China Merchants Group will take advantage of merger and acquisition opportunities in the mainland's fragmented logistics and infrastructure sector as local governments deleverage, said the company's chairman, Fu Yuning. "There will be lots of mergers and acquisitions in the logistics industry in China as oversupply will lead to industry consolidation," said Fu, also the chairman of Hong Kong-listed China Merchants Holdings (International) and China Merchants Bank, on the sidelines of the Asian Financial Forum yesterday. There are over 100,000 logistics players on the mainland but there are a lack of major players with advantages of scale. China Merchants' logistics arm will expand its services to upstream and downstream customers, Fu said. Over the past 20 years, China Merchants has established a network to support nationwide sales outlets for brands like Tsingtao Beer, Coca-Cola and Procter & Gamble. It is now aiming to further develop supply chain services for manufacturers on the mainland as well as last-mile delivery services, which have received a big boost because of the enormous growth of e-commerce. With the recent acquisition of a minority stake in SF Express, one of the major courier companies on the mainland, China Merchants is seeking to leverage the e-commerce boom. Fu said the logistics arm of China Merchants has grown over the past few years. He said he also sees opportunities to acquire toll roads on the mainland if debt-laden local governments are forced to sell them, a trend analysts see as imminent. "City governments are highly likely to sell off minority stakes in their toll-road assets as they are in need of cash," said Lawrence Li, an analyst at UOB Kay Hian Securities in Shanghai. "It fits in well with China Merchants' strategy as they are passive investors in many toll road companies now." Traffic volumes on mainland toll roads are expanding at an average of 10 per cent a year but the numbers can vary widely from region to region, Li said. The toll waiver policy on holidays that was implemented last year, has, however dampened revenues of toll roads by 3 per cent on average, Li added.