A study from Matthew Flynn and Poten & Partners
It's official. China has declared its intention to reach the summit of world shipbuilding by 2015. The core of this ambition is a Greenfield site on an eight-kilometre (five-mile) waterfront on Changxing Island at the mouth of the Yangtze River.
The announcement in early August will see the dismantling of the 130-year-old Jiangnan shipyard on prime downtown Shanghai real estate. As a 21st century replacement, China State Shipbuilding Corp (CSSC) will spend up to RMB 30 bn (USD 3.6 bn) over ten years to build what it intends to be the world's largest shipbuilder in combination with other CSSC yards.
When completed, the Changxing Island shipyard should be able to assemble a total deadweight tonnage each year of 8m dwt, according to Guo Xiwen, the CSSC director in charge of the project.
Together with other CSSC yards in Shanghai, capacity would be 12m dwt, while counting other CSSC yards outside Shanghai, the CSSC capacity number would actually hit 15m dwt.
To date, contracting in China has been fast and furious, allowing it to capture 2m gt in new orders for the first six months of 2003, according to LR-Fairplay statistics. While impressive, this is still a distant third to South Korea's 17.1m gt and a fraction of the 9m gt won by Japan. The question is not whether China can build bigger ships to meet owner standards. The question is whether it can move to a higher volume of bigger standard ships.
China needs to invest heavily in productivity improvements rather than pure expansion and certainly should consider concentrating efforts in key facilities as it is for Changxing Island.
Management skills will determine whether Chinese shipbuilding has a tail wind or head wind on its journey to become an in dustry leader.
Leadership ETA for China is likely sometime after 2015 and possibly closer to 2020, sharing the market with South Korea and Japan in a triumvirate of Asian shipbuilding.
Rome was not built in a day.
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tankerresearch@poten.com