To form a big conglomerate, Beijing is putting together mainland's top two shipbuilders, China State Shipbuilding Corp (CSSC) and China Shipbuilding Industry Corp (CSIC), to boost China's shipbuilding industry and help build a strong navy in the process.
A statement by the State-Owned Assets Supervision and Administration Commission's Bureau of Enterprise Reform said these two biggest State-owned shipbuilders, by production capacity, had their merger process started already.
No details were revealed about the merger, but listed companies under the two shipbuilding firms said that the two will become part of the new China Shipbuilding Corp Ltd.
Media reports say that Lei Fanpei, chairman of CSSC, is going to be the chairman of the new company, while Yang Jincheng, CSSC's general manager, will become its general manager.
Likewise, Wu Yongjie, general manager of CSIC, will take the post of deputy Party secretary in the merged enterprise.
A senior researcher at CSIC said that this merger will empower China's shipbuilding industry in the "lingering downturn of the international shipbuilding market."
He pointed out that in the past, a lot of products and services offered by CSSC and CSIC were very similar.
The researcher said that these products and services that include amphibious assault ships to landing craft and light-duty combat vessels are prone to cutthroat competition that would eventually compromise China's shipbuilding sector.
The researcher who spoke with anonymity added that after the merger, the new conglomerate will be able to handle the pressure to compete for new orders by being able to develop business for products and services for the global market.
Likewise, the researcher said that the joint forces of the two shipbuilders will benefit China's plans in the international naval arms market.
Being major contractors for the People's Liberation Army Navy, the joint forces of the CSSC and CSIC will solidify research and construction of advanced hardware for the PLA Navy.
This is so because, after the merger, almost all of the institutes and shipyards involved in the naval hardware business in China will be under unified management.
This new management will improve the coordination and cooperation among the involved institutes and shipyards.
Researcher Zhou Lisha of the State-Owned Assets Supervision and Administration Commission reiterated in the China Securities Journal that the merger of the two shipbuilders will optimize research and production capacities in the mainland's shipbuilding industry while injecting momentum and reducing unnecessary competition among Chinese shipbuilders.
CSSC and CSIC, headquartered in Beijing, were set up in 1999 as a result of the breakup of the former China State Shipbuilding Corp.
CSSC's major assets are in southern parts of China while that CSIC is mainly in northern areas.
