China: Largest shipbuilders plan to merge

China’s two largest shipbuilders are planning to merge, their listed arms said in separate exchange filings on Monday, the latest to join a wave of mergers among state-owned enterprises, reported the Wall Street Journal.

The move by China Shipbuilding Industry Corp (CSIC) and China State Shipbuilding Corp Ltd (CSSC), is subject to approvals from related authorities and there are still many details to be ironed out before the proposal can be finalized, the filings showed.

“The consolidation drive is about improving the competitiveness of these industries and to compete in global markets,” said Tommy Wu, a senior economist at analysis firm Oxford Economics. Though such mergers have the potential to boost efficiency, other analysts and industry executives caution that China’s state-run companies are often weighed down by leaden bureaucracy and slowed by internal politics.

A slew of units belonging to the two companies, such as CSSC Offshore & Marine Engineering Group, China Marine Information Electronics and Hubei Jiuzhiyang Infrared System  issued similar statements confirming their parent companies’ plan of consolidation.

The two companies have multiple shipyards across China whose products range from aircraft carriers to commercial ships which carry oil and gas.