Liaoning merger to form giant shipbuilding group by 2000

China State Shipbuilding Corp (CSSC) is preparing a plan to create the country's largest shipbuilding group through the merger of companies in Liaoning.

Dalian New Shipyard, Dalian Shipyard and Bohai Shipyard - among China's top-six shipbuilders - will form the backbone of the group with the support of other parts and components makers.

Liaoning Economic & Trade Commission director Wang Huabin said the provincial government hoped the merger to form Liaoning Shipbuilding Group could take place by next year.

It would join one of the 10 group companies in the province expected to have sales worth 10 billion yuan (about HK$9.33 billion) by 2000.

The shipbuilding giant would be a bellwether in industrial development in the province, accounting for about half of the country's total output by 2000, Mr Wang said.

A CSSC official said it had just started studying the merger plan.

'We haven't got a mature proposal, although we hope the group company could be formed in several months,' he said.

'We are not forcing them to merge. The companies will decide on the issue themselves.

'The alliance can allow the group to enhance its competitiveness, to avoid overlaps in technological upgrade and to save costs.' The CSSC official said the merger might not be done in one go as the enterprises concerned were spread across different areas.

Dalian New Shipyard is expected to deliver six ships of combined 600,000 deadweight tonnes worth about 2.6 billion yuan this year.

The company had sales of 1.7 billion yuan last year, up from 900 million yuan a year earlier, but posted a 75 per cent fall in net profit to 10.15 million yuan.

Dalian Shipyard recorded a 55 per cent slide in net profit to about 20.38 million yuan last year, despite a surge in sales.