Yue-Kong Pao
Encyclopedia
Sir Yue-Kong Pao CBE
, JP
, often referred to as "Sir Y.K. Pao" or just "Y.K.", was the founder of Hong Kong's
World-Wide Shipping Group which in the 20 years from purchasing its first second-hand ship in 1955 became by far the largest shipping company in the world with over . Astutely anticipating the seriousness of the shipping downturn starting in the late 1970s he drastically reduced his fleet and was able to pay off associated debt and raise cash to diversify his interests notably through the purchase of a controlling stake in The Hongkong and Kowloon Wharf and Godown Company Limited (now known as Wharf (Holdings)) and later Wheelock Marden giving an exposure to Hong Kong real estate, shipping terminals, retail, ferries and trams. He was noted for his unmatched access to leaders in both the commercial and political arenas and was equally at ease with Western political leaders and the Chinese leadership in the run up to Hong Kong's ceasing to be a British colony in 1997 (for example Margaret Thatcher
wrote the foreword to his biography published in 1990 and he was appointed a Vice Chairman of the Basic Law Drafting Committee
planning Hong Kong's constitution after 1997). He was also a generous philanthropist notably in educational projects (helping set up universities, libraries and scholarship schemes). He died in 1991 but his corporate legacy continues to be controlled and run by his family.
, the 3rd of seven children of a prosperous upper middle class family. In 1931 he went to Hankou
to work in his father's shoe manufacturing business whilst continuing his education at night. However, he decided that the shoe business did not suit him and he secured a traineeship with a foreign insurance company. By the age of twenty he was established in his new position and married a young girl selected by his parents, which marriage was to endure until death separated them.
In 1937 Hankou came under attack from the Japanese and Pao along with 70 colleagues moved to Hunan
and then Shanghai
whilst leaving his wife in the relative safety of Ningbo. In Shanghai he found a position in the insurance department of the Central Trust of China and as tension eased sent for his wife to join him. He was soon moving up the corporate ladder, moving into the area of banking, and moving to Hengyang
and Chongqing
as the progress of the war dictated. At the end of the war in 1945 he was sent by the Government back to Shanghai to help set up and manage the new Municipal Bank and in a short time had worked his way to Deputy General Manager, effectively in charge.
the company broadened its scope to Europe, although trade with China continued in a circuitous way through skilful exploitation of legal loopholes in the embargo. It was during the first half of the 1950s that Pao first made contact with Jake Saunders
(who was running the Imports Department) and Guy Sayer (also working in the department) at the Hong Kong Bank
. Both were later to become Chief Manager and Chairman of the bank, and the relationship was to be a decisive element in the growth of Pao's businesses.
The shipping business grew rapidly driven by the post war economic miracle taking place in Japan and the resulting need for freight and oil carrying capacity. Pao devised a system whereby he was able to secure bank guaranteed three year charters prior to purchasing ships thus significantly reducing the business risks and creating a very attractive lending opportunity for the banks financing the ship purchase. This basic scheme (known in Japan as a "shikumisen" arrangement) was extended when World-Wide moved into commissioning construction of new ships in 1961.
By 1979 the fleet was some 202 vessels with a total of , by far and away the largest fleet in the world. Indeed, the fleet was larger than the combined fleets of the famous Onassis
, Niarchos
and Lemos families. In recognition of his achievements Pao was made an Honorary Doctor of Law by the Hong Kong University
in 1975 and in 1976 appeared on the front cover of Newsweek
magazine with the heading "King of the Sea". He was knight
ed in 1978.
In the mid 1970s Pao had bought from Li Ka Shing
a ten per cent holding in the Hong Kong and Kowloon Wharf and Godown Co. Ltd and by 1977 had built this to 30%. Wharf had historically been in the Jardine Matheson
sphere of influence. Friction with the Jardine camp broke out in the late 1970s over board appointments which concluded with the Pao camp being allowed two more directorships (making 4 out of a total 12). Hostilities broke out again in June 1980 with Jardines launching a cash and shares bid for Wharf. Although in Europe at the time, Pao and his team were able rapidly to put together a successful cash tender for shares to take his holding to 49% and securing control of Wharf. Pao then took over the roles of Chairman and Chief Executive. Wharf gave World-Wide exposure to prime Kowloon waterfront property as well as ownership of Hong Kong Tramway and the Star Ferry.
In 1985 Pao was able to take control of Wheelock Marden, one of Hong Kong's premier companies established in 1857, when John Cheung sold his 34% stake to Pao forming a core shareholding from which to launch a bid in opposition to the bid from Tan Sri Koo Teck Puat
who had bought John Marden's stake in the company. Wheelock gave World-Wide exposure to more prime central Hong Kong property as well as the Lane Crawford department store.
, another son-in-law. By 1989 he announced that he had given up his interests in the Trusts that held the Pao family assets (the shipping interests going to the Sohmen family and the Wheelock / Wharf interests going to the Woo family) and gave up his title as Honorary Chairman of World International. He had already retired from his directorship of the Hongkong Bank in 1983 when he hit the mandatory retirement age of 65 but continued to lead a very active life taking in advisory roles (formal and informal) and philanthropic activities. Over the years, Pao was on a number of corporate advisory committees including Chase Manhattan
, IBJ
, AT&T
, United Technologies
and Caterpillar
.
Pao was active in philanthropic works and was particularly interested in educational projects. Among notable gifts were US$20m to found Ningbo University
, a £14m contribution to the Sino-British Friendship Scholarship scheme to enable Chinese students to attend British Universities and a US$10m gift to build a library at Jiaoting University in Shanghai.
in Shanghai was founded in memory of Sir Yue-Kong Pao. Yue-Kong Pao Hall at Purdue University
and the Pao Yue-Kong library at the Hong Kong Polytechnic University
were also named in his honor.
CBE
CBE and C.B.E. are abbreviations for "Commander of the Order of the British Empire", a grade in the Order of the British Empire.Other uses include:* Chemical and Biochemical Engineering...
, JP
Justice of the Peace
A justice of the peace is a puisne judicial officer elected or appointed by means of a commission to keep the peace. Depending on the jurisdiction, they might dispense summary justice or merely deal with local administrative applications in common law jurisdictions...
, often referred to as "Sir Y.K. Pao" or just "Y.K.", was the founder of Hong Kong's
Hong Kong
Hong Kong is one of two Special Administrative Regions of the People's Republic of China , the other being Macau. A city-state situated on China's south coast and enclosed by the Pearl River Delta and South China Sea, it is renowned for its expansive skyline and deep natural harbour...
World-Wide Shipping Group which in the 20 years from purchasing its first second-hand ship in 1955 became by far the largest shipping company in the world with over . Astutely anticipating the seriousness of the shipping downturn starting in the late 1970s he drastically reduced his fleet and was able to pay off associated debt and raise cash to diversify his interests notably through the purchase of a controlling stake in The Hongkong and Kowloon Wharf and Godown Company Limited (now known as Wharf (Holdings)) and later Wheelock Marden giving an exposure to Hong Kong real estate, shipping terminals, retail, ferries and trams. He was noted for his unmatched access to leaders in both the commercial and political arenas and was equally at ease with Western political leaders and the Chinese leadership in the run up to Hong Kong's ceasing to be a British colony in 1997 (for example Margaret Thatcher
Margaret Thatcher
Margaret Hilda Thatcher, Baroness Thatcher, was Prime Minister of the United Kingdom from 1979 to 1990...
wrote the foreword to his biography published in 1990 and he was appointed a Vice Chairman of the Basic Law Drafting Committee
Hong Kong Basic Law
The Basic Law of the Hong Kong Special Administrative Region of the People's Republic of China, or simply Hong Kong Basic Law, serves as the constitutional document of the Hong Kong Special Administrative Region of the People's Republic of China...
planning Hong Kong's constitution after 1997). He was also a generous philanthropist notably in educational projects (helping set up universities, libraries and scholarship schemes). He died in 1991 but his corporate legacy continues to be controlled and run by his family.
Early days
Pao was born in 1918 in NingboNingbo
Ningbo is a seaport city of northeastern Zhejiang province, Eastern China. Holding sub-provincial administrative status, the municipality has a population of 7,605,700 inhabitants at the 2010 census whom 3,089,180 in the built up area made of 6 urban districts. It lies south of the Hangzhou Bay,...
, the 3rd of seven children of a prosperous upper middle class family. In 1931 he went to Hankou
Hankou
Hankou was one of the three cities whose merging formed modern-day Wuhan, the capital of the Hubei province, China. It stands north of the Han and Yangtze Rivers where the Han falls into the Yangtze...
to work in his father's shoe manufacturing business whilst continuing his education at night. However, he decided that the shoe business did not suit him and he secured a traineeship with a foreign insurance company. By the age of twenty he was established in his new position and married a young girl selected by his parents, which marriage was to endure until death separated them.
In 1937 Hankou came under attack from the Japanese and Pao along with 70 colleagues moved to Hunan
Hunan
' is a province of South-Central China, located to the south of the middle reaches of the Yangtze River and south of Lake Dongting...
and then Shanghai
Shanghai
Shanghai is the largest city by population in China and the largest city proper in the world. It is one of the four province-level municipalities in the People's Republic of China, with a total population of over 23 million as of 2010...
whilst leaving his wife in the relative safety of Ningbo. In Shanghai he found a position in the insurance department of the Central Trust of China and as tension eased sent for his wife to join him. He was soon moving up the corporate ladder, moving into the area of banking, and moving to Hengyang
Hengyang
Hengyang is the second largest city of China's Hunan Province. It straddles the Xiang River about 160 km south of Changsha.-History:Its former name was Hengzhou . This was the capital of a prefecture in the Tang Dynasty's Jiangnan and West Jiangnan circuits...
and Chongqing
Chongqing
Chongqing is a major city in Southwest China and one of the five national central cities of China. Administratively, it is one of the PRC's four direct-controlled municipalities , and the only such municipality in inland China.The municipality was created on 14 March 1997, succeeding the...
as the progress of the war dictated. At the end of the war in 1945 he was sent by the Government back to Shanghai to help set up and manage the new Municipal Bank and in a short time had worked his way to Deputy General Manager, effectively in charge.
Move to Hong Kong
With the approaching fall of the "Bamboo Curtain", Pao and all his family had moved to Hong Kong by the spring of 1949, having managed to remit much of the family's assets and money before events made it impossible. It was impossible to resume a banking career and, given the prevailing uncertainties, he did not wish to commit to investing in machinery and land in Hong Kong, so Pao started an Import/Export business dealing in Chinese goods. Following the UN trade embargo resulting from China's entry into the Korean WarKorean War
The Korean War was a conventional war between South Korea, supported by the United Nations, and North Korea, supported by the People's Republic of China , with military material aid from the Soviet Union...
the company broadened its scope to Europe, although trade with China continued in a circuitous way through skilful exploitation of legal loopholes in the embargo. It was during the first half of the 1950s that Pao first made contact with Jake Saunders
Jake Saunders
Sir John Anthony Holt Saunders, CBE, DSO, MC was chairman of The Hongkong and Shanghai Banking Corporation , at a time of rapid and turbulent development of the Hong Kong economy...
(who was running the Imports Department) and Guy Sayer (also working in the department) at the Hong Kong Bank
Hongkong and Shanghai Banking Corporation
The Hongkong and Shanghai Banking Corporation Limited is a prominent bank established and based in Hong Kong since 1865 when Hong Kong was a colony of the British Empire. It is the founding member of the HSBC Group and since 1990 is now a wholly owned subsidiary of HSBC Holdings plc...
. Both were later to become Chief Manager and Chairman of the bank, and the relationship was to be a decisive element in the growth of Pao's businesses.
Founding of World-Wide Shipping
As his business grew Pao looked around for suitable new ventures and in 1955 decided to branch into shipping (still focusing on assets that were not fixed in Hong Kong) and embarked on an intensive learning process. Shipowning in Hong Kong had a poor reputation at that time with the banks and so the first vessel, a 28 year old coal burning 8,200 tonne freighter, was purchased without finance. Having seen this and the rigorousness employed by Pao in the purchase process, the Hongkong Bank extended a loan for the second purchase, the start of long and fruitful relationship which lead to Pao being appointed to the board of the bank in 1971 and later to become its Vice Chairman.The shipping business grew rapidly driven by the post war economic miracle taking place in Japan and the resulting need for freight and oil carrying capacity. Pao devised a system whereby he was able to secure bank guaranteed three year charters prior to purchasing ships thus significantly reducing the business risks and creating a very attractive lending opportunity for the banks financing the ship purchase. This basic scheme (known in Japan as a "shikumisen" arrangement) was extended when World-Wide moved into commissioning construction of new ships in 1961.
By 1979 the fleet was some 202 vessels with a total of , by far and away the largest fleet in the world. Indeed, the fleet was larger than the combined fleets of the famous Onassis
Aristotle Onassis
Aristotle Sokratis Onassis , commonly called Ari or Aristo Onassis, was a prominent Greek shipping magnate.- Early life :Onassis was born in Karatass, a suburb of Smyrna to Socrates and Penelope Onassis...
, Niarchos
Stavros Niarchos
Stavros Spyros Niarchos was a Greek shipping tycoon, sometimes known as "The Golden Greek." In 1952, Stavros Niarchos built the first supertankers capable of transporting large quantities of oil, and subsequently earned millions of dollars as global demand for his ships increased.- Early life :He...
and Lemos families. In recognition of his achievements Pao was made an Honorary Doctor of Law by the Hong Kong University
The University of Hong Kong
The University of Hong Kong is the oldest tertiary institution in Hong Kong. Its motto is "Sapientia et Virtus" in Latin, meaning "wisdom and virtue", and "" in Chinese...
in 1975 and in 1976 appeared on the front cover of Newsweek
Newsweek
Newsweek is an American weekly news magazine published in New York City. It is distributed throughout the United States and internationally. It is the second-largest news weekly magazine in the U.S., having trailed Time in circulation and advertising revenue for most of its existence...
magazine with the heading "King of the Sea". He was knight
Knight
A knight was a member of a class of lower nobility in the High Middle Ages.By the Late Middle Ages, the rank had become associated with the ideals of chivalry, a code of conduct for the perfect courtly Christian warrior....
ed in 1978.
Diversification
1978 saw the start of a severe downturn in the shipping business. Pao and his managers were quick to spot the problem and commenced a programme to reduce the fleet, especially crude oil carriers, selling ships as they came off charter. 140 ships were sold and the fleet reduced by half over a period of 4 to 5 years allowing debt to be paid off and cash resources built up. Although this was a difficult time for World-Wide, the company, through early action and conservative financial management, was able to ride the recession with little of the problems seen elsewhere in the industry.In the mid 1970s Pao had bought from Li Ka Shing
Li Ka Shing
Sir Ka-shing Li, GBM, KBE, JP is a Chinese business magnate based in Hong Kong. He is the richest person of East Asian descent in the world and the eleventh richest person in the world with an estimated wealth of US$26.0 billion on 10 March 2011...
a ten per cent holding in the Hong Kong and Kowloon Wharf and Godown Co. Ltd and by 1977 had built this to 30%. Wharf had historically been in the Jardine Matheson
Jardine Matheson Holdings
Jardine Matheson Holdings Limited often referred to as Jardines, is a multinational corporation incorporated in Bermuda and based in Hong Kong. While listed on the London Stock Exchange and the Singapore Exchange, the vast majority of Jardines shares are traded in Singapore...
sphere of influence. Friction with the Jardine camp broke out in the late 1970s over board appointments which concluded with the Pao camp being allowed two more directorships (making 4 out of a total 12). Hostilities broke out again in June 1980 with Jardines launching a cash and shares bid for Wharf. Although in Europe at the time, Pao and his team were able rapidly to put together a successful cash tender for shares to take his holding to 49% and securing control of Wharf. Pao then took over the roles of Chairman and Chief Executive. Wharf gave World-Wide exposure to prime Kowloon waterfront property as well as ownership of Hong Kong Tramway and the Star Ferry.
In 1985 Pao was able to take control of Wheelock Marden, one of Hong Kong's premier companies established in 1857, when John Cheung sold his 34% stake to Pao forming a core shareholding from which to launch a bid in opposition to the bid from Tan Sri Koo Teck Puat
Khoo Teck Puat
Tan Sri Khoo Teck Puat a banker and hotel owner, who, with an estimated fortune of $4.3 billion, was formerly Singapore's wealthiest man. He owned the Goodwood Group of boutique hotels in London and Singapore and was the largest single shareholder of Britain's Standard Chartered Bank...
who had bought John Marden's stake in the company. Wheelock gave World-Wide exposure to more prime central Hong Kong property as well as the Lane Crawford department store.
Other activities
In 1986 Pao retired from day to day management of the group handing over the shipping business to his son-in-law Helmut Sohmen and the Wheelock / Wharf interests to Peter WooPeter Woo
Peter Woo Kwong Ching GBS, JP MBA is Chairman of Wheelock and Company Limited and The Wharf Holdings Limited.-Education and career:...
, another son-in-law. By 1989 he announced that he had given up his interests in the Trusts that held the Pao family assets (the shipping interests going to the Sohmen family and the Wheelock / Wharf interests going to the Woo family) and gave up his title as Honorary Chairman of World International. He had already retired from his directorship of the Hongkong Bank in 1983 when he hit the mandatory retirement age of 65 but continued to lead a very active life taking in advisory roles (formal and informal) and philanthropic activities. Over the years, Pao was on a number of corporate advisory committees including Chase Manhattan
Chase Manhattan Bank
JPMorgan Chase Bank, N.A., doing business as Chase, is a national bank that constitutes the consumer and commercial banking subsidiary of financial services firm JPMorgan Chase. The bank was known as Chase Manhattan Bank until it merged with J.P. Morgan & Co. in 2000...
, IBJ
Industrial Bank of Japan
The , based in Tokyo, Japan, was one of the largest banks in the world during the latter half of the 20th century.It combined with Dai-Ichi Kangyo Bank and Fuji Bank in 2002 to form Mizuho Financial Group.- History :...
, AT&T
AT&T
AT&T Inc. is an American multinational telecommunications corporation headquartered in Whitacre Tower, Dallas, Texas, United States. It is the largest provider of mobile telephony and fixed telephony in the United States, and is also a provider of broadband and subscription television services...
, United Technologies
United Technologies Corporation
United Technologies Corporation is an American multinational conglomerate headquartered in the United Technologies Building in Hartford, Connecticut...
and Caterpillar
Caterpillar Inc.
Caterpillar Inc. , also known as "CAT", designs, manufactures, markets and sells machinery and engines and sells financial products and insurance to customers via a worldwide dealer network. Caterpillar is the world's largest manufacturer of construction and mining equipment, diesel and natural gas...
.
Pao was active in philanthropic works and was particularly interested in educational projects. Among notable gifts were US$20m to found Ningbo University
Ningbo University
-History:Ningbo University was established in 1986 by the donation of Yue-Kong Pao. Other major benefactors include Sir Run-run Shaw, Sir Chao An Chung , Sir Hans Tang, Sir Yue-shu Pao , Sir Cao Guangbiao , Sir Li Dashan , Sir Zhu Yinglong ....
, a £14m contribution to the Sino-British Friendship Scholarship scheme to enable Chinese students to attend British Universities and a US$10m gift to build a library at Jiaoting University in Shanghai.
Legacy
The YK Pao SchoolYK Pao School
YK Pao School is a bilingual school located in the Changning District of Shanghai, China. The school was founded in memory of Sir Yue-Kong Pao, a renowned businessman, statesman and philanthropist...
in Shanghai was founded in memory of Sir Yue-Kong Pao. Yue-Kong Pao Hall at Purdue University
Purdue University
Purdue University, located in West Lafayette, Indiana, U.S., is the flagship university of the six-campus Purdue University system. Purdue was founded on May 6, 1869, as a land-grant university when the Indiana General Assembly, taking advantage of the Morrill Act, accepted a donation of land and...
and the Pao Yue-Kong library at the Hong Kong Polytechnic University
Hong Kong Polytechnic University
The Hong Kong Polytechnic University specialises in professional education in Hong Kong. The University’s teaching units are grouped under six faculties and two schools; the Faculty of Applied Science and Textiles, Faculty of Business, Faculty of Construction and Environment, Faculty of...
were also named in his honor.