If the financial calculator had not been invented during the time that Eddy Lau, COSCO's financial controller, was being initiated into accounting he would most certainly not have remained in the industry. Perspective explores if that is really the only reason he stayed with the profession.

The Big Four
Eddy Lau's early years are no different than most aspiring accountants in the 1970s. An intern position at one of the Big Four firms straight out of secondary school because there was either no other option.

But unlike his colleagues from secondary school he didn't take the opportunity to study at Polytechnic when it came up. He decided to stay with Peat Marwick, Mitchell & Co (PMM), where he had started as an audit trainee, and gained his qualification by studying part-time. Toil hard he did. His study regime began at 5pm after work lasting four hours each night for over three years. At times even weekends had to be reserved for the pursuit of higher learning.

The First Move
Ultimately, these decisions proved to be the correct ones. By the age of 24, Mr Lau was qualified and embarking on his first career move. He left the accounting firm to join Diner's Club.

“This was a logical move to make,” he notes, recounting how at Diner's Club he moved from audit to finance, discovering a whole new world.

His career resembles marble stepping stones in a rolling stream. He moved from one position to the next without missing his goal and each new landing spot a bigger place from which to launch himself. With every decision he made regarding an impeding move, not only did he capitalize on his established strengths but he looked to push his capabilities further on the next stone.

It's almost like he'd planned it from the start but a quick study would reveal that the strategic thinker made the most of getting the timing, job and place right - with each step.

Back to Finance
Jumping from external audit at PMM to chief accountant of Diner's Club then moving into systems development and regional internal audit with Hewlett-Packard (HP). Strategic and business analysis was the next area explored with the HP in the United States before a move to being the controller of a start-up with China HP, moving on to project finance a bigger company a few years later. Most recently he was involved in a turnaround situation where he was the financial heavy who had to whip the company into financial shape. He completed his career circle by returning to finance in his current position with COSCO.

Before stepping into his position at COSCO, he had taken up a challenge at Swank International Manufacturing to turnaround the eyewear company. His first task of the day was to negotiating with the banks to get the company's debt to a manageable level. He and the Managing Director succeeded to restructure the loan from HK$1 billion to $550 million with interest on $250 million payable in the first three years and the $300 million becoming a junk bond. “I was able to do apply the soft and hard skills I learned at HP, deploying multi-national corporation (MNC) best practices in a situation where I didn't have the number of people I needed.

“I spent three years at the company as finance director turning a Chinese-dominated corporate culture into a more western-looking one. It was up to us to restructure the company so that it could survive. That was the job as the finance director - to restructure the balance sheet. What followed on was even more challenging, as I then had to switch from my finance role to become the head of the company. This time around the challenge was to restructure the profit and loss account, by assuming the responsibility as the Chief Operating Officer (de facto CEO) turning around the business.”

More Challenges
At COSCO Pacific he faces a different question: what to do with all the HK$30 billion net assets? His role at the shipping giant, which is listed on the Hong Kong stock exchange as a blue-chip stock, is more than the classical accounting role; realising this he's now studying to take his CFA. “Finance is not only about accounting. It goes beyond the CPA. While the accounting qualification trains us to look more at the auditing, corporate governance and reporting requirements, there is another piece - cashflow and capital market efficiency. At COSCO Pacific, we need to be concerned with shareholders' value, how to get value not only through higher operating efficiency but via capital market efficiency as well. Central to our finance role is maintaining an optimum capital structure so as to provide a competitive cost of fund, while providing business support to help our strategy department to rank capital projects based upon their risk and returns”.

“In my current job I have a lot of day-to-day interactions with investment and commercial banks in terms of raising syndicated loans, looking at our internal cashflow and our capital structure. There are the things that in my past positions I was not so involved in when I was working for an MNC...developing the treasury and corporate finance aspect....”

Developments in China
He also spends a great deal reflecting more on the China market and is encouraged by the wave of regulatory reforms that have been sweeping through the mainland. “If we look at Hong Kong and China, Hong Kong's capital market is largely efficient because the size, liquidity, good corporate finance and rule of law. Plus there are quite a few good accountants and lawyers here.”

“Access to capital markets is becoming critical for China but it also has to look at opening up and encouraging domestic consumption diminishing its export dependence. I think it is wise that it is slowly implementing changes rather than rushing into things. I believe the government has every intention of making the capital markets efficient.”

At the top of the pile is non-tradable shares held by companies. As China builds up a lot of foreign exchange reserves due to its status as the factory of the world, and people begin accumulating wealth in both the private and public sector, “there needs to be an efficient stock market where the supply and demand of funds can be matched using a market principle,” says Mr Lau. “At the moment, there is simply too much money being exchanged through the banks in the form of deposit savings being converted into business loans provided to businesses.

“Share reform is one step closer to making the market efficient. But there is still a long way to go before A and B shares are mixed.

“In the spirit of making the A-share market more market driven, reform has to be made where the non-circulating shares are converted into tradable A shares,” notes Mr Lau.

The importance of the changes occurring across the border is not missed on Mr Lau who devotes a great deal of time to staying abreast cross-border changes. But then again that's part of the job at his level, running operations and finance for listed companies.

Source: ACCA Hong Kong