The Analysis On The Motivation And Performance Of The Merger And Reorganization Of CSSC And CSIC

Complying with deepening the reform of state-owned enterprises and accelerating the construction of marine powers,the merger and reorganization of shipbuilding industry has become a general trend.Adjustment of the national economic layout structure and intensified international competition in the industry made it necessary for CSSC(South ship)and CSIC(North ship)to reverse the "big but not strong" situation of China’s shipbuilding industry through professional restructuring and integration.This paper takes the merger and restructuring of CSSC and CSIC in 2019 as the research object,using case study method to conduct in-depth research on its motivation and performance.Firstly,the paper introduces the background and significance of the research,then systematically summarizes domestic and foreign research on the motivation and performance of business combination.Secondly,the paper combs the merger and reorganization in detail from the aspects of history and current situation,preparatory work,specific process and direction of future integration.Thirdly,the paper analyzes the reasons from the perspectives of civil ship market and Navy construction.Then comprehensively evaluates market,financial and other performance of CSSC and CSIC using the method of long-and short-term event study,financial and non-financial indicators analysis.Finally,the paper provides policy suggestions for the future development of the newly established China State Shipbuilding Corporation as well as the next step of merger and reorganization of central State-owned enterprises(SOEs)in China.The research found that,in the perspective of the civil ship market,the merger can resolve overcapacity,optimize industrial structure and enhance international competitiveness;in the perspective of Navy construction,the merger can make up for the shortcomings of the military ship business in order to comply with the trend of the restructuring and integration in the European and American military ship industry,what’s more,to enhance the comprehensive strength of the Chinese navy.In terms of performance research,the merger and reorganization of CSSC and CSIC has brought substantial benefits to enterprises,the industry and the country.Analysis of market performance shows that,in the short term,the merger has a short-term shareholder wealth effect and receives positive response from the capital market,but long-term market response changed from positive to negative.Financial performance analysis shows that the profitability and long-term solvency of both shipbuilding groups have been significantly improved after the merger and reorganization,while the operating capacity continues to decline due to the recession of the shipbuilding industry,but the overall financial condition of the groups becomes better.Other performance analysis shows that the merger and reorganization is conducive to resolving the overcapacity of the civil ship industry,promoting technological innovation and optimizing industrial structure.Thus,the merger can improve the international competitiveness of the enterprise itself and the industry as a whole,leading to promoting the construction of the Chinese navy to a new level.Based on the research,suggestions are as follows: the restructured China State Shipbuilding Corporation should clarify the next step of development to accelerate the market-oriented reform,increase investment in scientific research to seize the technological highland,and strengthen domestic and foreign cooperation to create a broader industrial alliance.When promoting the merger and reorganization of central State-owned enterprises(SOEs)in the future,the government should pay attention to strengthening the demand side management and tightening the review on anti-monopoly.