TNAG-0625-FCO40-773-Trade-missions-to-UK-from-Hong-Kong-1977 — Page 32

I

BACKGROUND

CONFIDENTIAL

1

The idea of the mission appears to have originated with Mr Kinnear, Senior British Trade Commissioner in

Hong Kong. It was given further impetus by Sir Peter Carey's visit to Hong Kong in January February 1977. At that time, Sir Peter met Y K Pao and Frank Chao; Y K Pao in particular expressed a belief that the Japanese would be running down their shipbuilding industry over the next 10-15 years. In view of this fact, Mr Pao felt that it was no longer desirable to be too dependent on the Japanese industry and expressed an interest in buying ships in the UK.

2

It has not been possible to ascertain in detail what the Mission is seeking, and indeed a number of conflicting reports have been received. The Secretary met Dr Sohmen, Y K Fao's son-in-law, in mid-February to discuss a proposal for bareboat chartering. Officials have also seen repro- sentatives of Jardine Matheson to discuss charter deals.

3

There may be some difficulty in inducing the various parties to speak freely in front of one another as a broker acting for Y K Pao has asked us not to reveal to his rivals

the ideas he has previously put to officials.

The Proposals

4

Although we do not know the details of what members of the mission are seeking, and indeed they may have differing objectives, in outline their main aim appears to be the seeking of a guaranteed charter from a UK Govern- ment or semi-government body in return for which they would place an order for ships in UK yards. Mathesons have also told British Shipbuilders that they might be in the market for straightforward ship purchases, in the field of containers, ro-ro's, and tankers around the 80,000 ton mark.

CONFIDENTIAL