Last week, Beijing confirmed that it will introduce a specific three-year plan to reorganize its huge shipbuilding industry, although the content is no different from the long-awaited government plan, but ignore its long-term trend for the future. Far-reaching significance is not a wise move.
Because this project not only involves the domestic shipbuilding industry, it will bring long-term impact to shipowners and shipping markets in the next decade and beyond.
According to the 2013-2015 shipbuilding industry comprehensive development plan promulgated by the State Council, the government decided to fundamentally reform and reshape the domestic shipyards, so as to rectify the overcapacity situation in the industry according to the country's overall strategic objectives, and drive from investment. The pattern of sexual growth has gradually shifted to the path of increasing productivity and boosting domestic consumer demand.
The plan urges local governments to stop any new shipyard projects and no additional capacity beyond the 1,647 existing shipyards.
In addition, financial institutions are also required to suspend loans to companies that build ship facilities. Ship companies themselves must shift their focus to high-value energy-efficient vessels and high-tech offshore facilities projects, and actively seek opportunities for mergers and acquisitions.
In terms of shipbreaking, the government has clearly pointed out that it is necessary to speed up the demolition of inefficient old ships, thus freeing up space for new high-profile ships.
In fact, China's industry target is quite clear, that is, before 2015, the global high-tech ship and offshore engineering sector each accounted for 25% and 20% of the market share.
The above plan is quite radical, but the reasons behind it are obvious. In the first half of the year, the performance of Chinese shipyards was not good. The total profit of 80 major shipyards nationwide fell sharply by 54% year-on-year to only 3.58 billion yuan (about 584 million US dollars), and their total number of hand-held orders fell by as much as 23%.
Despite this, the above plans are not expected to have an immediate impact on domestic and foreign ship owners.
Generally speaking, it is always necessary to implement the policies promulgated by the central government in a timely manner, even in China. Competition for local political achievements may also lengthen the implementation process invisibly.
But inevitably, the price of the ship has been separated from the historical low in recent months and will continue to rise. In addition, opportunities to obtain cheap deals from emerging shipyards will gradually dry up.
With the increasing integration of shipbuilding and enterprises, brokers who are good at attracting customers will find it difficult to get bargaining space.
In the next decade, although China's goal is still to be the factory of the world, it will no longer become a bargaining place for poor and low-priced goods.
Instead, China will adapt to the trend of the global shipping industry and move toward a smarter, more advanced and profitable business model.
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