China Moves to Protect Domestic Shippers from Foreign Firms

Published Jul 12, 2013 9:06 AM by The Maritime Executive

China is considering a package of regulatory measures to protect the struggling domestic shipping industry against foreign competitors suspected of malicious price manipulation, the China Daily reported on Friday.

The primary enforcement tool will be intensified monitoring of how foreign shipping firms set their rates, the official newspaper said quoting comments by a top transport official.

In the past, companies were only required to report a range of potential rates on offer, but they will now be required to report their exact rates to officials.

Every change in rates offered must also be reported and will be subject to "market supervision" by regulators, the report said.

The move comes amid a seven-year-long shipping industry slump, which has punished Chinese shipyards and shipowners and wounded the nation's largest state-owned shipper China COSCO Holdings , which logged significant losses for a second year in a row in 2012.

The vulnerability of the shipping industry was also underlined by China Rongsheng Heavy Industries Group, China's largest private shipbuilder, which appealed for financial help from the government and big shareholders on Friday.

Song Dexing, director of the water transport department under the Ministry of Transport, was quoted on the sidelines of a conference on Thursday saying the new system will be helpful if "foreign industrial giants" attempt to stage unfair competition.

"If a company is suspected by other players to have slashed or raised rates maliciously when the market is volatile, we can launch an investigation against it to find out if there is unfair competition. I believe the shipping companies will act more cautiously when changing rates," he said.

Other policies under consideration include the restructuring of shipping capacity, a special capital fund for easing out old vessels and reducing taxes for shipping lines.

The increased scrutiny follows investigations into price setting and monopolistic behavior by foreign companies selling milk formula and pharmaceuticals in China.

Reporting by Pete Sweeney and Shanghai Newsroom; Editing by Jacqueline Wong (C) Reuters 2013.