Research Report on China Shipbuilding Industry, 2017-2021
In 2016, international ship market was on a downtrend. Global trading volume of new ships declined by 67% YOY, and holding orders of global ship enterprises declined by 25% over 2015. Completion of ships, orders of new ships and holding orders of China shipbuilding industry accounted for 35.6%, 65.2% and 43.9% respectively of the global market. Influenced by the on-going in-depth adjustments of the international ship market, Chinese shipbuilding enterprises were confronted with fierce competition in terms of taking orders. As there were more difficulties in delivering completed ships and obtaining financing, number of holding orders kept decreasing and profits declined sharply. According to incomplete statistics, 60% of shipbuilding enterprises took zero new orders in China in 2016. Large shipbuilding enterprises including Jiangsu Rongsheng, Shuntian Shipbuilding, Nantong Mingde, Zhejiang Zhenghe, and Zhejiang Shipbuilding were dramatically influenced and even encountered bankruptcy.
According to CRI, completion of ships and number of new orders taken by Chinese ship enterprises both declined in 2016. National completion of ships were 35 million tons, decreasing by 15.6% YOY. Volume of new orders taken by Chinese shipbuilding enterprises added to 21.10 million tons, decreasing by 32.6% YOY. Exported ships accounted for 94.7% and 77.2% respectively of the national completion of ships and volume of new orders.
In the short term, it is hard to break up the monopoly of enterprises from developed countries in high-end equipment manufacture and design and research fields. Status of Korean enterprises in construction of ocean engineering equipment is also difficult to shake, while the completion between enterprises from Singapore and China in middle and low-end field will continue. Therefore, strengthening design and research ability and improving the capability of building high-end equipment are the problems to be solved.
According to CRI, mergers and acquisitions were continuously carried out in China's shipbuilding industry in 2016. For instance, COSCO Group founded COSCO Shipbuilding Heavy Industry Co., Ltd. by integrating 13 large shipbuilding factories and over 20 supporting service companies; Integrations and reorganizations between CSIC Dalian Shipbuilding and Shanhaiguan Shipbuilding, Wuhan Shipbuilding and Beihai Shipbuilding, Fengfan and Torchbat Energy, Chongqing Hongjiang and Chongyue were forging ahead steadily; Major shipbuilding and repair enterprises including Shanghai Shipbuilding, Guangzhou Shipyard International, China Chengxi, etc. owned by CSSC actively cut down stock and capacity; Enterprises including Hudong-Zhonghua, Waigaoqiao Shipbuilding, Huangpu-Wenchong, etc. proposed an action plan of capacity control and assets disposal. In addition, enterprises from Jiangsu, Zhejiang, Shandong, Fujian, etc. took initiative in cutting down overcapacity through capacity replacing, transforming and upgrading.
The Chinese government issued a series of policies to support the development of shipbuilding industry. According to the goal of deepening integration of shipping industry in Action Plan of Deepening Structure Adjustments and Accelerating Transformation and Upgrade in Shipbuilding Industry (2016-2020) issued by Ministry of Industry and Information Technology of China, the ship completion of China's top ten shipbuilding enterprises will account for over 70% of the national completion by 2020, which means that the concentration rate of shipping industry will dramatically increase. According to the 13th Five-year Plan of China Ship Accessory and Equipment Industry (2016-2020), by the end of 2020, proportion of domestic equipment will reach 80%, 60% and 40% respectively in three main ship models, high-tech ships and ocean engineering equipment. Therefore, there will be large development space in China's ship equipment industry in the next few years.
According to CRI, there will be large development space in China's shipbuilding industry in the next few years and global investors will keep paying much attention to it. As China's shipbuilding industry takes advantages of lower cost over other countries including Japan and Korea, meanwhile, there is a growing demand at home.
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