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CHINA'S BIGGEST STATE SHIPBUILDERS CONSIDER MERGER

Thursday, July 4, 2019 

The Chinese Government is reported to be proposing a merger of China State Shipbuilding Corp (CSSC) and China Shipbuilding Industry Corp (CSIC), the country's two largest state-owned shipbuilding companies.

The reasoning behind the move is to allow enhanced competition with shipbuilders in South Korea and Europe, particularly in higher-value specialised and naval vessels, cruise ships, LNG carriers and offshore equipment. The plan, as described in stock exchange documents, is for "strategic restructuring", which would involve approval from the relevant authorities. If approved, it would result in China achieving more sales volume than its South Korean rivals. The enlarged Chinese group would have the scale to match Korea's combined HHI and DSME.

CSSC and CSIC were both established in 1999. CSIC's major shipyards are located in Dalian, Qingdao and Wuchang, with a number of associated suppliers and research organisations. CSSC's has yards at Shanghai Waigaoqiao Shipbuilding, Jiangnan Shipyard, Hudong-Zhonghua Shipbuilding and Longxue shipbuilding in Guangzhou.

The State-owned industry sector in China has been affected by overcapacity, and analysts believe it needs to move from quantity to quality as shipping becomes 'greener' and adopts digitalisation and renewable technologies.

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