It is reported that China's shipbuilding industry's revitalization plan has been drafted following the release of support plan for auto industry and is to submit to the State Council for approval.
It is reported that China's shipbuilding industry's revitalization plan has been drafted following the release of support plan for auto industry and is to submit to the State Council for approval. One principal in Zhejiang Development and Reform Commission said that it will strictly control the approval of new ship units and expanding projects in light of the current market downturn.
Mr Zhang Guangqin chairman of China Shipbuilding Association said that the revitalization plan for the sector covers a series of policies arranging from interior demand expanding, finance, tax and scientific research and mapped out a detailed development trend for China's ship industry in the coming 3 years.
China will establish development fund and financing & chartering company for the sector to ensure key shipbuilders orders completion and delivery. More Science and technology investments would be earmarked to help key enterprises' industrial upgrading and encourage mergers & acquisitions.
As the third largest shipbuilding country in the world, China is suffering the huge orders losses, leaving the ship producers into the hardest time in the history. Shipyards in Zhoushan, renowned as the City of Shipbuilding in China, are quiet with many ships unfinished at the moment, the traditional hot time for the sector.
An official said that domestic shipbuilding mills can hardly secure new orders after 2011 due to the contract suspension of European shipping industry impacted by the world financial crisis. So far, most Chinese shipbuilders have seen their delivery time extending to 2010. That means the international competition will be fiercer in days to come and the strong one will survive from the competition, while those inefficient ship-makers are set to be washed out.
According to the statistics from Singapore Pacific Basin Shipping Limited in early 2009, there are 382 new ship orders have been cancelled worldwide and China takes up half of the contract default, or 20 million DWT. Zhoushan COSCO, the subsidiary of Singapore COSCO Corporation has received cancellation for four ships and delaying requests for delivery for 12 vessels within one month.
A senior insider said that China's shipbuilding industry has expanded blindly before 2008 and the market downturn has helped squeezing out the bubbles in the sector. Only in Zhejiang province, there are nearly 2,000 private shipbuilding mills and the repeated construction can be seen everywhere with shrinking profits.
Compared with Japan and Korea, China owns cheap but high quality labors and rich land resources. Besides, the industry also enjoys the 17% export tax rebates, which help ensure the profit margin in the sector. As per the relevant surveyed statistics, the market shares of Chinese ship completion, new contracting tonnage and new building order books account for 19%, 42% and 28% of the world's total volume respectively in the first half of 2008, ranking the second all over the world.