On 28 December 2015, Beijing approved the strategic merger of China Merchants and Sinotrans & CSC, where the latter will become a subsidiary of the former.
China Merchants owns shipping arm China Merchants Energy Shipping (CMES), while Sinotrans & CSC is itself the result of a 2009 merger between China National Foreign Trade Transportation (Group) Corp (Sinotrans) and Changjiang Shipping Co (CSC).
Li Jianhong, chairman of China Merchants and one who will lead the merged entity, highlighted that after Sinotrans & CSC is taken in, the enlarged corporation will enhance the competitiveness of China’s state enterprises and promote industry consolidation.
Li urged both organisations to hasten the process of the merger, but did not specify a targeted completion date.
The grand meeting was chaired by Xiao Yaqing, chairman and deputy secretary of the party committee at State-owned Assets Supervision and Administration Commission of the State Council (SASAC).
Xiao said that at present, China’s state-owned corporations lacked vitality, competitiveness and resources have been stretched too thin due to fruitless attempts on expansion, leading to disorganised operations and poor management.
The coming together of China Merchants and Sinotrans & CSC is an important milestone yet as part of China’s move to deepen the reform of state-owned enterprises, he added.
Sinotrans & CSC and China Merchants already have an existing joint venture for their VLCC business established in September 2014.
Apart from the tanker shipping business, the two organisations have to work on consolidating their other businesses including dry bulk shipping, ports and logistics.