Dramatic Growth of Chinese Shipbuilding and Offshore Industry and its Implications
|Author||Hong, Sungin||Date||2014.07.31||Issue No||595|
While most of Chinese key industries are sharply growing since 2000s, Chinese shipbuilding and offshore industry is also dramatically growing by 30% on an annual basis, recording the 1st rank in the major indices including shipbuilding tonnage since 2010.
●Although the industry is undergoing restructuring since the global financial crisis, its shipbuilding capacity surpassed that of Korea significantly as China completed the construction of big three shipbuilding complexes which were implemented as one of the national policy projects mainly led by CSSC and CSIC shipbuilding groups.
Although it was expected that the industry would be hit hard since the global financial crisis due to its massive expansion of shipbuilding capacity during the booming period, it overcome the hardships thanks to the Chinese government’s effort to create demand and provide financial support in an aggressive way.
●Notably, Chinese government announced the program to subsidize ageing ship scrapping, in December. 2013. The subsidy seeks to offer benefits to the upstream shipbuilding industry through the support for the downstream maritime sector, by induce ageing ship replacement with eco-friendly ship so to improve both the efficiency of maritime sector’s operation and the shipbuilder’ technology to construct eco-friendly vessels.
As Chinese government strengthened its support for offshore plant sector, the industry dominated the global Jackup Rig market in a short period of time, surpassing Singapore in 2013. It also rapidly entered the drill ship and FPSO market, outpaced Korea recently in terms of the orders.
Although inefficiency is being pointed out in the industry due to the confusion in the on-site management caused by strong restructuring while bulk carrier still accounts for a high ratio in the industry, it is expected to be qualitatively stronger once the restructuring is completed.
It is urgent for Korean shipbuilding and offshore engineering industry to differentiate shipbuilding, offshore plant and marine equipment, and develop high quality products which high value added technology is applied to
● Although It seems feasible that a few giant enterprises pursue the strategy to strengthen offshore engineering sectors, it is crucial to complement the reduced efficiency in commercial vessel sector and its partial gap, and vulnerable offshore supply chain resulting from strengthening the sector.