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| ¡¡Analysis on primary influences, risks and opportunities of sustainable development |
| ¡¡1. Analysis on primary influences of sustainable development |
| Currently, among China's total foreign trade of imports and exports, shipping accounts for over 90% of the total shipment of the seaborne trade. COSCO as a pioneer of Chinese shipping industry dramatically boosts the development of national economy and foreign trade, provide guarantee for the transportation of China's important materials including energy and resources thus ensuring the state's economic security. It also greatly upgrades China's ability and position in the course of participating in the international maritime affairs. China is rated the A-class member of UN International Maritime Organization for 9 times in a row, participating into the formulation of the world's maritime rules and the decisions of the international maritime affairs to play an important role in the international shipping arena.
COSCO's development has positive and active effect on promoting the prosperity of the world economy and trade. Ships and containers with COSCO log sail over 1,500 ports in more than 160 countries and regions, like building many highly efficient bridges for the development of the world economy and trade.
COSCO's core business is to constantly organize and utilize the global shipping and logistics resources to provide high-quality global shipping and modern logistics services for global customers. COSCO is focusing on sharpening the comprehensive competitiveness of several vessel fleets including containership, dry bulk carrier, tanker and specialized cargo carrier in a horizontal perspective, while improving the competitiveness of the supply chain integration extending from the shipping to two-end logistics, terminals and ship-building/ship-repairing. COSCO's development has important impact on promoting the stable development of the global logistics supply chain and industry chain.
By constantly improving the competitiveness of its shipping business, COSCO expands the modern logistics fields, build up the core capability to surpass competitors and pursue the goal of maximizing the enterprise benefits, employee value and return to shareholders.
COSCO has committed itself to creating a stage for employees to show off their talents and realize their dreams, while giving all employees the returns matching their contribution to the company.
As an international shipping company, COSCO exposes high security and environmental protection risks as well as the heavy social responsibility. As a result, COSCO is speeding up building a resource-efficient and environment-friendly enterprise.
Generally, as a spearhead of China's shipping industry and global shipping group, whether COSCO can achieve the sustainable development is of great significance and has important impact on the domestic and international trade development, shareholders, employees, customers and partners, industry, society, environment and others. |
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| ¡¡2. Analysis on primary risks and opportunities of sustainable development |
From an external perspective, the risks and challenges exposed to COSCO in sustainable development is mainly that COSCO is facing an environment featuring stronger uncertainties, more substantial changes and bitter competition, e.g. the uncertainties of the development trends of the global economy and trade; the cycle of the development of the shipping logistics industry; drastic shock of the global capital and financial markets; high price of resources and energy; rising cost of security and environmental protection. Inappropriate disposal will lead to material risks and challenges to COSCO's sustainable development.
From an internal perspective, the biggest and the real risks or challenges exposed to COSCO in sustainable development lie in how to establish a stable and sustainable operation model that will not substantially fluctuate with the drastic fluctuation of the market. COSCO should make efforts to build such operation model. When the market conditions are favorable to the development, COSCO can achieve the profitability better than the market average; when the market conditions are unfavorable, |
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COSCO is still able to maintain the stable profitability. In this way, COSCO can ensure the more stable operation efficiency than other companies under the condition of drastic market fluctuations.
The essence of establishing a stable and sustainable operation model is to carry out the scientific concept of development and realize the comprehensive, harmonious and sustainable development for the enterprise. It has been proved by the experience of the international shipping development that it is hard to establish such model under the downturn. The unstable and fluctuating development model may be transformed into a stable and harmonious development model only by grasping the development opportunities when the market is bullish to implement the all-round reform and adjustment.
However, China, a place that brews up the miracles of economic development, provides significant opportunities for COSCO to speed up its development and successfully change the operation model. COSCO should grasp this opportunity to do well in the following three aspects: |
| Accelerate the strategic partnerships with VIP shippers to lay a solid foundation in procurement courses for establishing a stable and sustainable operation model. |
| Speed up the paces to enter the international and domestic capital markets to provide funds for the enterprise's development and propel the enterprise's ¨°mechanism restructuring and system optimizing¨®, thus laying a solid foundation in capital and system for establishing a stable and sustainable operation model. |
| Accelerate the adjustment and the optimization in such aspects as industry structure, asset structure, fleet structure and staff structure, thus laying a solid foundation in materials for establishing a stable and sustainable operation model. |
| ¡¡From a longer term perspective, a favorable trading and shipping logistics market environment in China and in the world as well as the approaching of the corporate citizen era will lay a long-term solid foundation in market and environment for COSCO to establish a stable and sustainable operation model. This is reflected in three aspects as follows: |
| ¡¡¡¡¡¡In terms of the world's economic and trade development, the world's economy and trade is expected to maintain stable and continual growth at least in the foreseeable early 21st century, namely in the first 30 years, which will provide the market space for the global shipping, logistics and related industries to seek stable development and continual expansion. |
| ¡¡¡¡¡¡The proposal of building a well-off society in an all-round way by 2020 will bring China into an important stage of continuing fast development and realizing the modernization, which fundamentally decides the growth speed and the size of the demands for China's shipping, logistics and related business and will provide the driver of constant development for China's shipping logistics enterprises for a long time in the future. |
| ¡¡¡¡¡¡The sustainability concept in the international community is being deepened; the corporate social responsibility campaign is in the ascendant; the corporate citizen era is approaching. In recent years, the Chinese government proposed establishing and carrying out the scientific concept of development, building a socialist harmonious society and building harmonious enterprises, which will necessarily provide a good public environment and constant development drivers for building a harmonious COSCO and a persistently growing COSCO. |
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| ¡¡3. Analysis on primary countermeasures for sustainable development |
| In order to achieve the sustainable development, COSCO should mainly focus on establishing a stable and sustainable operation model and make efforts to propel the following ¨°four transformations¨® at present and in the near future on a whole: |
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¡¡The first transformation is from periodical development to sustainable development. In order to avoid the long-term impacts of the market fluctuations, COSCO should transform from the periodical development to the sustainable development in terms of development method. With regard to the development content, COSCO should focus on the development of anti-cycle or no-cycle industries, including increasing the investment in terminal operation, energy-related or resource-related business, financial business and others. |
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¡¡The second transformation is from combination of software and hardware with hardware as the emphases to the combination of software and hardware with software as the emphases. Developing the hardware refers to expanding the asset size, while developing the software means adopting new business concepts and innovating the management thoughts. Only increasing the hardware investment while improving the software strength can COSCO reinforce the effect of the asset investment and the sustainability of development. |
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¡¡The third transformation is from possessing and controlling the resources to allocating social resources. In the recent years, COSCO unswervingly implement the strategy of "from owning to controlling", which has made good achievement. However, to be a "system integrator", COSCO needs to carefully research the development trends of the system integration theory, pay attention to allocating resources in the global perspective and the downstream and upstream industry chain perspective to become a distributor of social resources. |
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¡¡The fourth transformation is from obtaining benefits mainly from production business to obtaining benefits from both production and capital business. That means, further propelling the "two-pronged" balance strategy, striving to realize the effect of ¨°one plus one equals more than two¨® by making production business stronger and capital business bigger. |
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