Posted November. 07, 2009 08:40,
Korean shipbuilders have been overtaken by Chinese competitors for the first time after having dominated the global market for the past 10 years.
Shipbuilding has led Korean manufacturing and exports, along with semiconductors.
Clarkson Research Studies, a division of the worlds leading shipping services provider Clarkson PLC, and Korean shipbuilding sources said yesterday that the combined order backlog of Korean shipbuilders was 53.63 million compensated gross tons at the end of last month.
Chinese rivals, however, had 54.96 million CGTs and controlled 34.7 percent of the global market, higher than Koreas 33.8 percent. Until last year, the combined order backlog of Korean shipbuilders had topped the world since they overtook their Japanese rivals in February 2000.
China is expected retake the No. 1 spot for new orders received and combined order backlog before the end of the year.
○ Chinese dominate cheaper vessel market
The rapid growth of Chinese shipbuilders is mainly due to increased orders from overseas. Backed by their government, Chinese maritime transportation companies have placed most of their orders with Chinese shipbuilders.
With an enormous amount of foreign exchange reserves, China lends up to 90 percent of a vessels price to foreign carriers that place orders with Chinese shipbuilders, said Yang Jeong-dong, a researcher at Korea Investment and Securities. Chinas protection of its domestic industry has affected the global shipbuilding market.
European and North American shipping companies, the major buyers of Korean-built ships, have also placed fewer orders amid the global financial crisis.
New orders at Chinese shipyards reached 2.7 million CGTs in the first half of this year, or 52.3 percent of the global total and exceeding the 1.64 million tons at Korean shipyards. China also clinched orders for 142 of the worlds 264 ship orders over the same period.
○ Focus on high value-added vessels
Certain experts say the situation shows that low value-added shipbuilding is being taken over by China. At the end of September, all of the worlds top six shipbuilders were Korean. They still remain ahead of their Chinese rivals in high valued-added vessels such as LNG and LPG tankers and large container ships.
Chinese shipbuilders, however, dominate the labor-intensive sector of low-priced ships.
Korea is focusing more on high value-added vessels while shifting its remaining resources to building plants or alternative energy businesses.
Fears are growing, however, that other Korean manufacturing industries will also face a strong challenge from China.
The government has announced measures to prevent its shipbuilding and shipping industries from going down together. The investment ceiling of corporate restructuring funds into the shipping industry will be raised from 40 to 60 percent.
The state-run Korea Export-Import Bank will also provide easier credit to shipping and shipbuilding companies if both sectors suffer from a prolonged slump.