Equity Swap Between China's SAIC Motor and COSCO Shipping

Evaluation of Win-Win Strategy for Increased Chinese Auto Export Volume
Shanghai Auto Secures Stable Shipping Capacity, COSCO Ensures Stable Export Volume

[Asia Economy Senior Reporter Cho Young-shin] Chinese state-owned Shanghai Automotive Industry Corporation (SAIC) and China’s largest state-owned shipping company China Ocean Shipping Company (COSCO) are reported by Chinese media such as Shanghai Securities News to be exchanging shares. This is known as the first case of a stock swap between an automobile company and a shipping company to support the rapidly increasing exports of Chinese automobiles, including electric vehicles.

[Image source=EPA Yonhap News]

According to Chinese media including Shanghai Securities News on the 11th, Shanghai Automotive Industry Corporation will transfer its 5.82% stake in Shanghai Automotive (SAIC) to COSCO free of charge. China Ocean Shipping Company will also transfer its 5% stake in COSCO to Shanghai Automotive Industry Corporation free of charge, the Chinese media reported.

Through this stock swap, Shanghai Automotive will secure car carriers, while COSCO will secure automobile export volumes. Both companies are being evaluated as a 'win-win strategy.'

Regarding this, a representative from Shanghai Automotive Industry Corporation said, "Once the share exchange is completed, synergy effects between China’s largest automobile company and the top shipping company in the shipping industry will emerge," adding, "Both companies will contribute to automobile (electric vehicle) exports."

Last month, Shanghai Automotive’s export volume surged to 108,000 units, a 51.2% increase compared to the same month last year. The cumulative export volume from January to September reached 688,000 units, reaching last year’s annual export volume (697,000 units) within just three quarters. Shanghai Automotive expects export volumes, including electric vehicles, to increase further.

COSCO operates 1,413 vessels, making it China’s largest shipping company. Among all vessels, 512 are container ships with a total capacity of 2.92 million TEU (1 TEU equals one 20-foot container).

[Image source=Reuters Yonhap News]

The Shanghai Automotive Industry Corporation side explained that this share swap was conducted on the premise of maintaining the state-owned status (shares) of the companies, stating that Shanghai Automotive will establish a stable transportation base, COSCO will secure stable automobile export volumes, and the corporate value of both will increase.

The Chinese shipping industry is also reportedly planning to convert 40-foot containers for use in automobile exports, utilizing containers instead of car carriers to address the rapidly increasing export volumes of Chinese-made automobiles, including electric vehicles.

Meanwhile, the China Association of Automobile Manufacturers forecasted that the total export volume of Chinese automobiles, including electric vehicles, reached a monthly record high of 308,000 units in August, and that Chinese automobile exports will continue to increase going forward.

This content was produced with the assistance of AI translation services.