China Merchants Holdings (International), the largest terminal operator in western Shenzhen, is setting up a joint venture to provide support services to its port operation in the Pearl River Delta. Shenzhen Shipping Logistics will be 60 per cent owned by Hai Hong, an indirect wholly owned subsidiary of China Merchants. The remaining interest will be held by Shenzhen Chiwan, of which China Merchants is an indirect shareholder. The registered capital of the new company is 10 million yuan (about HK$9.38 million), of which China Merchants will invest six million yuan through Hai Hong. The new venture will provide services such as warehousing, order-processing and distribution, container land transport, land-sea transport, port operation, a freight-forwarding agency, customs declaration and insurance. Timothy Shen Ka-yip, deputy general manager, corporate finance department of China Merchants, said the joint venture was complementary to its port operation. It was a 'gesture to prepare the company to develop in the broader logistic sector', he said. 'The joint venture can grab the business opportunities that the terminals forgo because of different business nature or a thinner margin. Its role won't duplicate with the ports we have in Shenzhen,' Mr Shen said. China Merchants owns a 32.5 per cent stake in Shekou Container Terminal. It is also the single largest shareholder of China Nanshan, which indirectly controls the Chiwan port in western Shenzhen. 'Setting up the company is a good thing. We'll be able to act quickly if any opportunity emerges . . . It is not a very big investment and I can't see we will lose money in that,' Mr Shen said. Separately, China Merchants is holding talks with the Qingdao government about investing in a logistics centre in the free trade zone. The first phase of the project would require more than two billion yuan to develop, an official of the Qingdao Free Trade Zone said. Mr Shen said the company had not decided whether to go ahead with the project. 'It's an opportunity to establish good contacts with Qingdao. The whole world has been eyeing the mainland,' he said.