China’s Shipbuilding Industry, 2013-2017

Shipbuilding industry is a heavy industry undertaking the design, construction, maintenance and testing of various military and civil ships and producing the ancillary equipment.

The shipbuilding industry is a modern comprehensive industry providing technical equipment for industries such as water transportation, marine development and national defense construction, which is also a labor, capital and technology-intensive industry. It plays a relatively strong leading role in the development of upstream and downstream industries such as mechanic & electronic, steel, chemical, shipping and marine resource exploration & exploitation, which is of great significance for promoting labor employment and developing export trade. With abundant labor resources, sound industrial systems and long coastlines suitable for shipbuilding, China possesses relatively strong comparative advantages in the development of shipbuilding industry. Meanwhile, the rapid growth of China's foreign trade also provides relatively good development opportunities for the shipbuilding industry. China's shipbuilding industry is expected to become one of the most internationally competitive industries.

Over 30 years since the reform and opening up, China's shipbuilding industry continuously expands, and it makes direct contributions to China's water transportation industry, aquatic fishery, marine development industry, etc. Its status in China's national economy continuously rises. The shipbuilding industry is one of the few Chinese manufacturing that rank among the top worldwide and compete with advanced levels in the world.

Since the 1990s, the completion volume of China's shipbuilding sustainably and rapidly grows, and China already becomes one of the shipbuilding centers worldwide. In 2011, the number of new orders of China's shipbuilding replaced South Korea to rank the first for the third consecutive years, accounting for 46% of new orders worldwide. The delivery volume of China's new ships surpassed South Korea to rank the first in the world for the second consecutive year, accounting for 41% of the new ship delivery volume globally.

In 2011, the completion volume of China's shipbuilding firstly exceeded 70 million tons to reach 76.65 million deadweight tons, with an increase of 16.9% YOY, hitting a record high. In terms of DWT, the completion volume of shipbuilding, new order volume and holding order volume respectively accounted for 45.1%, 52.2% and 43.3% of the market share worldwide.

In 2011, the export ships completed by China's shipbuilding enterprises were 62.55 million deadweight tons, increasing by 18% YOY. In 2011, despite the continuous adverse impacts of the international financial crisis on the ship market and the increasingly obvious strikes of the debt crisis in Europe and the United States on ship transactions, the import and export trade of China's ships still maintained the slow growth trend. In 2011, the total import and export value of China's ships was USD 45.5 billion, with an increase of 8.38% YOY. Among it, the export value of ships was USD 43.69 billion, with an increase of 8.41% YOY.

Since 2012, under the environment of slowdown in the growth of global economy and trade, the shipping market is continuously in depression, and the development of China's shipbuilding industry faces huge challenges. From January to September in 2012, the completion volume of China's shipbuilding was 41.58 million deadweight tons, with a decline of 18.5% YOY. The volume of new ship orders was 15.41 million deadweight tons, with a decline of 46.9% YOY. By the end of September 2012, the volume of reserve ship orders of China's shipbuilding enterprises was 120.9 million deadweight tons, with a decrease of 28.4% YOY, falling by 19.4% over the end of 2011. From January to September in 2012, the completed ship export were 34.34 million deadweight tons, with a decrease of 20.2% YOY; the order volume of ship export was 12 million deadweight tons, with a decrease of 44.5% YOY; at the end of September 2012, the reserve orders of export ships of China's shipbuilding enterprises were 101.19 million deadweight tons, with a decrease of 27% YOY. The export ships separately accounted for 82.6%, 77.9% and 83.7% of completion volume, new order volume and reserve order volume of China's shipbuilding.

The downstream of the shipbuilding industry is the shipping industry, with the market demand closely related to the transport volume of international coal, iron ore, crude oil and other bulk commodities. Currently, the downturn in the global shipbuilding industry not only happens in China but also in the whole world, so it is unnecessary to overly worry about the prospects of China's shipbuilding industry.

In April 2012, China's Ministry of Industry issued the Notice on Further Strengthening the M&A of Enterprises, putting forward to promote the advantageous enterprises to implement combination of the strong, trans-regional M&A, overseas M&A and investment cooperation, in order to raise industrial concentration rate. It also listed the shipbuilding industry as one of the key industries. In the integration process of China's shipbuilding industry, some enterprises with excellent operation performance are expected to ultimately survive. In addition, some shipbuilding enterprises focusing on market segments and specializing in characteristic production will also survive.

On one hand, China's shipbuilding industry owns the low-cost advantage compared with Japan, South Korea, etc. Meanwhile, because of the exuberant domestic demand, the global capital still focuses on China's shipbuilding industry. Therefore, there is still much room for the development of China's shipbuilding industry in the next few years.

Please Note: All reports from China Research and Intelligence are written in Chinese, then translated to English. This process takes approximately 5 business days from the date the order is placed