Are Chinese shipbuilders painted in an unfair light that allows shipowners to scramble all over them? Sure, the yards are desperate to increase both their repertoire as well as volumes and will naturally offer tempting incentives to build a new ship type, but are they going too far?
Japanese and Korean yards, who let's face it the Chinese want to replicate in a hybrid mega fashion, confide to some of their Chinese counterparts how shocked they are that the mainland builders give owners such flexibility and room for manoeuvre, even after contract signing, which often results in severely dented profit margins.
It's a well-known fact that many of the Chinese yards' first ships in a new series are often produced at a loss. This is believed to be done to ensure that whatever the landmark deal is, it goes to them. But surely this is wrong. All the Chinese yards now talk a good game about the need to be market-orientated and, more pertinently, profitable, something that was not necessarily in the Chinese lexicon a decade ago. Empowered by yet another record year, with export volumes jumping massively and breakthrough moments including Kawasaki Kisen Kaisha's car-carrier order, Transmed's two 174,000 dwt double hull cape order at Bohai, and Shanghai Waigaoqiao's first ship delivery, the CSK Fortune, now is the time to correct international perceptions regarding quality. You don't become the third largest shipbuilder in the world by building tin cans.
Exacting standards
Strong blue chip owners, such as Stena, Gotland, AP Moller and the National Iranian Tanker Company, have been ordering in China for a number of years and, more importantly, they are returning. All these companies have exacting standards. Perhaps the reason why they themselves don't blow the China yard trumpet so loudly is that they believe they have a temporary competitive advantage over others ordering at more expensive yards elsewhere.
Certainly there are areas where the Chinese need to improve, and to be fair, the top executives in the industry appreciate there is still plenty to be done to overhaul the South Koreans and the Japanese, as Beijing has stated is its intention within the next 20 years. The president of China's largest shipyard has highlighted three key areas where the country's shipbuilders can learn from their neighbours in Japan and South Korea. Boosting domestic marine equipment production, research and development and information technology were all considered ways to improve competition by Paul Sunbo, boss of Dalian New Shipbuilding Heavy Industries (a finalist at this year's Lloyd's List Maritime Asia Awards alongside Korean heavyweights Daewoo and Hyundai Heavy - a further sign of boosted credibility) in the northeast of the mainland.
World's largest shipbuilder
There can be no doubt that the Chinese yards will overhaul their east Asian rivals some time around 2020, with plans unveiled this year for the largest shipyard in the world on an island to the north of Shanghai, plus four other large greenfield yards. By building on a clean slate, shipbuilders will be able to construct more modern, better laid out facilities, more Korean in nature as such than many of the present inner city cramped places. Shanghai Waigaoqiao is a forerunner for these new look shipbuilding areas.
Watch this space as Koreans and Japanese flock to invest in Chinese shipyards in the coming years. With LNG carriers on the way from Hudong-Zhonghua, how much longer will it take before China's shipbuilding skills are universally appreciated?