China Orders Second Major Merger


In a bid to handle the increasing rate of overcapacity in the shipping industry, China has approved a restructuring of logistics provider Sinotrans and engineering specialist CSC Holdings, which will become a wholly-owned subsidiary of China Merchants, making the approval the second to take place in recent months, according to Bloomberg.

The move has been made in an effort to make China’s state-owned sector much more competitive in a global market.

Sinotrans said: “The reorganisation aims to achieve economies of scale and synergies, in particular in the areas of logistics, energy and bulk shipping, property development, ports and marine and off-shore engineering between the two groups, to speed up the development of an internationally competitive leading enterprise.”

The news follows a recent announcement that China had cleared the way for Chinese shipping companies Cosco and China Shipping Container lines (CSCL) to merge their container shipping units.

CSCL has since made an exit from container shipping and its imminent shipping partner, Cosco will rent its assets and oversee shipping operations.

The two shipping lines were recently given a two-day warning by the Shanghai Stock Exchange to declare how the merger will be managed.

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