CSIC-CSSC merger confirmed. This says a lot of what's happening with the global shipbuilding industry that is facing massive gluts and layoffs. This follows as Korea is trying to merge the shipbuilding arm of HHI with that of Daewoo into a super entity.
In the light of the CSIC GM Sun Bo's conviction, I believe there are also more reasons for the merger under the surface. This is a major loss of CSIC, as I see this merger more like CSSC absorbing CSIC. This is also a tale of North which is CSIC vs. South, which is CSSC. CSSC has the yards from Guangzhou to Shanghai, while CSIC has Dalian and Bohai.
CSSC has been the more successful and dominant of the two entities, and practically made the heart of the PLAN's surface fleet. The Type 055, 052B/C/D, the 054A and the 056 corvettes were all designed and originally made in CSSC yards. In addition, the Type 071, 075 and the Type 003 are made or going to be made in CSSC. The supply ships, like Type 901 and 903, are all built in CSSC yards. They also pumped out the ELINT ships, the military tugs, the sonar surveillance ships and even the Yuan Wang space tracking ships. What ships do CSSC doesn't make? In terms of commercial shipping, CSSC yards are building high end stuff like LNG carriers --- with HDZ looking to building the world's largest LNG carrier ---- and a CSSC yard built the world's first Arctic condensate and semi ice breaker tanker, the Boris Sokolov. The Boris Sokolov made an incredible journey to the Arctic Circle, then ported into the ice laden waters in Murmansk.
CSIC made the submarines, including Yuan, refitted the ex-Soviet carrier into the Liaoning, and made the first domestic Chinese carrier, the Type 002. CSIC's shipyards are Dalian are "licensed" to produce 052D and 055 in order to increase capacity and production --- only one Dalian 052D has been accepted by the PLAN so far. But the last original Dalian design was the 051C, which seemed like an aging ship in today's rapid progress.
But overall, while CSSC has been a successful SOE, CSIC has been losing tremendous amounts of money and has been suspected of deep corruption, leading to the arrest of Sun Bo. CSIC has been the model definition of an inefficient SOE that has been sucking up state funds, while CSSC has been a model of a successful SOE, the so called state champion that China wants to push forward. CSSC's ship owning or leasing arm has been robust, that its planning its own IPO.
With the downward global pressure on ship building demand, there is little room left for CSIC, with the only route being a so called merger, that in my opinion, is a de facto take over of CSIC by CSSC. The SOE champion eating up the SOE chump. This is classic SOE consolidation with the state deciding who is the winner and who is the loser.
With this coming in the light of continued PLAN modernization, the behind the doors effect can be immensely profound in untold ways.
