Yangzijiang Shipbuilding (Holding) Company will deliver 22 ships this year, and the entire site is in full swing. However, it is not generally known that the shipyard is about to enter a period of chill.

In a statistical report released on April 27 by China Association of National Shipbuilding Industry (CANSI), gross production value and actual delivery value both maintained growth in the first quarter of this year, respectively up by 42.9 percent and 29.8 percent.

However, at the same time orders for new ship delivery have basically come to a halt. CANSI's General Secretary Wang Jinlian says, "Domestic shipyards have very little backlog of new orders." 80 percent of orders are from overseas, but this market is currently suffering under the global economic crisis. Since last September, shipyards have been frequented more by onlookers merely making inquiries than by real customers placing orders.

Miao Weiqun, the vice GM of Yangzijiang, explains the situation, "The shipbuilding industry differs from regular manufacturing business mainly in the length of its production cycle. For example, construction of a mainstream cargo ship will take 2-3 years. That is to say, we are processing orders placed 2 or 3 years ago, when the market was still robust."

CANSI's statistic shows that orders suffered a drastic decline in Q4 last year, which totaled 2.61 million deadweight tons (Dwt), a mere 5 percent of the year's performance, while in the first quarter this year, new orders to be processed by the country's major shipbuilding companies only amounted to 440,000 Dwt, plummeting by 95.6 percent year on year.

The brisk shipbuilding industry which started in 2003 lasted until last year, shortly before the outbreak of the economic crisis. From 2007 to 2008, the Chinese shipbuilding industry saw a growth of 52.2 percent, recording 28.81 million Dwt.

"We have fully overtaken Japan to become the world's second largest shipbuilding country, but are still some distance behind South Korea, which possesses far more advanced technology in this industry," Wang Jinlian observes.

Excessive repetition of products, low added value, and lack of R&D are the major problems faced by Chinese shipbuilders.

Recently, the Ministry of Industry and Information Technology, the National Development and Reform Commission, and CANSI have been conducting research in the country's major shipyards. "Through this investigation, we hope to identify common problems. The difficulties of the current situation to some extent are holding back the stimulus plan for the industry," revealed a source close to the plan's detail.

For more information, please consult the Chinese coverage at:

http://www.21cbh.com/HTML/2009-4-30/HTML_FHY15VHRAH0G.html

(China.org.cn by Maverick Chen, April 30, 2009)