Debate on China’s Shipbuilding Industry’s Capacity and Strength

Reporter Yang Peiju

Not long ago, the industry’s attention was aroused by an article entitled “Why Chinese shipbuilding cannot become the national name card like high-speed rail”, and in no time the debate on whether China has become one of the world’s shipbuilding powers and whether Chinese shipbuilding has become the national name cade is going on consistently. How should we then look at the present Chinese shipbuilding industry in an objective manner?

Li Baokun, the chief analyst of consultancy company SeaHow believes that the overall strength of China’s shipbuilding industry should be among top eight. There will be 16 best and 8 best teams in a football match, if the overall strength of China’s shipbuilding industry is one of the 8 best and she still dares not claim to be a powerful shipbuilding nation, something must have happened to the industry’s confidence. Looking at the other KPIs, such as the comprehensive performance in the field of merchant ships, navy ships, special purpose ships, offshore engineering projects and non-standard heavy industry projects, we could see that there are both weaknesses and strengths when compared to South Korea, Japan and Singapore. Comparison can be made in an overall manner.

At present, many people believe that China cannot be said to be a shipbuilding power, but more appropriately a big shipbuilding nation. During the interviews, the reporter feels that the reason that many industry people take China as a big rather than a powerful shipbuilding nation is that China still lags behind in its design and development capability, accuracy control technology, shipbuilding production efficiency, information integration technology,standard system, production management, awareness of corollary equipment and etc.

Both of the point of views held by the above two camps have reasons, which point to the highlighted points and pains of the shipbuilding industry. So, how to view objectively the development and positioning of China’s shipbuilding industry? It requires us to look out to the world while laying our foundation in the nation and look at this in a dialectically way. From the industry and the enterprise level, the so-called “big” is mainly represented by the external and intuitive factors, usually measured by numbers; whilst “powerful” is imbedded in the industry and enterprise, being comprised of multiple factors, which are not obvious.

On the denounce about China’s excess shipbuilding capacity in recent years, the view of Tan Zuojun, the former general manager of China State Shipbuilding Corporation is impressive. He argues that the “theory of over capacity” has always been the main propaganda tool used by the leading shipbuilding countries to restrain the development of emerging shipbuilding countries. Europe and Japan once used “theory of over capacity” to limit the development of South Korea, and now the focus of Europe, Japan and South Korea focus is China.

From the perspective of the history of world shipbuilding development and transfer, when a country’s shipbuilding industry makes the breakthrough in the output and becomes the world's leading force, generally speaking,though it is not yet the best in technology, it has its own comprehensive competitive advantage in conventional ship type. At this joint, the existing shipbuilding powers can not defeat it by their technical advantages alone.Judging from the reality of Chinese shipbuilding, on one hand, China still has the comprehensive advantages in labor, capital and technology to develop shipbuilding industry, in the market of regular ship types such as bulk carriers, oil tankers, container ships, China has the foundation and ability to face the competition of South Korea and Japan. On the other hand, although the overall market production capacity is excessive, in some segment markets, especially in high technology, high value-added shipping market with high threshold, China still has a lot of opportunities, such as large liquefied natural gas (LNG)ship, ultra large container ships, as well as some offshore engineering industry etc.

Based on this, we should have a correct cognition towards sharp expansion of domestic shipbuilding capacity and the “short board” of technology. We cannot be blindly arrogant, neither should we improperly belittle ourselves. From the development viewpoint, China's shipbuilding industry in fact is ushering in the historical opportunity to become the world’s power. Compared with other domestic manufacturing industries, the shipbuilding industry should feel proud for the reason that it is indisputable that China’s shipbuilding industry is becoming stronger and stronger, although the shipbuilding industry is experiencing the baptism of the market like other manufacturing industries, and is facing the pain of industry transformation, and even there are bankruptcies.The concentration level of China’s shipbuilding industry is higher and higher, the market share of shipyards is bigger and bigger, the independent innovation capacity is stronger and stronger, and the hollowing out phenomenon is gradually being eliminated... China’s shipbuilding industry has already become a model domestic industry to develop into a powerful industry.