China Merchants Group Limited ( zh, first=s, s=招商局集团, p=Zhaoshangju Jituan) is a state-owned enterprise (SOE) of the

People's Republic of China China, officially the People's Republic of China (PRC), is a country in East Asia. With population of China, a population exceeding 1.4 billion, it is the list of countries by population (United Nations), second-most populous country after ...

. The company operates under the auspices of the Chinese Ministry of Transport. Founded in 1872 as the China Merchants Steam Navigation Company in

Shanghai Shanghai, Shanghainese: , Standard Chinese pronunciation: is a direct-administered municipality and the most populous urban area in China. The city is located on the Chinese shoreline on the southern estuary of the Yangtze River, with the ...

, the firm has developed into one of China's leading SOEs since the 1980s and has expanded its global role as a result of China's

Belt and Road Initiative The Belt and Road Initiative (BRI or B&R), known in China as the One Belt One Road and sometimes referred to as the New Silk Road, is a global infrastructure development strategy adopted by the government of China in 2013 to invest in more t ...

in the early 2010s. In the Western media, China Merchants Group is mostly known for being criticized as a tool for China's alleged

debt-trap diplomacy Debt-trap diplomacy is a term to describe an international financial relationship where a creditor country or institution extends debt to a borrowing nation partially, or solely, to increase the lender's political leverage. The creditor country ...

and its legal disputes with

DP World DP World is a multinational logistics company based in Dubai, United Arab Emirates. It specialises in cargo logistics, port terminal operations, maritime services and free trade zones. Formed in 2005 by the merger of Dubai Ports Authority and ...

, another port operator, regarding concession rights at the

Port of Djibouti The Port of Djibouti is a port in Djibouti, the capital of Djibouti. It is strategically located at the crossroads of one of the busiest shipping routes in the world, linking Europe, the Far East, the Horn of Africa and the Persian Gulf. The port ...

Beginnings and growth (1872–1978)

Early history

China Merchants Steam Navigation Company was a shipping company founded on 16 December 1872 by the then

Viceroy of Zhili The Viceroy of Zhili, officially in Chinese as the Governor-General of the Directly Subordinate Province and Other Local Areas, in Charge of Military Affairs, Food and Wages, Management of Rivers and Governor Affairs, was one of eight regional ...

Li Hongzhang Li Hongzhang, Marquess Suyi ( zh, t=李鴻章; also Li Hung-chang; February 15, 1823 – November 7, 1901) was a Chinese statesman, general and diplomat of the late Qing dynasty. He quelled several major rebellions and served in importan ...

, who was also concurrently serving as Commissioner of the

Beiyang Fleet The Beiyang Fleet (Pei-yang Fleet; , alternatively Northern Seas Fleet) was one of the Imperial Chinese Navy#Fleets, four modernized Chinese navies in the late Qing dynasty. Among the four, the Beiyang Fleet was particularly sponsored by Li Hong ...

. Its purpose was to capture part of the international trade, which had been virtually monopolized by foreign companies based in

Treaty ports Treaty ports (; ) were the port cities in China and Japan that were opened to foreign trade mainly by the unequal treaties forced upon them by Western powers, as well as cities in Korea opened up similarly by the Qing dynasty of China (before th ...

. 80% of the company's start-up capital was provided by native Chinese, making this the first transportation company using modern technology not based on foreign ownership. It obtained government support and received a monopoly contract to transport the tribute grain from the

Yangzi The Yangtze or Yangzi ( or ) is the longest river in Eurasia and the list of rivers by length, third-longest in the world. It rises at Jari Hill in the Tanggula Mountains of the Tibetan Plateau and flows including Dangqu, Dam Qu River the l ...

Valley to the capital city of

Beijing Beijing, Chinese postal romanization, previously romanized as Peking, is the capital city of China. With more than 22 million residents, it is the world's List of national capitals by population, most populous national capital city as well as ...

. The company also received loans from government sources and monopoly rights that prevented the founding of rival Chinese steamship companies. Initially, Li Hongzhang appointed Zhu Qiang ( zh, s=朱其昂) as manager at the Shanghai office, assisted by his younger brother Zhu Qizhao ( zh, s=朱其詔). The Zhu brothers and extended family had a large and successful sea-going junk business, shipping sand, rice and other cargoes along the regional coast. Zhu Qiang had already purchased an official rank as a sub-

Prefect Prefect (from the Latin ''praefectus'', substantive adjectival form of ''praeficere'': "put in front", meaning in charge) is a magisterial title of varying definition, but essentially refers to the leader of an administrative area. A prefect' ...

Zhejiang ) , translit_lang1_type2 = , translit_lang1_info2 = ( Hangzhounese) ( Ningbonese) (Wenzhounese) , image_skyline = 玉甑峰全貌 - panoramio.jpg , image_caption = View of the Yandang Mountains , image_map = Zhejiang i ...

The listed Chinese name for this company in the early 1870s was Zhao Shang Gongsi Ju ( zh, s=召商公司局, l=China Merchants Bureau), although by the 1880s it had turned into Lunchuan Zhaoshang Zongju ( zh, s=輪船招商總局, l=China Merchants Shipbuilding Bureau). In 1872, the company acquired its first steamship, an old combined sail & steam-powered vessel named SS ''Aden''. The ship was previously owned and operated by the Peninsular and Oriental Steam Navigation Company (P & O). However, the Zhu brothers lacked knowledge about modern steamships and their operations, and that they were unsuitable to head the new endeavour. They subsequently replaced Zhu Qiang as manager with the appointment of Tang Jingxing to this position in 1873. Both Zhu brothers, however, being substantial shareholders, retained positions in the company as "Rice Tribute" managers. By 1877, the company was still not turning a profit and a decision was taken to expand the fleet significantly in an attempt to break the foreign shipping companies' virtual monopoly on the China coastal trading routes. The company purchased the entire fleet of 17 vessels from the Shanghai Steam Navigation Company whose agents were the old-established American Treaty-port traders, Russell & Company. In 1885, Sheng Xuanhuai was named the company's director-general General to improve its fortunes,China Year Book 1916 following the departure of Tang Jingxing for other industrial projects. During the

Sino-French War The Sino-French or Franco-Chinese War, also known as the Tonkin War, was a limited conflict fought from August 1884 to April 1885 between the French Third Republic and Qing China for influence in Vietnam. There was no declaration of war. The C ...

of 1884-85, ownership of the ships was temporarily transferred to Russell & Co. in order to avoid seizure by French forces, but after hostilities had ceased, they were purchased back by CMSNCo., for the same price they had been sold for. The company enjoyed profitability for a few years under Sheng's directorship and began paying out annual dividends. However, by 1904, the company's finances had once again slipped into losses. Sheng, who had appointed a whole series of corrupt cronies to the management during his tenure, was eased out of control in 1911 when Dr. Wu Ting-fang took over as managing director with a view to reorganizing the company. By 1912, the fleet size of the company had grown to 29 coastal and river steamers, all manned by foreign (mainly British) captains. During the early 20th century up until the time of the revolution, there was a long and continual power struggle between Sheng and the various shareholders over control of the company. Following the revolution, in June 1913, shareholders of the CMSNCo. agreed to a scheme for the company to be reorganized with a new constitution. The company at this time possessed 31 ships and owned wharves and property in some 20 Chinese ports, with total assets valued at an estimated 25 million taels of silver. Following Sheng's death in 1916, Li Hongzhang's grandson, Li Guojie ( zh, s=李国杰), was appointed as a board director of CMSNCo. Li Guojie had previously served as the Chinese Minister to

Belgium Belgium, officially the Kingdom of Belgium, is a country in Northwestern Europe. Situated in a coastal lowland region known as the Low Countries, it is bordered by the Netherlands to the north, Germany to the east, Luxembourg to the southeas ...

(1910-1912). In 1924 he was elected as chairman of the board of directors.

Civil war period

In 1927, Li continued to head the company although the entire Chinese shipping industry was placed under the supervision of the Communications Ministry of the

Nationalist government The Nationalist government, officially the National Government of the Republic of China, refers to the government of the Republic of China (1912–1949), Republic of China from 1 July 1925 to 20 May 1948, led by the nationalist Kuomintang (KMT ...

. In 1929, the Nationalist government commenced investigations into past financial dealings of the company, and in particular those of the late Sheng Xianhuai. After uncovering evidence of impropriety, the Jiangsu Provincial Government ordered the confiscation of assets from Sheng's estate. Li Guojie also came under suspicion for misappropriating funds from the company and for taking out personal bank loans secured on the company's assets. This culminated in a lawsuit again Li to recover lost monies. The scandal escalated when on 24 July 1930, Zhao Tieqiao, a senior member of the Shanghai Investment Promotion Bureau tasked with investigating past financial irregularities, was assassinated outside the company's offices in Shanghai. Li immediately fell under suspicion but lacking sufficient he was instead detained on economic fraud charges relating to obtaining personal foreign loans using state-owned assets as collateral. He was convicted and sentenced to 3 years imprisonment. However, through his political connections he was soon released. Li remained in Shanghai, heavily involved in the corrupt political power struggles prevalent in that era. He was shot outside his Shanghai home on 19 February 1939 and died soon afterwards. The firm was nationalized and reorganized as the China Merchants Group in 1935, acquiring the name it uses today. During the Sino-Japanese war, the company sold four of its ships: Haiyuan, Haili, Haichen and Haiheng to the Hong Kong-based trading company Jardine Matheson & Co. Other ships were scuttled during the hostilities. During

World War II World War II or the Second World War (1 September 1939 – 2 September 1945) was a World war, global conflict between two coalitions: the Allies of World War II, Allies and the Axis powers. World War II by country, Nearly all of the wo ...

, the headquarters moved around, being for a period in

Hong Kong Hong Kong)., Legally Hong Kong, China in international treaties and organizations. is a special administrative region of China. With 7.5 million residents in a territory, Hong Kong is the fourth most densely populated region in the wor ...

and at

Chongqing ChongqingPostal Romanization, Previously romanized as Chungking ();. is a direct-administered municipality in Southwestern China. Chongqing is one of the four direct-administered municipalities under the State Council of the People's Republi ...

. After the defeat of Japan in the

Second Sino-Japanese War The Second Sino-Japanese War was fought between the Republic of China (1912–1949), Republic of China and the Empire of Japan between 1937 and 1945, following a period of war localized to Manchuria that started in 1931. It is considered part ...

, the Nationalist government confiscated industrial enterprises in formerly Japanese-occupied areas of China and in Japanese puppet states. These confiscated enterprises were re-organized into Chinese state-owned enterprises, primarily under the control of China Merchants Steam Navigation Company, the

National Resources Commission The National Resources Commission () was a powerful organ of the Executive Yuan of the Republic of China that existed from 1932 to 1952 and was responsible for industrial development and the management of public enterprises. It was staffed entirely ...

, and China Textile Construction Corporation. The company also took over control of 2,158 formerly Japanese ships.

Post-Civil War split

In 1949, following the Chinese Civil War, the company's head office was transferred together with the Republic of China government from the Mainland to

Taiwan Taiwan, officially the Republic of China (ROC), is a country in East Asia. The main geography of Taiwan, island of Taiwan, also known as ''Formosa'', lies between the East China Sea, East and South China Seas in the northwestern Pacific Ocea ...

. On December 28, 1972, because Communist China obtained the "Chinese seat" in the United Nations, in order to prevent Communist China from taking over the assets of the original CMSNCo, the CMSNCo in Taiwan invested in Yang Ming Marine Transport Corporation, thereby transferring assets to Yang Ming Marine Transport. In March 1995, The Taipei-based part of CMSNCo. finally merged with Yang Ming Marine Transport Corporation. Meanwhile, the People's Republic of China retained ownership of some of the company's ships and of the Hong Kong subsidiary, allowing the latter to retain its name (China Merchants Steam Navigation Company Limited) to avoid legal disputes. In 1950, transfer of the original core company was moved to its Hong Kong headquarters but with overall control still being retained by the PRC.

Modern history (1978 to today)

The company slipped into relative obscurity during the Mao era. This only changed with China's opening of its economy in 1978, when the free-trade zones created in China led to the company's revival. On 31 January 1979,

Yuan Geng Yuan Geng (; 23 April 1917 – 31 January 2016), born Ouyang Rushan, was a Chinese guerrilla fighter, war hero, spy, policy visionary, and serial entrepreneur on behalf of the Chinese state. He was an early proponent of China's reform and open ...

became the first CEO of the PRC-owned company. Yuan had founded the Shekou Industrial Zone in

Shenzhen Shenzhen is a prefecture-level city in the province of Guangdong, China. A Special economic zones of China, special economic zone, it is located on the east bank of the Pearl River (China), Pearl River estuary on the central coast of Guangdong ...

and was made CMG CEO following Beijing's approval of the zone proposal, making it a corner stone of the first special economic zone in Shenzhen as part of

Deng Xiaoping Deng Xiaoping also Romanization of Chinese, romanised as Teng Hsiao-p'ing; born Xiansheng (). (22 August 190419 February 1997) was a Chinese statesman, revolutionary, and political theorist who served as the paramount leader of the People's R ...

's reformist policies. CMG subsequently developed a reputation for its successful Port-Park-City model, which is also referred to as the Shekou Model. Throughout its development of the Shekou Zone during the 1980s and 1990s, CMG got involved in business sectors beyond shipping, including investing in and operation of amenities, social and industrial infrastructures, numerous industrial ventures from containers to food manufacturing, real estate and finance. In 1987, it founded the first joint-stock bank in the PRC,

China Merchants Bank China Merchants Bank (CMB) () is a Chinese bank headquartered in Futian District, Shenzhen, Guangdong, China. Founded in 1987, it is the first share-holding commercial bank wholly owned by corporate legal entities in China. CMB listed on the Sha ...

, making it a "highways-to-banking conglomerate". Although CMG was involved in numerous horizontal businesses, in 2001 this was rationalized to three "core business sectors", namely transport infrastructures, financial, as well as property development and industrial park operations. Since the Chinese government's adoption of the

in 2013, CMG has been playing a major role in furthering the policy through its flagship port business. CMG has been seeking to expand international operations accordingly. Besides operating in Hong Kong and Mainland China, CMG now has operations in strategic locations across South Asia, Europe, for example in

Greece Greece, officially the Hellenic Republic, is a country in Southeast Europe. Located on the southern tip of the Balkan peninsula, it shares land borders with Albania to the northwest, North Macedonia and Bulgaria to the north, and Turkey to th ...

Lithuania Lithuania, officially the Republic of Lithuania, is a country in the Baltic region of Europe. It is one of three Baltic states and lies on the eastern shore of the Baltic Sea, bordered by Latvia to the north, Belarus to the east and south, P ...

and

Belarus Belarus, officially the Republic of Belarus, is a landlocked country in Eastern Europe. It is bordered by Russia to the east and northeast, Ukraine to the south, Poland to the west, and Lithuania and Latvia to the northwest. Belarus spans an a ...

, and Africa, including most notably

Nigeria Nigeria, officially the Federal Republic of Nigeria, is a country in West Africa. It is situated between the Sahel to the north and the Gulf of Guinea in the Atlantic Ocean to the south. It covers an area of . With Demographics of Nigeria, ...

and

Djibouti Djibouti, officially the Republic of Djibouti, is a country in the Horn of Africa, bordered by Somalia to the south, Ethiopia to the southwest, Eritrea in the north, and the Red Sea and the Gulf of Aden to the east. The country has an area ...

. CMG became active in

in 2010 with the acquisition of a 47.5% stake in the Tin Can Island Container Terminal in

Lagos Lagos ( ; ), or Lagos City, is a large metropolitan city in southwestern Nigeria. With an upper population estimated above 21 million dwellers, it is the largest city in Nigeria, the most populous urban area on the African continent, and on ...

. CMG became involved in Djibouti in 2013, when it acquired a 23.5% stake in the Doraleh container terminal. In January 2021, Djibouti and CMG signed a deal for the Chinese conglomerate to expand the

at a cost of $350 million. The development plan will follow the Shekou Zone model. In 2014, the Hong Kong media reported that the CCP's

Central Commission for Discipline Inspection The Central Commission for Discipline Inspection (CCDI) is the highest supervisory organ of the Chinese Communist Party (CCP). The CCDI is elected and supervised by the National Congress of the Chinese Communist Party, CCP National Congress. ...

was conducting a special investigation into CMG, along with several other SOEs, on corruption claims. In January 2024, BAR Technologies signed a deal with China Merchant's CM Energy Tech (CMET) to manufacture, supply, and sell BAR's WindWings wing sail for installation on new and existing vessels in China and throughout Asia. The WindWings system with route optimisation system saves up to 1.5 tonnes of fuel per sailing vessel per day. This reduces daily

carbon dioxide Carbon dioxide is a chemical compound with the chemical formula . It is made up of molecules that each have one carbon atom covalent bond, covalently double bonded to two oxygen atoms. It is found in a gas state at room temperature and at norma ...

emissions by 4.9 tonnes, accelerating the

decarbonisation Climate change mitigation (or decarbonisation) is action to limit the greenhouse gases in the atmosphere that cause climate change. Climate change mitigation actions include conserving energy and replacing fossil fuels with clean energy sour ...

of the Chinese shipping sector. China Merchants Energy Shipping (CMES) has ordered four methanol dual-fuel car carriers, two kamsarmax bulkers and two multipurpose carriers for $508 million in 2023. Deliveries are expected in 2025-26.

House flag

House Flag of the China Merchants Group (1872 - 1873).svg, 1872-1873 House Flag of the China Merchants Group (1873 - 1942).svg, 1873-1942 House Flag of the China Merchants Group (1942 - 1951).svg, 1942-1951 (- 1972 in Taiwan) House Flag of the China Merchants Group (1951).svg, 1951-1984

Structure

China Merchants Group Limited owns 12 main subsidiaries across its core business sectors, employing 230,000 people: * China Merchants Ports Holdings Company Limited (CMPort) * China Merchants Finance Holdings Co., Ltd (CMF) * China Merchants Energy Shipping Co., Ltd (CMES) * China Merchants Industry Group Co., Ltd (CMI) * China Merchants Hoi Tung Trading Company Co., Ltd (CM Hoi Tung) * China Merchants Investment Development Co., Ltd (CMID) * China Merchants Shekou Holdings (CM Shekou) * China Merchants Expressway Network & Technology Co., Ltd (CMET) * China Merchants Logistics Holding Group Co., Ltd (CML) * Zhangzhou China Merchants Economic and Technological Development Zone (CMZD) * China Merchants Chongqing Communication Research and Design Institute Co., Ltd (CMCT) * China Merchants Venture Capital Management Co., Ltd

Notable subsidiaries

* China Merchants Capital * China Merchants Energy Shipping *

China Merchants Port China Merchants Port Holdings Company Limited () is a major conglomerate based in Hong Kong and is involved in a range of businesses such as port operations, general and bulk cargo transportation, container and shipping business, air cargo, log ...

* China Merchants Property * China Merchants Securities Company *

Ping An Insurance Ping An Insurance known also as Ping An of China (), full name Ping An Insurance (Group) Company of China, Ltd. is a Chinese financial services holding company whose subsidiaries provide insurance, banking, asset management, financial services. ...

Wing Lung Bank CMB Wing Lung Bank (; former stock no: ) is a bank based in Hong Kong. As of December 2018, the bank has 35 branches in Hong Kong, 4 branches in mainland China, 1 branch in Macau and 2 overseas branches, located respectively in Los Angeles and Sa ...

Notable projects

Port of Djibouti

Controversy surrounds the way in which CMG acquired the 23.5% stake in the Doraleh terminal. CMG was sold the stake after Djibouti's government seized the facilities from Dubai-based port operator DP World, co-manager of the facilities since a concession agreement in 2004. One year later, CMG got authorization to construct another port facility, the Doraleh multi-purpose port located within the Chinese military support base. This coincided with Djibouti and CMG establishing the International Free Trade Zone. In 2018, Djibouti terminated DP World's concession rights, nationalized its shares in the terminal and handed them on to China Merchants Group. Although the Djibouti government has stated it alone controls the port, media reports indicate that CMG is directing day-to-day activities. DP World sued CMG in 2019 in Hong Kong for allegedly causing Djibouti to revoke its concession rights. The

London Court of International Arbitration The London Court of International Arbitration (LCIA) is the oldest arbitral body in the world dealing with international disputes. It was founded as a British private company limited by guarantee with a head office in London. It offers dispu ...

ruled in 2020 that Djibouti's actions constituted a breach of contract and ordered Djibouti to return the concession to DP World, but the country rejected the ruling. Thus far, there have been seven rulings in DP World's favor in the matter, most recently in July 2021, all of which have been rejected by the Djibouti government.

Hambantota Port development

CMG's development of Sri Lanka's Hambantota port is considered part of the

. Proposals for developing port preceded the BRI, however. The Sri Lankan government proposed the project, and contracted with CMG to develop it in 2010. In 2017, Sri Lanka approved an agreement with CMG regarding the Hambantota port, according to which the company would take a majority stake in the port, in exchange for debt forgiveness. This had caused concern that the facilities could be used for Chinese military vessels and that such a large-scale transfer of land could adversely impact

Sri Lanka Sri Lanka, officially the Democratic Socialist Republic of Sri Lanka, also known historically as Ceylon, is an island country in South Asia. It lies in the Indian Ocean, southwest of the Bay of Bengal, separated from the Indian subcontinent, ...

's national sovereignty. As of 2018, the port was being referred to as a "Chinese colony" by critics and described by them as "debt diplomacy", because CMG provided $1.1 billion in funds to the highly indebted government for the port in exchange for an 85% stake and a 99-year lease. This allowed China to gain a geostrategic foothold in close proximity to India, one of its main rivals in the

Indo-Pacific The Indo-Pacific is a vast biogeographic region of Earth. In a narrow sense, sometimes known as the Indo-West Pacific or Indo-Pacific Asia, it comprises the tropical waters of the Indian Ocean, the western and central Pacific Ocean, and the ...

India India, officially the Republic of India, is a country in South Asia. It is the List of countries and dependencies by area, seventh-largest country by area; the List of countries by population (United Nations), most populous country since ...

, as well as to important commerce and military waterways. Writing in 2023, academic and former UK diplomat Kerry Brown states that China's relationship to the Hambantota port has become the opposite of the theorized debt-trap modus operandi. Brown observes that China has had to commit more money to the project, expose itself to further risk, and has had to become entangled in complex local politics.As of 2024, the port has not been a significant economic success, although shipping through the port is on the increase.

References

External links

* {{authority control 01 Conglomerate companies of China Holding companies of China Shipping companies of China Government-owned companies of China Conglomerate companies of Hong Kong Holding companies of Hong Kong Holding companies established in 1872 Financial services companies established in 1872 Transport companies established in 1872 Chinese companies established in 1872 1872 establishments in Hong Kong Shipping companies of Hong Kong