The Straits Times / The Business Times News on Cosco

Rising well to the challenge

Cosco Corp president Ji Hai Sheng has come a long way since taking the helm at the listed company five years ago

WHEN Ji Hai Sheng became president of Cosco Corporation (Singapore) five years ago, he faced a challenge he had not previously encountered in his 25 years with the Cosco Group (China Ocean Shipping Group Company).

And that was to not only work for a listed company but to head it as well, says Mr Ji, who began his career with China-based Cosco Group in 1975 straight after graduation.

Because he had to start from scratch in learning how to run a listed company, Mr Ji was extremely fussy about ensuring good corporate governance in Cosco Corp.

Cosco Corp, whose core business is shipping and ship-related activities, is about 55 per cent owned by Beijing-based Cosco Group. It has been listed on the Singapore Exchange since 1993.

'Even though it was still in the shipping business, I did not have any experience with listed companies,' Mr Ji says. 'When the chairman (Wei Jiafu) of Cosco Corp asked me whether I was comfortable taking over Cosco Corp, I said that as long as the staff are hard-working and willing to learn, the company can be a success.'

After agreeing to become Cosco Corp's president, Mr Ji studied the ins and outs of running a listed company. 'The shipping business was familiar to me after so many years, but I needed to learn the rules and regulations of the stock exchange, especially corporate governance of listed companies,' he recalls.

'Listed companies are very different from private companies. Listed companies must be very honest and adhere to all the rules of the stock exchange.'

Under Mr Ji's stewardship in the past five years, Cosco Corp's share price has increased about 20 times and its market capitalisation has increased about 36 times. 'That's the result of all our hard work and of protecting the interests of both majority and minority shareholders, even those with just 1,000 shares,' he says.

After the China Aviation Oil (CAO) scandal, Mr Ji is all too aware of the spotlight on Chinese companies in Singapore. And he is quick to emphasise that Cosco Corp has always placed a 'special priority on corporate governance'.

'As a listed company is a public company, we need to consider all the regulations set by the stock exchange, the laws of the Singapore government,' he says. 'We must follow orders and be transparent. For my subordinates, whenever they want to do something, I ask them to check whether its clear to the public.'

And that includes not disclosing to third parties information that has not been made known to the public. 'That is a 'must',' says Mr Ji. 'We have very good lawyers and a very good company secretary to assist us. Anything we are not sure of, we consult them. And very often, we talk to SGX if we have any questions.'

Cosco Corp's three independent directors are 'especially important' in ensuring corporate governance is maintained, Mr Ji explains. 'People have been talking about the responsibility of independent directors after the CAO case. Our independent directors have always played an important role.

'Whenever I have any ideas, before I even talk to my employees, or my assistants, I talk to my independent directors. I seek their opinions on whether the idea is good or not, because they are independent. They are sitting in a different office. They can see more clearly whether we should do it or not.'

Mr Ji also makes sure his company sticks to its core business. CAO suffered US$550 million of losses by trading oil derivatives and had failed to make proper disclosure to SGX and shareholders.

And after the CAO incident, Mr Ji 'made it clear to all our employees to do everything according to the 'Bible''.

'We should not divert from our core business,' he says. 'No oil trading, no derivatives. We just focus strictly on our core business.'

Divestment of Cosco Corp's non-core businesses, like trading and property, started in January 2002, long before CAO's losses in derivatives trading were revealed.

Still, Mr Ji says scandal can hit any company, not just Chinese companies. 'After the CAO incident, people point at Chinese companies, but I tell people that it does not mean that the CAO incident happened because CAO is a Chinese company.' he says. 'It can happen to any company.'

Cosco Corp, being a subsidiary of the Beijing-headquartered Cosco Group, was not spared media and public scrutiny after the CAO debacle. But according to Mr Ji, Cosco Corp is not a Chinese company.

'People say Cosco Corp is a company from China. But I say Cosco Corp is an international company. Its name comes from Cosco Group, but Cosco Group is only one of the shareholders.

'They own 55 per cent of the company, but still we need to consider the interests of all 100 per cent of shareholders. That's our objective.'

Despite his initial lack of experience in running a listed company, Cosco Corp has done remarkably under Mr Ji.

For the financial year ended Dec 31, 2004, turnover at $116.3 million was 27 per cent higher than that the year before. Net profit rose by 173 per cent year on year to $66.2 million and was more than seven times higher than the profit achieved in 2000 before Mr Ji came in. And the share price is now close to 17 times the 14 cents it was in 2000 and before that.

More recently, Cosco reported a five-fold jump in third-quarter profits to $56.6 million, and its profit for the first nine months of this year came to $121.7 million. The average forecast of nine analysts' polled by Reuters Estimates is for 2005 net profit to increase 110 per cent to $140 million.

Much of Mr Ji's success at Cosco Corp has probably to do with his 30 years of experience in shipping and related industries. But the irony is that he did not get into the industry by choice.

After he graduated from Sichuan Institute of Foreign Languages in 1975, he was sent by the government - as was the practice then - to work in the Beijing headquarters of Cosco Group. 'So I had no choice,' he says.

Since then, he has worked in every department in Cosco Group and has been everything from a dispatcher to an accountant. He trained in Denmark and was also sent to study at New York University's Maritime College for a couple of years in the late 1980s. And through it all, his interest in the industry has strengthened.

'I started my career in this industry and my career has developed very successfully in this industry,' he says. 'But if I was not interested in shipping, I would not have been in it for 30 years.'

Shipping and related industries are a necessity everywhere. 'Because of the job, I've travelled to 67 countries and have met many different kinds of people,' says Mr Ji.

He finds it a 'challenging industry' because 'to be in this industry, you need to understand the world and economic situations, circumstances and people'.

And he often has to work extremely long hours. He is usually in the office before 8am and leaves late. He confesses: 'It is very difficult to balance family and work', and that his wife and daughter often say they do not see him enough.

'I spend more time in the office than at home. I get complaints from my family. They always joke that I treat the house like a hotel, 'Always get back very late and as soon as my eyes open, I go to the office'.'

Of course, Mr Ji is indebted to his wife of 26 years for her support, and especially for being at his side during the 16 years they have had to spend overseas for his career.

'Behind every successful man, there is a successful woman,' says Mr Ji. 'My wife supports me in everything. Her only requirement, 'Be safe, be careful, take care of your health'.

'I always joke with my wife. I tell her, 'I will make more time with you after I retire, I won't go anywhere, I will just follow you. Wherever you go, I will follow you. But now is the time for you to follow me. After I retire, I will spend time with you.' But my wife says that will be too late.'