The port resources integration models in China

Reporter Xu Miaomiao

The port resources integration models in China

Reporter Xu Miaomiao

With the continuous development of social economy, huge changes are taking place in the system of China’s port economic system. In March this year, news came from Jiangsu Province that it is planned to establish Jiangsu Port Group by integrating the equity of the state-owned port group or the terminal enterprises along the river and sea in Jiangsu Province. This is another big step after the formation of Ningbo Zhou shan Port Group Co., Ltd by incorporating Ningbo Port Group Co., Ltd. and Zhou shan Port Group Co., Ltd., and the formation of Anhui Port Group, a terminal operator giant along the Yangtze River which is formed by integrating other port groups from Anqing, Wuhu, Maanshan and so on. In addition, Guangdong Province has also off i cially launched integration plan and is expected to introduce a detailed integration program at the end of 2017. In a word, a new round of port integration is coming in 2017.

The reorganization in an industry can be realized only by combined action of enterprise’s need and external forces. According to Ning Tao, the director of the Center for Economic Policy and Development Strategy of the Water Transport Science Research Institute of the Ministry of Transport, from the government’s point of view, port resources can be divided into three parts: administrative resources, natural resources and operating resources. Integrating administrative and natural resources is themain measure by government. If the integration of administrative resources is successful, it means that the government has better co-ordination which is beneficial for the effective use of resources. It is also true for natural resources, the successful integration means the planning and integration of shoreline natural resources can be conducted in a unif i ed and coordinated manner, including the unified planning of projects, which is beneficial for the effective use of natural resources. From the point of view of enterprises, the integration of the port is a good thing since it certainly will reduce competition, but there may be a monopoly, if the competition is not fi erce.

At present, there are three kinds of path and mode of integration of various ports in China. The first is administrative order. The second is simply business (market). The third is the combination of government and market. Under the condition that China's shoreline management is not strict, the cross-the-board management of the local governments at all levels make it diff i cult to the orderly use of the natural resources of ports which spread over multi-administrative regions. The integration of administrative resources across administrative regions also brings some new problems, such as administrative procedure chaos, administrative power overlap. At the same time, because of its natural geographical monopoly, the port groups which local municipal SASAC hold rely heavily on the local government and benefit from monopoly. It is inevitable that each city will pursue its benefit to the greatest extent if two (or more) Port Group assets are integrated into the Port Group under the administrative orders of the provincial government.

Judging from the current situation, the biggest obstacle of China’s port resource integration is interest coordination. Ning Tao pointed out that the interest distribution in China's port resources integration is very complex. Coordinating the interests of all sides, including the interests between two ports under the same local government, between local governments and between governments and its superior, should be of paramount importance.

In this regard, many experts offered advice and suggestions as follows: strengthening the intergovernmental coordination and solve the core contradictions of the inconsistency of local government interests in the integration of port resources; improve shoreline management and effectively promote the efficient use of shoreline resources; strengthen and improve the statistical investigation system and information construction and provide accurate basis for system design; strengthen the anti-trust investigation to avoid monopoly inefficiency and vicious competition; improve the relevant laws and regulations, and carry out the above reform under the framework of rule by law so as to guarantee the system to support resource integration.

Ning Tao believed that balancing the interests of all sides is the key for smooth advancing of integration. First of all, the parties involved in integration should be as less as possible, and bilateral integration is better than multilateral integration. Secondly, the integration should better be between a strong and a weak party, with the strong one integrating the weak one. As an example, the integration between Ningbo and Zhoushan is the 90% integrating the 10%, and it is easier to negotiate under this condition of one being the main party and the other being the secondary. It is better to avoid 50% and 50% integration. Thirdly, during the integration the stronger party should consider from long-term perspective, doing its best to make the weaker party having more benefits.