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Shift in the Global Status of Shipbuilding Industry and Future Strategies

Author Hong, Sungin Date 2015.02.10 Issue No 606

The recovery of the Japanese shipbuilding industry resulting from the chase of the Chinese shipbuilding industry and the low yen trend, and the deteriorated performance of the domestic large shipbuilding corporations, are raising concern. For this reason, this study strives to examine the competitive factors of the Korean shipbuilding industry and suggest the development directions for the industry.

From the mid-1990s to recent years, the market leader of the global shipbuilding industry has been rapidly changing from Japan to Korea to China in accordance with external conditions and the capacity and the strategy of leading enterprises.   

     When looking into the competition structure based on type of ship, Korea is focusing primarily on high value added ships such as large container ship, LNG carrier, offshore plant and tanker, whereas China and Japan are concentrating primarily on bulk carrier and tanker. 

 The shift in the status of major shipbuilding corporations in major countries indicates that the market share of the Korean shipbuilding corporations is in decline since it reached a peak in 2000 , whereas the share of the Chinese are being maintained while that of the Japanese industry is on the increase due to the low yen trend.  

When comparing the competitive resource among Korea, China and Japan, China which has a comparative advantage in the price factor, is pursuing the industry’s qualitative improvement. In case of Korea and Japan, two countries are comparable to each other in terms of the resources. However, differentiation factors of both countries are somewhat weak.    

The recent major issues in the shipbuilding industry are summarized as the sluggish offshore market caused by oil price decline, accumulated loss of small and medium-sized shipbuilding enterprises and  the operating profit loss of  the large Korean shipbuilding corporations, and the recovery of the Japanese shipbuilding industry resulting from the low yen trend. 

As countermeasures, it is necessary for the big 3 shipbuilding corporations to take the lead in differentiating offshore and high value added ship markets by strengthening the bases for engineering while it is critical for rest of the shipbuilding enterprises to differentiate their products from Chinese enterprises by targeting general purpose ship markets and strengthening the basis for the construction of eco-friendly ships.