The office building of China COSCO Shipping Corporation Limited in Shanghai Photo: Courtesy of China COSCO Shipping Corporation Limited

On February 18, State-owned shipping giants China COSCO Holdings Company Limited and China Shipping officially announced in Shanghai that they had merged into one company called China COSCO Shipping Corporation Limited. The new company boasts a capital value of 610 billion yuan ($93.58 billion), registered capital of 11 billion yuan and a workforce of around 118,000. As China COSCO Holdings Company Limited was a major player in the industry, the move has drawn wide attention.

Established in 1961, China COSCO Holdings Company Limited was a major presence in the domestic and international shipping industry. Within decades of its founding, it had expanded its ocean routes to over 1,500 harbors in up to 160 countries and regions and developed a shipping scale that ranked second in the world.

China Shipping was much younger but more diversified in its business coverage. Founded in 1997, the company was engaged in finance, logistics, ship repair and building, and scientific and technological information. The newly combined company will boast the greatest shipping capacity in the world, said Xu Lirong, the chairman of China COSCO Shipping Corporation Limited, in a Beijing Business Today report on February 19. He also said that the merger was not only part of the central government's plan to deepen reform of State-owned enterprises but also aimed at even deeper internal reform of the two shipping companies. "In the face of the ongoing depression in the global shipping industry, these two companies were not thriving in terms of market segmentation as well as worldwide competition," said Xu. "With the merger, they can combine their resources, creating more complete synergy of action and size effect, and bringing China to the top of the world's shipping industry."

According to a China News report on February 19, the company has already laid out its business plan for the next few years, according to which it will focus primarily on scale growth, profit-making capability, resistance to periodicity and internationalization.

In the future, the company's business coverage will grow to include many industries from shipping and logistics to manufacturing and finance, and the main focus will be shipping and financial industrial clusters. Some experts have suggested that things such as equity investment and capital investment could help the newly combined company grow its profits and better deal with the declining shipping industry, according to the Beijing Business Today report.