China Shipbuilding Industry Corporation (CSIC) and China State Shipbuilding (CSSC) are set to merge their operations in order to become more competitive in global markets.
The joining of forces will strengthen the companies’ status when competing against global corporations such as South Korean Hyundai Heavy Industries, which is on course to acquire Daewoo Shipbuilding and Marine Engineering.
The Chinese Government’s Assets Supervision and Administration Commission owns both CSIC and CSSC.
CSSC manages shipbuilding business in the east and the south of China, while CSIC oversees ship-making activities in northern and western parts of China.
Both firms have already launched internal management changes and the restructuring of assets, indicating that the groundwork is being prepared for the merger.
The proposed collaboration is subject to approval from related authorities.
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CSIC and CSSC were originally part of the same division until 1999 when they were split into two separate entities. The two firms manage numerous shipyards across China and build aircraft carriers for commercial ships.
China State Shipbuilding, CSSC Offshore & Marine Engineering and CSSC Science & Technology are listed companies of CSSC, according to Shine.cn.
CSIC operates five firms, among them China Shipbuilding Industry and China Shipbuilding Industry Power.
Last year, CSSC reported revenue of CNY114.4bn and net profit of CNY2.4bn, while CSIC posted revenue of CNY305bn with a CNY6.9bn net profit.
In 2016, Chinese shipbuilders Cosco and China Shipping merged their operations.
The following year, logistics service providers China Merchants Group and Sinotrans CSC also formed a new entity by combining their businesses.