Chinese getting it together

Chinese shipyards will be capable of competing with South Korean yards on equal terms after 2005, according to a new report released by the Korea Institute for Industrial Economics & Trade and the commerce ministry. The report says that South Korean shipbuilders should expand their R&D investment if they are to remain competitive. However, South Korean ship builders have rejected the findings, saying that it is impossible for Chinese yards to mount a challenge to Korean yards within four years. But, this is probably what the Japanese thought about the South Koreans. A force to be reckoned with There is no doubt that China is emerging as a force to be reckoned with in the shipbuilding world with problems over quality and late delivery being addressed. That is not to say that the Chinese can currently offer the same level of service as the Japanese or South Korean?s ? but they can offer lower prices and slot availability in an expanding industry. Qiang Fan, general manager of the China Classification Society?s London office, highlights that 10 years ago, the Chinese white goods and television industries where in their infancy, with most of the country?s products imported from the US or Japan. He says that Chinese manufacturers realised that they must offer not just a good price, but have the same capability and focus on quality. However, there is still a large gap between quality in the east and west of China. “The problem lies mainly in management and it?s not in all shipyards ? if you cannot satisfy, you lose your reputation and will be defeated ? not only on quality but on time,” says Fan. The cost of late delivery is considerable, especially on something as large as a VLCC and Fan says that more yards are becoming aware of that. He says it is important for shipyards to have good relationships with shipowners and class and that repeated late delivery is not good for these relationships. He says that Chinese companies now realise that quality is extremely important and both shipping companies, such as COSCO, and builders are focussing on it. Fan points out that CSSC had no ships detained in Australia last year, which is better than some IACS members can claim. He says: “Shipping is an international business and you have to compete on an international level if you are to win.” CSSC has disclassed 50 ships in the past two years says Fan – “ships that didn?t comply with quality standards.” The Chinese government is at the beginning of a five-year plan to build Shanghai up as a maritime centre, with yards in the area capable of building VLCCs and ULCCs. Fan says that banks in China “understand the shipping industry” and are willing to invest in both ships and facilities. He told The Motor Ship: “I am very confident of the future ? the most important thing is the developing economy.” Domestic growth He explains that the country has managed to maintain domestic growth every year ? even during the Asian crises. The country has also invested $200 billion in infrastructure every year which has spurred domestic demand, says Fan. Taxes are low on imports, so the cost of European equipment is not high, making more and more owners want to build in China, says Fan. Owners still want mainly European equipment. “Even Chinese owners prefer European equipment,” explains Fan. However, Fan admits that although China has two main equipment builders “they still have some distance to go”. One area of equipment manufacture that has been cornered by the Chinese is that of container building, with Fan claiming that they have 60% of the market.