SOE reform offers route to greater efficiency

A mega-merger in China's tourism sector marks the latest step forward in the country's drive to improve the efficiency of its bloated State-owned enterprises. China International Travel Service Group Corp is now a wholly owned subsidiary of China National Travel Service (HK) Group Corp, the State-owned Assets Supervision and Administration Commission said in a statement earlier this week.

The marriage of the two former competitors will allow for higher SOE efficiency, larger market share and better profit performance of State-owned assets, said Shen Meng, executive director of Chanson Capital, a boutique investment bank.

The new entity, which will register revenues of at least 52 billion yuan ($7.8 billion) and assets of at least 116 billion yuan, will become "one of the largest travel service companies" in China, offering diversified products and services, said Lu Chenyi, a Moody's vice-president and senior analyst.