Greater ChinaTankers

Dingheng boss slams fellow Chinese owners for lacking management nous

Talking about the critical issue that Chinese private owners are having difficulties to secure financing at the Capital Link International Shipping Forum in Shanghai on Friday, Li Duozhu, president of fast expanding Chinese chemical tanker owner Dingheng Shipping, suggested many Chinese private owners do not deserve to get financing as they simply do not have the management capabilities to handle expansion.

“Assuming your company can achieve a rate of return of 10-12% per year, you could double your scale in five years. However, given the fact that the general management level of Chinese private shipping companies is low, your management quality is just about to keep up with the expansion scale during the time. If you double your scale in three years by adding more financial leverage, it would add substantial risk for the management of the company,” Li explains.

“And if your rate of return is lower than 10%, it would add significant financial risk to the company, which could eventually kill the company and leave bad debts to banks,” he continued, adding that he has seen many companies go bankrupt in similar cases.

Li reckons the private owners shouldn’t count on financing to expand their scale, but to focus on increasing operational quality.

“Sustainability is the key for operating a private shipping company,” Li claimed.

Jason Jiang

Jason is one of the most prolific writers on the diverse China shipping & logistics industry and his access to the major maritime players with business in China has proved an invaluable source of exclusives. Having been working at Asia Shipping Media since inception, Jason is the chief correspondent of Splash and associate editor of Maritime CEO magazine. Previously he had written for a host of titles including Supply Chain Asia, Cargo Facts and Air Cargo Week.
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