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China may create shipbuilding giant to dwarf global rivals

China may create shipbuilding giant to dwarf global rivals
China is planning to merge its two biggest shipbuilders to form one giant industrial manufacturer that may leave the country’s major rivals in the sector behind.

Chinese State Council has granted preliminary approval for consolidating two state-controlled companies – China State Shipbuilding (CSSC) and China Shipbuilding Industry (CSIC) – according to unnamed sources close to the matter, as quoted by Bloomberg. The two corporations’ product portfolio ranges from aircraft carriers for the navy to vessels that carry containers, oil, and gas.

The combined revenues of the industrial giants reportedly reach 508 billion Yuan ($81 billion). Both corporations have subsidiaries that trade on the stock exchanges in Shanghai and Hong Kong.

As a result of the merger, China may have an enterprise with more than twice the combined annual revenue of the world’s three biggest shipbuilders, South Korea’s Hyundai Heavy Industries, Daewoo Shipbuilding & Marine Engineering, and Samsung Heavy Industries. The two Chinese groups were founded almost 20 years ago to increase competitive advantage and performance among the country’s defense corporations.

CSSC, CSIC, and their subsidiaries had 10.4 million compensated gross tons in order backlog as of February, according to the latest data from Clarkson, a London-based provider of shipping services. The figure reportedly equals about 13 percent of the market. That compares with 7.72 million tons at South Korean Hyundai Heavy.

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