Source: China AGLOOK!

On May 14th, 2017, China will hold the “One Belt, One Road” Summit Forum. As the pacesetter of “One Belt,One Road”, China Merchants has become a shareholder of Djibouti Port and finished the landing of Djibouti International Free Trade Area Project successfully, thus placing a solid basis in Africa and providing more hopes to all African businessmen.

1. The first landing pilot project of “Silk Road Station” - China Merchants has become a shareholder of Djibouti Port and will extend the port’s building.

The Djibouti Project is China Merchants’ first landing pilot project to comprehensively develop its overseas markets and proceed the “Silk Road Station” construction, as well as the major innovation of “Cruise development - Industrial park development - City development” mode, having an important landmark and milestone significance to the implementation of the group’s overseas strategic. It is very possible to be a demonstration project of the early harvest of “One Belt, One Road”, international industrial capacity cooperation and China - Africa cooperation.

On February, 2013, China Merchants participated the reform of Djibouti Port Project by its wholly-owned subsidiary, Merchants Holdings (Djibouti) Co.,Ltd and bought 23.5% shares of Djibouti Port Co., Ltd.

Since China Merchants has been a shareholder, the workers at the port is relatively stable. Under the condition that the local employment is assured with no dismissing employees, it also shares more development achievements with Djibouti. The salary of the workers at the port is increased stably. Since 2013, PDSA has paid a total sum of about 35,000,000USD for its corporate income tax and business tax, becoming an important source of Djibouti government’s tax revenue. In 2016, it is estimated that 10,120,000 USD has been paid for the tax of the Djibouti Harbor business, increasing about one time compared with that in 2013 of 5,060,000USD.

The Djibouti Harbor is located in the center of Djibouti city. The port facility has aged and the natural conditions are no longer suitable for the ship large - scale trend. There are prominent contradictions between the port production and city development. At the early stage when China Merchants became a shareholder, the Djibouti government was planning to extend the old port with its throughput capacity to be increased by 20%. The Djibouti investment and promotion team came up with a suggestion to build multi - function wharf in Doraleh area of Djibouti and carry out the commercial updating to the current old port. Now the concept planning to the old port has been completed. The old port renovation project is to be promoted actively.

To assure the operation need of the Djibouti new port, China Merchants Shenzhen West Port Zone established a China - Djibouti Port Training Center for training the management personnel, operators and drivers in DMP new port to cultivate the operation management qualified personnel for the port construction.

Look forward to the future of DMP new port construction operation, a new chapter to the Djibouti port development and the fresh impetus to the construction of the shipping center in East Africa area. Under the guidance of the national “One Belt, One Road” strategy, the workers in China Merchants will bring the rich experience of  China Merchants to the Djibouti port construction, thus adding new vigor to the development of Djibouti port ! 

2. The “Djibouti International Free Trade Zone Project” of China Merchants has been landed ceremoniously.

After being the shareholder of Djibouti port successfully, China Merchants carried out the development mode of “Cruise development - Industrial park development - City development” step by step in Djibouti. Only within 1 year, it has finished the landing of Djibouti International Free Trade Zone Project successfully with the cooperation with DPFZA(Djibouti Ports &Free Zones Authority).

On January 16th,2017, the guests from more than 10 countries and the Djibouti politicians gathered together to celebrate this historic moment: The project of Djibouti International Free Trade Zone has been started! The cheerful songs echoed the city’s sky. It just takes 1 year since the signature of the framework agreement to the starting of the construction.

The planning area of Djibouti free trade zone is about 48.2 square kilometers, in which 6 square kilometers for the first stage of this project and 2.4 square kilometers for the beginning area and it mainly includes the trade logistic park and the export processing zone. In the investment agreement, the Djibouti government not only gives permission of the development of the most valuable offshore resources and land resources around Djibouti port to the Chinese companies presented by China Merchants, but also provides the most attractive preferential policies among the same kind of parks.

It is worth mentioning that Djibouti government specially promulgated a presidential decree for Free Trade Area Project and promised to amend the present related laws for FTA. It just takes one year from an intention to the landing of such a major negotiation. If there is no mutual sincere cooperation and long-term consensus between the two parties, it will be difficult to realize this.

 By the cooperation with Djibouti Port and the negotiation of FTA project, China Merchants has been highly trusted by the Djibouti government and the Djibouti people. Their president and several ministers said in several occasions that they feel that China is different from the previous countries, not coming to colonize or seizing the benefit, but sincerely for the development of Djibouti.

3. The development strategy of China Merchants.

1). The strategic significance of Djibouti port

Djibouti is located at the intersection of several continents and the throat fortress of Mand Strait. It is the only way for Ethiopia’s shipping. Its strategic position is prominent. The hinterland economic growth advantage is obvious.

After the president of Djibouti has visited Shekou, he said that today’s Djibouti is just like the Shekou years ago. By fully making use of Djibouti’s geopolitical advantages, he hopes to create Djibouti from a poor, backward and small country to be a regional shipping center, logistics and trading center and financial center, thus building into the “Shekou in East Africa”.

In 2016, affected by the strongest El Nino phenomenon in history, Ethiopia suffered the the worst drought in thirty years, leading to bad harvest. There are millions of people needing the emergency food assistance. Since Djibouti Port is Ethiopia’s main seaport for entry and exit, the precious food by the international assistance need to be delivered through Djibouti Port to the disaster areas in Ethiopia as soon as possible. Due to the hard - working of Djibouti Port people and the active cooperation of each party, the key times were seized and the food and supplies were brought to Ethiopia in time to resist the severe natural disaster. They were highly praised by Ethiopia.

This indicates Djibouti Port’s important strategic significance to Ethiopia. As Ethiopia’s main seaport for entry and exit, Djibouti Port is very important for the export of Ethiopia’s products. DECX platform also knows very well about the important significance of Djibouti Port‘s geographical position, so it cooperates with China Merchants to build a Djibouti Bonded Warehouse Project in Djibouti, thus laying an important foundation for the successful export of Ethiopia sesame, as well as making an important step for building a standardized trading platform & pricing center of spot goods and futures of global small - scale agricultural products and realizing the integration of the whole industrial chain.

2). With the help of the “One Belt, One Road” policy, China Merchants establishes the “Djibouti Bonded Warehouse”

China Merchants put forward a four - wheel - drive development strategy. These four wheels include innovation development, One Belt & One Road, merger & reorganization and Internet plus. Innovation development is an important wheel of China Merchants’ four - wheel drive strategy in the 13th five-year development strategy, under the lead of which the “One Belt, One Road” policy has been implemented rapidly.  

In order to respond to the “One Belt, One Road” policy put forward by China and expand the overseas layout, China Merchants became a shareholder of Djibouti Port, and later worked with DPFZA(Djibouti Ports & Free Zones Authority) to finish the landing of Djibouti International Free Trade Zone Project, representing the concrete implementation of the “One Belt, One Road” policy and having the milestone significance to the landing of the group’s overseas strategy. This project is expected to become the demonstration project of the early harvest of “One Belt, One Road” policy, international capacity cooperation and Sino - African cooperation.

4. China Merchants “4+N” financial layout to establish a dynamic financial & service platform in Djibouti

China Merchants put forward the “4+N” financial layout by mainly relying on the subordinate finance companies of China Merchants such as banks, security, insurance, fund, etc., aiming at establishing a comprehensive financial services platform of full function and full financial license. These layouts have significantly enhanced the group’s comprehensive strength and core competence.

5. China Merchants develops new modes, with comprehensive integration for development

The primary launch of China Merchants’ three main platforms and the “3S” system open the new development mode of the group. In the 13th five-year plan, China Merchants proposed transforming the business to the three main platforms and the management & control to the “3S”, which is the major reform of its business and management & control mode. In 2016, all staffs in the China merchants worked and thought on the basis of the three main platforms and the three main platforms awareness has been increasing.

In 2017, China Merchants come up with a plan of actively promoting the strategic transformation. Grasping the features of the new round of industrial transformation, taking advantage of the internet to break through the “bottle neck” of traditional industries and stimulating new vitality of the traditional industry are all key points for the group’s innovation and transformation. Therefore, the group’s general direction of innovation and transformation can be summarized as one formula, which is “(Products + Services) * Internet = Industrial Internet and two basic ways, which are cross-border integration and integrated innovation.    

China Merchants is a comprehensive enterprise with diversified businesses, mainly covering three core industries, which are transportation(including port, road, shipping, logistics, marine industry, trade), finance(including bank, security, fund, insurance) and property(including industrial zone development and real estate), and it is turning from the three main industries to three main platforms, which are industrial operation, financial services and investment & capital operation.