executive of the group, is a well-known figure in the international shipping community. The elder Mr Tsao's story is one of success in the face of adversity, through entrepreneurial talent, patience, prudence, sheer hard work and, as he put it modestly, good fortune. Mr Tsao was born in Shanghai and grew up during a period of great turmoil in China. He vividly remembers the days of the Sino-Japanese war and the disastrous effects of spiralling inflation after it ended. As heir to his father's business, he worked in a bank in the morning, in an import-export company in the afternoon and then studied late into the night. In 1948, leaving most of its assets behind, the family moved to Hong Kong where refugees were pouring from China in their thousands daily. The family lived under very crowded conditions in Hong Kong and Mr Tsao found himself taking responsibility for the family business. He started trading internationally and in 1949 bought his first ship - a 1,200 dwt bulk carrier built in 1908. That laid the foundation of a company that is today one of the three largest shipping stocks on the Stock Exchange of Hong Kong. Mr Chavalit Tsao joined the group in 1977 soon after getting a bachelor's degree in naval architecture and marine engineering and a master's degree in industrial engineering, both from the University of Michigan. The IMC Group comprises all the companies controlled by the Tsao family, including IMC Holdings. In 1979, Mr Chavalit Tsao took charge of the diversification and development programme of the group and successfully implemented a number of projects, including a pioneer plantation project in Thailand. In 1986, the IMC Group was approached to take over United Thai Shipping Co which, though one of Thailand's national carriers, was facing serious problems and heavy losses. The challenge of turning around such a company under the business conditions at that time daunted even the most experienced shipping stalwarts. But Mr Chavalit Tsao took up the challenge and spent the next three years struggling hands-on with the problems at United Thai. He succeeded, and not only put black ink on the bottom line, but reorganised the corporate structure to set it on a path of sustained growth and diversification. Unithai Line - the successor company of United Thai - was listed on the Stock Exchange of Thailand in June last year and is now highly regarded by the shipping and investing community. Proceeds of the share issue were applied to expand the fleet, which almost doubled. Nine vessels were acquired last year, including four conventional vessels, one container vessel and four handysize bulk carriers, which have all been delivered, increasing the fleet size to 20. Consolidated net profits of Unithai were up 50 per cent last year to 245 million baht (about HK$77.17 million) on revenues of 1.67 billion baht. During the year, Unithai expanded to Europe, North Asia and Africa by adding four vessels to the liner fleet. Main ports in Indonesia were added as regular ports of call last year. Unithai also expanded its marketing network, especially into the former eastern bloc countries and calls were made to load cargo from Poland. This year the company will further improve the frequency of sailings to Europe and will add a sixth ship to the European route. With the lifting of trade sanctions, trade between South Africa and Southeast Asia also picked up last year. Unisaf Line, a 50-50 joint venture between Unithai Line Marshall Islands and Safmarine, increased the frequency of its sailings and carried 51 per cent more cargo last year than in 1993. Mr Chavalit Tsao said intra-Asia trade, particularly imports of capital goods from North Asia, continued to grow. 'Unithai will continue to benefit from its fleet mix, which includes relatively smaller vessels with superior lifting capacity, allowing for increased berth flexibility in increasingly congested ports,' he said. 'While Unithai's core business is conventional liner services, we plan to grow the business in tandem with the region's industrialisation.' He said future transport demands would include servicing the import of industrial raw materials, servicing the export of semi-finished industrial products, as well as servicing the various integrated shore-based transportation requirements, including container terminals, inland container depots and logistics centres. In line with this strategy, the company has teamed up with Nissho-Iwai Corp and Maruzen Showa of Japan to develop a logistics centre in Thailand's Chachoengsao province. Phase one of this joint venture, designed to provide integrated distribution services, including general and bonded warehousing, customs clearance, trucking and freight forwarding, is scheduled to begin operations towards the second half of this year. After proving his mettle at Unithai, Mr Chavalit Tsao took on many added responsibilities, including that of managing director of IMC Holdings, a position he has held since 1989. He initiated and steered several new ventures for the group, and two are worth special mention. One is the US$150 million shipyard in Thailand - Unithai Shipyard and Engineering - which went into operation last year. The IMC Group has a long-term investment of 25 per cent in the shipyard, the largest in Thailand. The other is the new tanker firm Wawasan Shipping in Malaysia which is profitably operating seven product tankers. In the bulk shipping field, Mr Chavalit Tsao introduced the concept of commercial pools which, although not uncommon in the West, were almost non-existent in the East. As a result, IMC Group today operates three very successful shipping pools, one each for handysize, handymax and Panamax ships, which are managed in Singapore. The three pools have more than 30 ships, some of these owned by other eminent shipowners. In a further extension of the pool concept, and as someone who sees the advantage of strategic alliances, Mr Chavalit Tsao has successfully been able to combine the resources and strengths of the IMC Group with that of other companies to create better positioned joint ventures. This is exemplified in partnership companies between Wawasan and the Malaysian Government and in Unithai's joint venture with Safmarine of South Africa. In October last year, Unithai formed a joint venture with Hong Kong's China-backed Ming Wah Shipping Co to transport crude oil from the Persian Gulf to Southeast Asia. The company, Unithai Ming Wah Tankers, represented Unithai's first entry into the petroleum shipping business. 'Our expansion is predicated on the industrialisation of Asia,' Mr Chavalit Tsao said. 'We are particularly interested in Thailand, where heavy industry is growing so rapidly.' Ming Wah holds a 50 per cent stake in the company, with Unithai owning 25 per cent and United Thai Shipping Corp taking the other 25 per cent. IMC Holdings was first listed on the stock exchanges of Hong Kong - there were four at the time - in October 1972 under the name of International Maritime Carriers (Holdings) as the holding company for a number of shipowning subsidiaries incorporated overseas. Following the group's reorganisation in September 1989, IMC Holdings, an exempted firm with limited liability under the Company Act 1981 of Bermuda, acquired all the subsidiaries of International Maritime Carriers and became the holding company for the group. The Hong Kong listing was maintained and the group secured a secondary listing on the Stock Exchange of Singapore in December 1989. In 1972, the group was operating seven vessels with a total tonnage of about 98,000 dwt. Today, 21 Panamax and handysize vessels are in operation and one is being built, aggregating one million dwt. On the group's future prospects, Mr Chavalit Tsao said the world had seen a gradual industrialisation of East Asia since the beginning of this decade. 'It is almost certain that this process will continue and extend well into the next century,' he said. He said there would be huge demand for transportation and handling of both materials and products in the region. 'To capitalise on such opportunities, we shall have to position our organisation to become more customer focused.' In the past, IMC's main earnings and profits came from buying and selling of ships in the international market. 'In the future, we shall simultaneously position ourselves also as a regional transportation company with the ability to offer a complete transportation solution to our customers.' Colleagues say Mr Tsao is a man of vision and boundless energy. He never tires of telling his people that IMC can continue its success only by keeping up to the expectations of its customers and investors. 'The only way to grow is [through the] ability to find innovative solutions which offer our customers more for less, while we improve our profit,' Mr Chavalit Tsao said. As a senior company executive put it: 'We all look up to him with great pride and affection, not because he is the principal owner of the business, but because he is an inspiring leader and a very capable and resourceful individual.'
