CHINA MARITIME LAW NEWSLETTER
Vol. 1, No.8 - November 19, 2001
TOPICS THIS ISSUE:
- First Wholly Foreign Owned Port Awaits Beijing Approval
- China Provides the First Buyer's Credit for Ship Exports
- China Import & Export Bank Provides Credit Support for the Ship Exports to Iran
- China Sets up Giant Oil Company for Inland River Shipping
- China Launches Massive Program to Clean Bohai Sea
- COSCO in Alliance
First Wholly Foreign Owned Port Awaits Beijing Approval
According to China's mainland policies, foreign companies are not allowed majority ownership in mainland ports. So far, one exception has been made to Hutchison Whampoa, which holds 50.5% of the shares in phases one and two of the Yantian terminal. A majority stake is something to strive for since in general it is vital to fast decision making. The investment ceiling for foreign investors in the ports industry used to be lower but was raised to 49% in the early 1990s in order to attract foreign investors to help develop port infrastructure.
China Merchants Holdings International Co. Ltd. (CMHI) is proposing to buy a port operator in Shenzhen and has applied to become the first foreign company to gain full control of a mainland port. China Merchants Holdings International is a Hong Kong incorporated company. Apart from this deal, CMHI proposes to buy China Merchant Container Services Ltd. The Container Services Company operates the Shekou port in Shenzhen and provides container- and port services at Tsing Yi terminal in Hong Kong. According to CMHI, these acquisitions will enable an integration of its port businesses in Hong Kong and western Shenzhen along with the mainland highways to Dongguan and other locations in the Pearl River Delta.
If the CMHI deal is approved, it may pave the way for other companies, such as Hutchison and Singapore Ports who are interested in raising their holdings in Qingdao Port.
(Sources: South China Morning Post, AFX News)
China Provides the First Buyer's Credit for Ship Exports
On November 6 in Beijing, the China Import & Export Bank and Norway's Somargas Limited reached a buyer-credit agreement amounting to US $62,500,000 for ten years. This is the first buyer's credit for Chinese ship exports released by a China bank.
The buyer's credit will be used to support Norway Somargas Limited in its purchase of four 8,900-stere oil tankers from the China Ship Industry Trading Company. With the China shipping industry entering into the international market, the buyer's credit, as a popular method for international finance, will become more common in China in the future.
(Source: Xinhua, Sohu.com)
China Import & Export Bank Provides Credit Support for the Ship Exports to Iran
China has agreed with the National Iranian Tanker Company to build five huge oil tankers and the first 300,000-ton oil tanker (VLCC) ever made in China, completed by China's largest ship builder--Dalian New Shipbuilding Heavy Industry Co., Ltd. In order to support this big order from Iran, China Import & Export Bank has released RMB 1.79 billion as seller's credit and US $5 hundred million as export credit. Such financial support from China Import & Export Bank will undoubtedly help the Chinese shipbuilding industry in its move to capture more of the international market. In recent years, the China Import & Export Bank has become the main bank that supports the shipbuilding industry in China.
(Source: China News)
China Sets up Giant Oil Company for Inland River Shipping
China National Petrochemical Corp. (Sinopec) and China Yangtze River Navigation Group recently established a joint venture enterprise in Wuhan, Hubei Province to deal with oil storage, transportation and sale in inland rivers. The two parties each invested RMB 200 million (US $24 million) in the new company, Sinopec Yangtze River Fuel Co. Ltd, which is said to be the largest company in this field in China with a registered capital of RMB 50 million (US $6 million).
It is said that the new company has five large oil depots, a special railway line, 41 docks, 195 shipping vehicles of various kinds and is able to sell 1.5 million tons of oil each year.
Headquartered in Wuhan, through a transportation hub along the Yangtze River, the new company can comfortably strengthen its shipping business through the Yangtze River transportation system and railway.
(Source: Hoovers)
China Launches Massive Program to Clean Bohai Sea
With billions of dollars of investment, China plans to gradually mend the Bohai Sea's ecological system that has been deteriorating due to pollution and irrational exploitation of ocean resources. The Bohai Sea is off the coast in north China and is one of the country's most populous and developed areas. Fishery, salt production, transportation and oil and gas development have long been pillars of the local economy in those areas.
The State Environmental Protection Administration (SEPA) announced in Beijing on November 8 that the "Blue Sea Action Program" has been launched in the Bohai rim area with the aim to halt discharge of industrial wastes, to monitor environmental pollution and to restore the damaged ecological system in the sea. At least RMB 55.5 billion (US $6.7 billion) in total investment will make the 15-year program the biggest ever effort in China to improve the ocean environment, according to the SEPA. In recent years, the provincial governments of Liaoning, Hebei and Shandong and the Tianjin Municipality around the rim have set ambitious goals on the development of the ocean-based economy.
The program has been jointly mapped out by the SEPA, the State departments of oceanology, transportation, and agriculture, and local governments around the Bohai rim. The State Council has approved the plan, which requires full implementation by local governments.
(Source: Xinhua)
COSCO in Alliance
The container arm of China Ocean Shipping Company is getting in to an alliance with Kawasaki Kisen Kaisha Ltd. (Japan), Yangming Marine Transport Corp. (Taiwan), Hanjin Shipping Co. Ltd. (Korea), and its Senator Lines affiliate. The plan behind this new alliance is to jointly operate liner services between the Far East, America and Europe. The same alliance partners are also discussing with COSCO to begin cooperation in the logistics area. Of the five participants in the alliance, only COSCO has a container terminal in Hong Kong.
COSCO strives to be a world-class leader in shipping and logistical services. It plans to do so by adopting a scientific decision-making and management system. COSCO was recently awarded an International Management System Certificate in management system standards, occupational-hygiene management, and environment management, and thus became the first Chinese company awarded these three certificates. The certificates will enable and simplify COSCO's access to international markets.
COSCO was founded in 1961 and is changing its face from being a traditional ocean-shipping enterprise to becoming a transnational logistics provider with multiple functions, such as road transport, airfreight forwarding, and Internet business.
(Source: Journal of Commerce)
Lehman Lee & Xu
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