China Ocean Shipping Company (COSCO) has announced it had bought China Ocean Shipping Tally Company ( COSTACO), in a move expected to increase the competitiveness of the country's largest shipping firm, China Daily reported on April 9.

The merger is seen as a big step in China's State-owned enterprises (SOEs) reform because COSCO was on the central government's list of 30 to 50 promising large SOEs, which are being strengthened to tackle global competition, the daily said.

COSCO president Wei Jiafu said "the merger has extended our business chain and also made us both more competitive." He said COSTACO, the country's largest shipping tally company, has become a subsidiary of COSCO, the world's second largest shipping company in terms of capacity.

Wei, whose company yielded a net profit of 12 billion yuan (about 1.4 billion US dollars) in 2004, promised the merger would not lead to job losses at COSTACO, which has 70 branches nationwide and more than 7,000 employees.

COSTACO said it would benefit from the merger by sharing the business network of its new parent firm, which already has 25 subsidiaries.

The takeover on April 8 dropped the number of large SOEs under the State-owned Assets Supervision and Administration Commission of the State Council from 178 to 177.

China started speeding up SOE reform in the early 1990s and now the government is focusing on improving efficiency and global competitiveness, especially after China entered World Trade Organization.

Wei said that the overall shipping capacity of the company's container carriers will rise to 800,000 TEUs (twenty-foot-equivalent unit) by 2010 to enter the world's top three. It now ranks the seventh in the world, says the newspaper.