Annual Report 2019

Management Discussion and Analysis 28 CHINA MERCHANTS PORT HOLDINGS COMPANY LIMITED economic and trade frictions, the “Phase One Economic and Trade Agreement” signed by the US and China will help boost confidence in the global market and hence stabilise market expectation. It is worth noting that, although the outbreak of the novel coronavirus pneumonia epidemic will bring short-term impact to the Chinese economy, it shall not be overlooked that many production and consumption may be shifted to other quarters, and that will usually result in a retaliatory rebound of the economy. Meanwhile, the increase in finance expenses and social donation due to this epidemic will be translated into the income of the related industries upon successful execution, which will be conducive to the recovery of the economy under multiplier effect. As such, the impact from the epidemic will be limited on the Chinese economy in the mid-to-long term. In 2020, container shipping market will be benefitted from disciplined growth of shipping capacity, but face the uncertainties arising from the global pandemic at the same time. With the epidemic being gradually brought under effective control in China and enterprises resuming production in an orderly manner, China’s container shipping market has recovered rapidly and the business volume of ports recorded a significant rebound. During the year, the demand for seaborne freight volume on the major East- West routes is expected to have some recovery, benefitted from favourable factors such as the de-escalation of the US- China trade friction, and the growth rate of seaborne freight volume on the non-major East-West routes and the South- North routes will experience some rebound. Based on the above analysis and judgment, in 2020, firmly adhering to the strategic principle of “leveraging on its long- term strategy, tapping the current edges, driving through technology and embracing changes”, the Group will consistently develop new approaches to promote sustainable and high-quality development with a focus on maintaining growth, improving quality and efficiency, enhancing capability, promoting reforms, strengthening innovation, controlling risks and attracting talents, striving to “be a world’s leading comprehensive port service provider”. Regarding the development of homebase port, the Group will strive to establish world-class leading ports. In the West Shenzhen Port Zone, the Group will strengthen its marketing and commerce, in tandem with the optimisation of channels and other resources, to actively expand ocean-going routes, promote paperless waterborne customs transit and improve its feeder services, developing a strategic platform for the West Bank of the Pearl River Delta. Besides, the Group will establish an innovative intelligent corridor connecting Mawan Container Terminal and Haixing Intelligent Port. CTOS will be upgraded with the standardised operation systems, servers and databases to support automation and intelligentisation, as well as the introduction of big data and cloud storage. To support the transformation plan of Haixing Port, the Group will complete the delivery and acceptance of section II and III of the Public Channel outside the West Shenzhen Port Zone, realise regular night services of Tonggu Channel and expedite the construction of phase II of the navigation channel of the West Shenzhen Port Zone. In terms of the overseas homebase ports, CICT will be committed to optimising the customer structure, continuing the analysis of customer value, and adopting corresponding business strategies. In addition, based on the development strategy of Hambantota Port, its synergistic business development with CICT will be promoted. It will also consummate the incentive mechanism for technological innovation by encouraging the participation of all staff to extend sources of innovation. Hambantota Port will develop its container business, oil and gas business and maritime services, and as well as the induction of business and investment for the port’s logistic park. As for overseas expansion, the Group will step up its efforts in building overseas leading ports. Based on the overseas layout of “East-West routes, South-North routes, the Belt and Road”, the Group will work diligently on the overall planning of overseas development. It will strengthen the research on various regional segments of the global market to proactively capture investment opportunities in the emerging market overseas. The Group will strengthen its marketing team, and devote more efforts in market development. Moreover, the Group will improve its management by further promote the establishment of a quantitative management system to enhance the performance and efficiency of its operation management. The Group will also foster overseas expat talents with improved system of performance assessment and incentive mechanism. In respect of comprehensive development, the Group will deepen the promotion of the “Port-Park-City” model. The Group will capitalise on the opportunities arising from industries upgrade and migration to realise the value extension of its core port operation and deeply explore its