Competition among Korean, Japanese shipbuilders growing

Stiff competition between Korea and Japan for the title of the world`s top shipbuilding country appears to be approaching a climax. Korean shipbuilders took the No. 1 position in terms of orders for the second consecutive year, but Japanese shipbuilders claimed they would soon retake the top spot.

Based on accumulated orders received by domestic shipbuilders like Hyundai Heavy Industries, Samsung Heavy Industries, Daewoo Shipbuilding and Hanjin Heavy Industries, Korea is right to claim superiority. As of the end of last year, domestic shipbuilders secured $23.1 billion in orders for 503 ships, enough work to keep shipbuilders at full capacity for the next two-and-a-half years.

Japanese shipbuilders playing catch up:

Japanese shipbuilders are eager to draw even with their Korean counterparts. Hitachi Shipbuilding and NKK of Japan recently agreed on a merger. With the move, the merged company has reborn as the No. 2 shipbuilder in Japan, after Mitsubishi Shipbuilding, and No. 5 in the world. Meanwhile, IHI, Kawasaki and Mitsui Heavy Industries also pushed for a merger, creating prospects that the Japanese shipbuilding industry would be reorganized into a big-three structure, identical to Korea.

Japanese shipbuilders are determined to recover their competitiveness. Two years ago, Japan lost its No. 1 position to Korea in terms of shipbuilding orders. The gap between the two countries widened to 11 percentage points last year with Korea accounting for 41% of all orders against Japan`s 30%.

Korea to remain ahead of Japan for the time being:

Market analysts said Korea remains ahead of Japan in terms of systems, such as the capability to create flexible designs to meet the requirements of ship owners, and the very ability to handle a higher volume of orders.

Korean shipbuilders received $15.2 billion worth of orders for 313 ships last year, a 65% increase in value and a 38% rise in the number of ships from $9.2 billion worth of orders for 227 vessels in 1999.

Kim Dong-Won daviskim@donga.com