Dec-06
Japan, Korea and Singapore
ship-builders relocate to China
The world's ship-building industry is shifting to China, thanks to
labour costs 10-20 times lower than those in Japan and Korea, and
the success of marine engineering industry clusters in the Bohai Bay
area and East China.
In 2005, 18% of the world's orders were taken by China, compared
with 13% in 2002, and this spiked to 27% in Q1 2006, overtaking Japan.
While there are signs of growth in new orders abating elsewhere, as
fears of global over-capacity in commercial shipping loom, China has
continued to attract new business.
China plans to boost its shipbuilding capacity to 40 million tons
by 2010, a three-fold increase over 2005. Chinese yard labour costs
as little as US$2 per hour, compared with US$34 in Japan and US$18
in Korea. The repair and maintenance business can only continue its
upward trend as China's international trade growth forges ahead.
Korean, Japanese and Singaporean players including Samsung, Kawasaki
and Keppel are establishing shipyards in China, lured by the promising
market size and growth, low labour costs and the attractions of a
lucrative repair and maintenance business.
They will be up against the established state-owned behemoths, China
State Shipbuilding Corporation (CSSC) and China Shipbuilding Industry
Corporation (CSIC), which hold dominant positions in the East and
in the Bohai Bay area, respectively, and account for 55% of industry
output. As well as bringing out their technology, skills and international
experience as competitive weapons, foreign entrants will need to collaborate
with the technology-hungry industry heavyweights in order to survive
and thrive.
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Fusion Consulting is a business intelligence consultancy providing
strategic advice on Asia-Pacific markets. With offices in Shanghai,
Singapore and Hong Kong, and a network of 400 freelance industry consultants in 16 countries, the company conducts custom research and consulting
to help clients understand their markets, compete more effectively
and grow into new areas of opportunity. www.fusionc.com
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