A Public Sinotrans

By Matt Flynn

Investors have embraced the listing of Sinotrans Ltd. as a proxy for the bonafide exuberance of mainland Chinese cargo growth, while in turn the mainland logistics firm sees the discipline of a stock market listing as an avenue to greater corporate efficiency. The China dream so very often embraced by fortune seekers has a tangible vehicle in trade growth, which has exceeded 30%. This rate across all cargoes will likely slow, but would still easily achieve 15%, or about twice the global average. The stock market reception from investors has been strong, but not exuberant and this may be exactly what Sinotrans Ltd needs. In the months before the listing, a senior Sinotrans executive in Hong Kong told this correspondent that the most important feature of getting the company hammered into shape for a stock market listing was the simple performance benchmark from the earnings statements. This would drive the restructuring into a more streamlined and profit oriented corporation ready to face the onslaught of competition unleashed by World Trade Organisation ascension.

The greatest challenge facing China’s large state owned enterprises is getting the far flung offices to use the regional resources to the best benefit of the head office. COSCO and China Shipping have both gone through this process and although much of Sinotrans’ less productive inland offices and warehousing has been stripped out, now it is Sinotrans’ turn to reverse the commercial devolution and fragmentation inherent in a matured socialist business structure.

In other words, the market gets what it wants in terms of a plausible China play, while Sinotrans enjoys the self-discipline demanded by Western style corporate accounting.

This is only an excerpt of A Public Sinotrans

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