Shipbuilders' Merger Reflects Trend

The formation of China's largest shipbuilder after the merger of the Hudong and Zhonghua shipyards in Shanghai last week is seen as part of the inevitable shake-up of domestic enterprises as they prepare for the challenges of the nation's upcoming accession to the World Trade Organization. The Hudong-Zhonghua Shipyard Group has set the target of becoming a world-class shipbuilder and increasing its annual shipbuilding production from 740,000 tons to 1.2 million tons by 2005.

The move is part of the government's efforts to foster dozens of big companies in major industrial sectors to compete internationally and form the backbone of the national economy. The establishment of the Hudong-Zhonghua Shipyard Group comes about two years after the government split the China National Shipbuilding Industry Corp into the China Shipbuilding Industry Corp and the China State Shipbuilding Corp (CSSC), which is the parent company of the new shipbuilder.

Zhu Rujing, director of the China Shipbuilding Economy Research Centre under the CSSC, said the launch of the Hudong-Zhonghua Shipbuilding Group followed a new wave of mergers and acquisitions in the industry in South Korea, Japan and western Europe. These are major players of China in the oversupplied global shipbuilding arena.