HONG KONG'S BALTRANS is a relative minnow in a freight-forwarding marketplace dominated by giants such as Swiss-based Kuehne + Nagel, with 2005 revenues of more than 14billion Swiss francs (HK$90.25 billion), and Panalpina, with 2005 revenues of 8.29billion Swiss francs. But Anthony Lau Siu-wing, chairman and co-founder of the David fighting the global Goliaths in the cargo-shifting business, is a contented warrior. 'I was going to say that it was our survival and our ability to grow and branch out into the global freight-forwarding market,' he muses when asked what has given him the greatest satisfaction in his working life, 'but it is more than that - it is the pride and satisfaction I feel that a home-grown Hong Kong logistics group can grow from such humble beginnings and also find a place in the international arena.' As a model of wealth creation via the traditional route in Hong Kong - through building a family business - Mr Lau has made a tidy return on the HK$500,000 he invested initially to fund his half share in the fledgling freight forwarder. The other HK$500,000 came from the man who would become his lifelong friend and partner, Englishman William Bird - hence Bird and Lau Transport, or Baltrans. Now a public company capitalised at around HK$1.7billion (and with revenues for the last financial year ended July 31, 2005, of HK$3.7billion), that makes Mr Lau's remaining stake worth some HK$420million. But he is in no hurry to realise this gain by accepting the buyout offers being made with growing enthusiasm in the wake of several recent strategic strikes into the marketplace by Baltrans itself. 'We are approached regularly by the bigger players and financial investors. But I think there is still a lot of room to grow and add value for shareholders. And we want to do that. We want to grow bigger,' he says. Does this mean he has ruled out selling the company and has embarked on a fiercely independent course? 'My mind is at present preoccupied with growing the company. I also spend a lot of time promoting the logistics industry for Hong Kong. I am determined to showcase a strong Hong Kong company to the world,' he says - deftly dodging the question. For his efforts he received the Outstanding Achievement Award at the Logistics Awards Hong Kong 2005. The award citation noted that he enjoyed 'undisputed status as one of the most prominent entrepreneurs in the global logistics industry', and identified his acquisition of Jardine Logistics Group in 2003 and the subsequent turnaround of its world operations within 18 months, as 'one of the most widely acclaimed examples of management excellence in the industry'. Hong Kong's freight forwarders and logistics services providers are the people who fetch and carry all those containers and air cargo that are shipped from factories (mainly on the mainland), to the airport and harbour. The volumes are huge. Hong Kong's harbour has been the busiest container port in the world for the past 12 years. Last year, it handled 23.2 million containers, with another 3.5million tonnes of cargo flown out of Chek Lap Kok airport. Business conducted on such a scale is bound to attract a lot of rivals vying for a slice of the cake, and the singular achievement of Baltrans is that it has not only survived but prospered in what has become a fiercely competitive environment. It did so, says Mr Lau, by finding a niche serving small and medium-sized customers with a more personalised and efficient service, while the large players focused on the prestige and status - not to mention ease - associated with adding Fortune 500 companies with well-resourced internal shipping divisions to their customer lists. This is a strategy, he suggests, that family start-up businesses in Hong Kong fighting similar unequal battles with global behemoths today might usefully follow in their bid to create and secure family wealth. Another key decision made by the partners was to plough back into the business most of the initially meagre profits made in the early years, steadily accumulating a sizeable cash hoard, and a reputation with its lenders for conservatism and credit-worthiness that later came into good stead when it began to expand and require bank finance. Those character traits may be traced back to Mr Lau's childhood as the third son in a family of nine siblings, born to a father who was a civil servant in Macau and a mother who took care of her large brood on a modest budget. Young Anthony left school, and without the luxury of a university education took a job in the cargo department of Alitalia in Hong Kong. His main role was to sell Alitalia's air cargo space to freight forwarders. But the trouble was, he recalls, that there were too few planes and too little cargo to keep an energetic and ambitious young man busy enough and on a clear promotional path. So he made his first key move. 'I found I wanted to keep myself busier, and the managing director of a forwarding company said an English company was looking for a Hong Kong representative,' he says. The English company was LEP. 'I became the Asian head for LEP, one of two British-based global players in the freight-forwarding business, and was their first employee in Hong Kong.' What started as a one-man sales office grew under Mr Lau's enthusiastic stewardship into an operating company that began to spread its tentacles into Singapore, Taiwan and the Philippines. In the process, he was promoted to regional managing director of an operation with 200 staff that was contributing sizeable revenues to the group's London head office. But while the company made progress from 1971 to 1982, it was once again frustrations with slow progress that prompted another move. He left LEP, he says, when he realised that the Euro-centric culture of the company prevented it from appreciating the potential on offer in Asia, and from making the necessary investments to prepare for the boom that would follow economic reforms on the mainland that got under way under Deng Xiaoping in 1978. 'I had a few frustrations. I felt we could have expanded at a much faster pace, but we had some disagreement with the chairman in London. The chairman had never set foot in Hong Kong and did not realise the tremendous extent of opportunities when the Hong Kong economy just took off. 'So we decided to start out own company, which we did in 1982, and we called it Baltrans - the name coming from Bird and Lau Transportation. 'We started with HK$1million in share capital. Of course that was not sufficient to fund the company, so we were looking for investors and found a businessman in Taiwan who knew us from his previous dealings with LEP. As soon as he heard we were looking for a backer he came in as a 25 per cent shareholder.' The backer, C.M. Cheng, paid HK$250,000 for his stake and offered collateral that secured a HK$5million banking facility. Mr Cheng had been a minority shareholder in LEP in Taiwan. Three years after the company started operating, Mr Cheng reluctantly cashed out his investment after discovering he had terminal cancer. 'I asked him to propose a figure and at first he didn't want to give me one, but then he said HK$2million, which we gave him happily - so in three years he turned his HK$250,000 into HK$2million, which seemed to be a good arrangement for both parties,' recalls Mr Lau. The fledgling freight forwarder began making money within months, and over the first five or six years enjoyed a compound growth in capital reserves of between 30 per cent and 50 per cent, according to Mr Lau, a record that led to an IPO in 1992, in which a 25 per cent stake of the company was sold. Sixty-million shares were offered at a subscription price of HK$1.50 per share, and the offer was 30 times oversubscribed. It was not just the need to raise capital for expansion that prompted the decision to go public, says Mr Lau. 'In Hong Kong we were becoming quite big, but in a global sense we were small and felt that an IPO would enhance our reputation and status and stimulate us into moving forward at a much faster pace. Since then we have kept expanding in order to obtain a critical mass - in our business you must have scale to compensate for the highly competitive margins at which business is done.' Eyebrows were raised with the first high-profile acquisition of Jardine Logistics, the old 'hong' having decided to quit its loss-making logistics business. Baltrans, having a long view of its potential, bought it for HK$157million - a consideration settled by a new share issue to Jardine, which gave it 20 per cent of the expanded capital. 'They did not want the cash. They had faith in us turning the business around so we issued them shares valued at about HK$2.60, and they made it clear at the time they would not be long-term holders but would like to quit the holding in a few years,' says Mr Lau. 'So I found a strategic investor in Mitsui, a trading conglomerate in Japan, and Jardine exited at a price of HK$4.50 a share - which represented a tidy return on their investment as well.' The result is that the present shareholding structure of Baltrans gives founding partners David Wai, William Bird and Anthony Lau a controlling shareholding of 43 per cent. Mitsui holds 25 per cent and the balance is in the hands of the public. In the view of Mr Lau, the public shareholders have given their vote of confidence in the aggressive expansion upon which Baltrans has now embarked. In the current year, this has included acquiring a 62 per cent interest in their South African agent called Clover Cargo - a freight forwarder based in Johannesburg with branch offices in Cape Town and Durban - at a cost of HK$25.3million. Also wrapped up this year was the acquisition of a 100 per cent interest in Gothenburg Shipping, one of the largest independent Swedish forwarding companies; and 25 per cent from the minority shareholder of the British subsidiary. 'We have also acquired the other 50 per cent interest of BNG Logistics, our company in Germany, and a 100 per cent interest in a small company in Dubai called Outlook Express,' adds Mr Lau. All up, Baltrans has spent HK$211million on these acquisitions, funded principally by way of reserves and a successful syndicated loan. How has it survived and prospered in such a cutthroat marketplace? 'We are very focused. The bigger players are kept busy by catering to the big companies and boasting about their customer list. We target the medium-sized customers who are less demanding, and our service proposition is more personalised. We respond to demand more quickly and are more nimble,' says Mr Lau. 'Being relatively small with just 2,100 staff, our internal communications and co-operation is much more efficient,' he adds. Costs are also controlled with more success than the cost structures of his global rivals, he says, due largely to Asian wage levels being lower. As for the New Year outlook, Mr Lau sees little slowing in Asian export trade. 'The business is recession resilient and also our strong coverage in Hong Kong and China and our expansion into global markets will benefit us.' Year-end revenues in July reached about HK$4billion, he says, up some 10 per cent on the previous year. And he is expecting double-digit growth in both revenue and profit for the 2006/2007 year. He has put his investment in Baltrans in a family trust and as for succession planning, in June this year Henrik von Sydow, formerly CEO of Swedish-based global company Wilson Logistics, was appointed as CEO of Baltrans, with Mr Lau retaining the role of executive chairman and concentrating on the group's strategic direction.