Half a century ago, they eagerly awaited delegations from the People’s Insurance Co of China, keen to get a share of what was already seen as a phenomenal market opportunity.
In the modern era of booming Chinese fleets, export-import trade and shipbuilding, the way the market opened out internationally might appear a little quaint, but it is a lesson for today’s practitioners.
The pioneer brokers had to tread carefully in dealing with what was then a largely closed society.
Chinese representatives visiting the City would arrive in groups of half a dozen, in their high-button uniforms with red star enamel brooches, for earnest talks with their brokers.
Despite the warm welcome and the blandishments of favoured libations, the brokers usually won only small percentages of placements to offer to the then myriad marine underwriters at Lloyd’s.
Alas, there was at that stage little reward in the business, and even today when the Chinese market is more promising and, having allowed foreign brokers to establish joint ventures subject to strict licensing conditions, the marine side has to be content mainly with reinsurance.
In the old days, conducting business with the Chinese delegations took twice as long as any other meeting, but there was one very key compensation, as veteran broker Tony Delderfield, then managing director of Stewart Smith brokerage (and still active today for AJ Gallagher) recalls.
“The Chinese were very loyal, just like the Japanese,” he told Lloyd’s List. “It took years and years sometimes to do a deal with the Japanese, but once you shook hands on the business, they never left you.
“The Chinese were the same. In some ways, you can understand why they were careful not to make hasty decisions, because they knew whatever decision they made, it would be written in stone.”
Even today, trying to tie up insurance business with a Chinese aspect can be opaque. London underwriters are sometimes requested to cover newbuilding hulls at yards that have yet to be opened, so rapid is the pace of infrastructure planning.
Much reminiscing has been going on lately over the origins of today’s mighty Asian marine industry, prompted by the 50th anniversary celebrations of the Hong Kong Shipowners’ Association. Market experts insist that one cannot hope to come to terms with this tradition-laden market without absorbing its amazing history, including the knowledge that at one stage, in 1951, much of the rest of the world embargoed trade of any kind with China, and the US blacklisted any companies that refused to toe the line.
The boycott half a century ago was a response to Chinese support for North Korea and for a couple of years a serious embarrassment for Hong Kong, as author Stephanie Zarach explained in her lavishly illustrated book Changing Places: the Remarkable Story of the Hong Kong Shipowners (details from www.hksoa.org).
Although giants of Chinese shipping including YK Pao, Frank Tsao and CY Tung had just painfully relocated to Hong Kong from Shanghai, the clash threatened to reduce the colony to the backwater it had once been.
Apart from ‘bamboo curtain’ political considerations, Shanghai was devastated in the Second World War, giving an advantage to the European firms that had offices in Hong Kong, such as Swires, Jardine and Wallem.
Savvy exiled shipowners set up companies in the Philippines and Singapore, using them to win valued charterparties with China. China waited until the 1990s before substantially expanding its shipping presence in Hong Kong, but it is a new breed of cargo and shipowning interests that have reaped the biggest benefits from the growth of China, Ms Zarach explains.
As mainland companies discovered the benefits of the former British colony’s regime, Hong Kong shipowners became more supportive of China’s emerging shipyards, piling in the orders. KH Koo and his son David were, and remain, in the vanguard of contracting from Chinese yards, for their Valles Steamship group.
Mr Delderfield has known personally and done business with every one of the shipowners mentioned since 1955 in Ms Zarach’s book. His first broking accounts among these were with DL Wu, Taiship, YK Pao and KM Koo.
Since that time, he has always looked after the interests of Valles Steamship and has praise for Anthony Hardy of Wallem, who is among those who assisted Ms Zarach in her research (he was the guiding force in establishing the splendid Hong Kong Maritime Museum).
Wallem led the way in third partyshipmanagement from Hong Kong, and costs might be higher than in other centres, but as a gateway to China andwith numerous mainland companies on the register, Hong Kong has all the ingredients to remain a leading focus for insurance and all the other maritimeservices.