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2015 has been quite officially set as the target for achieving leadership with a long-term strategy and reorganization of the industry. China wants its shipyards to claim as much as 50% of the entire global shipbuilding market by 2050. That is admittedly an extremely ambitious goal, but when you consider the bulging order books and the massive investments in existing and new shipyards, China looks all set to take the wind out of the sails of the other shipbuilding countries. There have recently been contradictory statements, however. Top-ranking representatives of the “Commission of Science, Technology and Industry for National Defence” have expressed the hope that China will be the leading shipbuilding country in 2020. Clarkson cites government circles as making similar announcements, the background to this probably being more realistic assessments that the Japanese and Korean competition are hardly likely to give up without a struggle and have also run up considerable overcapacities. It is worth noting that the output of Chinese shipbuilding overtook the entire production of the then 15 EU countries for the first time in 2004. The report of the classification society Germanischer Lloyd (GL) for the same year stated: “The Area China is still one of the fastest-growing markets for Germanischer Lloyd; with the order boom in newbuilding classification, the share of the vessels to be built at Chinese shipyards already accounts for about 15% of the world order level; according to experts, China will be the world‘s leading shipbuilding country by 2015. At the end of 2004, the order volume of Germanischer Lloyd in China doubled compared with the previous year to 239 vessels totalling approx. 3.4m gt, built at more than 30 yards; about 60 units (0.7m gt) were delivered with GL class.” The Chinese have colossal capacities with a staggering total of 645 shipyards – and that is counting only the yards that meet certain industrial standards. Chinese shipbuilders pro- duce vessels of almost all sizes, ranging from tankers to bulk carriers, containerships and Ro-Ro units and more sophisticated special-purpose vessels for the offshore sector According to experts, the sudden upsurge in newbuilding orders for Chinese yards particularly since the beginning of the new millennium with growth rates topping 30% in some cases is attributable mainly to the advantage of low wage costs compared with Japan and Korea. But capacity bottlenecks in the traditional shipbuilding countries have certainly also played a role. A combination of both of these factors has probably been responsible for the success of Chinese shipbuilding. It is also pointed out that many Chinese shipyards meanwhile also offer good quality and deliver on schedule. It has long since been impossible to defend the old prejudice that China can build only cheap standard ships that cannot be compared with western know-how and technology. China‘s restructuring programme and comprehensive investments have yielded dividends and contributed to the good quality of newbuilding production. It is stated that this applies not only for the newbuilding yards; there has also been enormous growth in capacities and orders in the repair segment. However, shipbuilding in China is still a sector of tremendous contrasts. It is true that To built large containerships for the international market is one of the objectives of the Chinese shipbuilding industry 6 there are very efficient shipyards, but there has also been no decline in the number of poor performers. Above all, there is the productivity level compared with Japan and Korea: although the Chinese have also made progress in this area, they still have a great deal of catching up to do. On the other hand, this offers the opportunity to expand capacities without having to invest substantially in infrastructure. Along with its aim of becoming the leader in global shipbuilding in the medium term, China puts just as much importance on creating an efficient marine equipment industry, initially mainly in the area of marine propulsion systems. Basically, shipbuilding in China, even outside the specified number of ship-
yards, is carried out wherever this is possible, i.e. close to the water. In the global market, however, shipbuilding in China is crucially determined by two large groups. These were established in 1999 under a decision made in July 1999 by the State Council to pool activities in a more effective form, decentralize decision-making paths, keep them controllable and put the industry generally on a more competitive basis. China State Shipbuilding Corporation (CSSC) and China Shipbuilding Industry Corporation (CSIC), each encompassing dozens of company shipyards, research institutes, repair companies, etc., were thus founded. The Commission of Science, Technology and Industry for National Defence (COSTIND) is responsible for the groups and the regulation of shipbuilding generally. Although these two conglomerates are still state groups under the direct control of the State Council, they have become far more independent in economic and operative terms. They integrate R&D, marketing and production. The aim is to establish some sort of competition between the two groups, despite their different focuses, in order thereby to promote cost-efficiency as well as innovations in products and production. Key decisions on, for instance, investment are taken by the management of each of the groups. The shipyards thus have no autonomy themselves, although there is less a competitive than a cooperative relationship between the yards of a group. The two groups were intended to account for about half of Chinese shipbuilding production, the other half being provided by shipyards commissioned by shipping lines as local companies belonging to provincial or municipal administrative bodies or even private firms. However, the two conglomerates still claim a market share of 60-70% and generally also have better equipped facilities. Both are attempting with different strategies to play more of a role in the market for large and high-tech ships. CSSC is responsible for shipbuilding in south China CSSC Group includes shipyards in south China focusing on Shanghai and Guangzhou. It unites a total of 52 companies: newbuilding yards, as well as repair facilities, mechanical engineering works and other marine equipment suppliers, not to mention 36 research and design centres, including Marine Design & Research Institute of China (MARIC) and Shanghai Merchant Ship Design & Research Institute (SDARI). The most important of the 25 yards of this group are Jiangnan Shipyard, the entirely new large shipyard Waigaoqiao Shipbuilding, Hudong-Zhonghua Shipbuilding active at three sites (to which Shanghai Edward Shipbuilding also belongs; the Hamburg company Hansa Treuhand has a 49% share in the latter), Guangzhou Shipyard and Shanghai Shipyard. The group has an overall workforce of approx. 95,000. Shipbuilding production focuses on the construction of merchant vessels of all types up to 300,000 tdw. Naval ships, offshore units and other specialpurpose vessels are also delivered. The A lot of Chinese Shipyards are specialised on bulk carriers group is particularly proud of having been commissioned to build the first LNG carriers in China. These will have a transport capacity of 147,000 cu m and are to be built at Hudong-Zhonghua in the large building dock of Hudong. The group also has, as mentioned, Jiangnan Shipyard in Shanghai, which calls itself the oldest Chinese shipbuilding company. Founded in 1865 at the time of Ching Dynasty, Jiangnan Shipyard with its about 10,000 employees is still one of the leading shipyards for the construction of merchant and naval vessels. The latest newcomer to CSSC Group is Waigaoquao Shipyard, which was established within an impressively very short time at a new location at the In the spotlight Yangtze river about 30 km from Shanghai on an area of l.44m sq m with a quay length of 1.1 km. Its two large building docks for ships of up to 300,000 tdw, equipped with 600t portal cranes, are in operation. Its first newbuilding, the 175,000 tdw bulker “CSK Fortune”, was already built in 2001-02 parallel to the construction of the yard itself. Meanwhile the second expansion stage is about to be completed, enlarging the overall area to 2.1m sq m. Production capacity is given at 1.8m tdw annually. One of the focal points of the production is offshore business with the construction of FPSOs and rigs. And an even larger shipyard located on the island Chingxin in the mouth of the Yangtze has been planned and is indeed already under construction. The “working name” of this yard is also derived from the name of the island. It will have a quay length of 3.7 km and four building docks for VLLCs and be put into operation in 2007. After what we have seen in China so far, this facility will probably be completed on schedule. In a second expansion stage, the number of VLCC docks is to be increased to seven and the quay length to 8 km. Annual capacity will then reach 8m tdw. Since this summer, however, concerns about the creation of overcapacities have been increasingly expressed in government circles. But this basically changes nothing to the ambitious expansion plans of the Chinese, although it cannot be ruled out that there could be delays for some of the new shipyard location projects. 7
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Page 21 and 22: Organization in China the customers
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