CHOPPY WAVES

Chi­nese ship­builders will have a bleak out­look by 2020

China Daily (Hong Kong) - - FRONT PAGE - By WANG YING in Shang­hai wang_y­ing@chi­nadaily.com.cn

Chi­nese ship­builders will have a mixed out­look by 2020 with only one-third of them mak­ing a suc­cess­ful trans­for­ma­tion and another third fac­ing clo­sure or merg­ers, ex­perts said.

Al­though the global ship­build­ing in­dus­try has started to pick up since the be­gin­ning of the year, many of them are still find­ing it dif­fi­cult to es­cape the in­dus­trial down­turn. Even those with or­ders in hand are strug­gling to make a profit, said Zhang Shengkun, pres­i­dent of the Shang­hai So­ci­ety of Naval Ar­chi­tects and Ma­rine Engi­neers.

“I think one pre­dic­tion is re­li­able: It says by 2020 only one- third of do­mes­tic ship­builders will sur­vive the in­dus­try down­turn by mak­ing a suc­cess­ful trans­for­ma­tion, with one-third ei­ther shut­ting down or merg­ing with oth­ers, and with the re­main­ing onethird go­ing out,” Zhang said on Mon­day.

“When I said ‘go­ing out’, I mean two dif­fer­ent end­ings. One is to de­velop a ship­build­ing busi­ness over­seas, while the other is mov­ing into other sec­tors,” he added.

Ac­cord­ing to data com­piled by Lon­don- based mar­ket re­searcher Clark­son Re­search Ser­vices, Chi­nese ship­build­ing com­pa­nies gar­nered 11.68 mil­lion com­pen­sated gross tons in the first three quar­ters, an 83.4 per­cent surge from a year ear­lier and ac­count­ing for 38.6 per­cent of global new or­ders dur­ing the pe­riod.

But all the or­ders have been awarded to 69 ship­yards, im­ply­ing that the re­main­ing 80- plus ship­builders are with­out work and many of them have stopped pro­duc­tion, Zhang said.

This com­plies with an ear­lier re­port that said only about 50 to 55 per­cent of the na­tion’s ship­build­ing ca­pac­ity was used in the first three quar­ters of this year, down about 20 per­cent­age points from 2012.

Bao Zhangjing, di­rec­tor of the China Ship­build­ing In­dus­try Re­search Center, es­ti­mated up to 30 per­cent ca­pac­ity will be cut by 2015 com­pared with 2011.

Au­thor­i­ties are study­ing mea­sures to en­cour­age merg­ers and ac­qui­si­tions within the ship­build­ing in­dus­try to al­le­vi­ate ex­cess ca­pac­ity while help­ing com­pa­nies be­come stronger, ac­cord­ing to the Na­tional Busi­ness Daily, cit­ing an un­named source.

The in­dus­trial out­look has at­tracted a num­ber of lead­ing do­mes­tic ship­builders to shift their core busi­ness into high­end mar­itime engineering.

The to­tal trans­ac­tion vol­ume of the global mar­itime equip­ment in­dus­try reached $44.5 bil­lion in the first three quar­ters of this year. The whole year is ex­pected to ex­ceed $60 bil­lion, the Se­cu­ri­ties Daily re­ported.

But Zhang said ev­ery com­pany should make tran­si­tions ac­cord­ing to their own back­grounds and ad­van­tages. “Mar­itime engineering re­quires tech­nol­ogy, cap­i­tal and a so­phis­ti­cated in­dus­trial chain. Those lack­ing thor­ough re­search and in­ves­ti­ga­tion into their own strengths are not en­cour­aged to leap to such a high thresh­old in­dus­try,” he said.

LIU JUNFENG / FOR CHINA DAILY

A ves­sel un­der con­struc­tion at a ship­yard in Yichang, Hubei prov­ince. Even those ship­builders with or­ders in hand are strug­gling to make a profit.

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