Taiwan's Air and Shipping Firms to Unload Stakes in China's Yangtze River Express

Taipei, Aug. 25, 2010 (CENS)--Three Taiwanese air and shipping firms, namely China Airlines Ltd., Yang Ming Marine Transport Corp. and Wan Hai Lines Ltd., have jointly announced a move to gradually dispose of their stakes in a China-based cargo carrier, Yangtze River Express Airlines Co., Ltd., by the end of 2012.

The three firms together spent over RMB600 million acquiring part of stakes in Yangtze River Express in January, 2006, with China Airlines possessing a 25% stake at RMB310 million, Yang Ming 12% or RMB 150 million and Wan Hai 6% or RMB75 million. In addition, China Container Express Lines, owned by Wan Hai's founder, also bought a 6% stake of the Chinese firm then.

Yangtze River Express, founded in 2002 with paid-in capital of RMB500 million, has owned a fleet of 12 airplanes and operated freight services.

However, following four years of operation, the three Taiwanese firms have decided to withdraw from the reinvested Chinese company this year, making their counterparts quite surprised, especially when Taiwanese enterprises have eagerly moved to invest or cooperate with local partners in China after the signing of ECFA (Economic Cooperation Framework Agreement) between the two sides.

China Airlines explained that the reinvestment in Yangtze River Express at that time was mainly designed to secure them an access into China's huge domestic market for transport services. But, with regular cross-strait direct flights between Taiwan and China officially launched last year, the firm has been permitted to operate 61 cross-strait direct flights and 8 all-cargo flights every week and has expanded its routes in China presently, making the reinvestment no longer necessary now.

According to the three firms' announcement, China Airlines and Yang Ming will each dispose of an 8% stake in Yangtze River Express while Wan Hai will dump all its stake this year, with every 1% of the stake to sell for RMB12.5 million, the same as their buying price. Noteworthy is that the divestment will bring about exchange profits to them, for the current RMB exchange rate against U.S. dollars has risen to 1:6.7 now from 1:8 four years ago, when they made the reinvestment.