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Dalian, Yingkou fight it out over port business

Tuesday, 21 July 2015 | 11:00
Dalian and Yingkou, the two major port cities in China's Liaoning province, have been engaged in a competition that is hurting the local port business, which is set to see a controversial new harbor, the China Business News reported.

In the past two decades, Dalian, which once dominated in Liaoning with an 87.2% share in 1991, has been losing in its competition against Yingkou, the newspaper said.

In 2008, Dalian saw its market share drop to 38.9%, while Yingkou's grew to 42.5%. In addition, Yingkou's net profits grew 5.65% year-on-year to 540 million yuan (US$87 million) in 2014, but Dalian's dropped 23.67% to 521 million yuan (US$83.9 million), the newspaper said. Dalian's new harbor project in Taiping bay, therefore, is seen as the port city's efforts to attract cargo away from Yingkou.

Construction in Taiping bay began in October 2012 and the project, with a price tag of 200 billion yuan (US$32.21 billion), will create a new harbor that can handle 300 million tons of cargo per year by 2022.

However, industry insiders said there may not be enough cargo for the new port to handle when it is completed, since the six existing ports in Liaoning have already created an over-capacity.

Liu Bin, director of the World Economic Research Institute at Dalian Maritime University, said that the Taiping bay project requires heavy investment for a long period of time before it will see a return, because of the lack of heavy industry in the area and the lack of a clear positioning of the port.

An executive of the operator of Dalian Port also admitted that the company's efforts to attract business to the Taiping bay area have not seen good results.

According to the newspaper, Yingkou and Dalian share the same source of cargo from northeast China and the eastern part of Inner Mongolia. The harbor in Taiping bay will cut the distance between Dalian and these regions by 100 kilometers.

But Liu added that the port business is no longer about the amount of cargo handled but about creating added value for industry.

The newspaper also said the project has not received regulatory approval, which has been confirmed by officials at Dalian port. One executive said the project has not been approved because of issues regarding the preservation of spotted seals that live in the area.

The return on assets of Dalian and Yingkou, which stood at 3.09% and 4.85%, respectively–lower compared with Shanghai's 9.2% and Tianjin's 6.99%–also shows that the competition is hurting the business of ports in Liaoning, the newspaper added.
Source: WantChinaTimes
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