Recently, the shipbuilding industry released its performance report for the first three quarters of 2024. Between January and September, China’s shipbuilding completion volume, newly signed orders, and hand-held orders increased by 18.2%, 51.9%, and 44.3% year-on-year, respectively. In terms of deadweight tonnage, these figures represent 55.1%, 74.7%, and 61.4% of the global total.
For the past 14 years, China’s shipbuilding industry has maintained its position as the global leader. So, what factors contribute to China’s impressive performance in the shipbuilding sector? What has China done right over the years?
There are three key driving forces behind this success.
The first is a significant advantage in developing a dual-characteristic industry that is both technology-intensive and labor-intensive. The shipbuilding industry embodies both of these traits, and Chinese companies have excelled in both areas.
China has a strong technical foundation. In recent years, the nation has accelerated structural adjustments and innovation-driven practices within the shipbuilding industry, continuing to ascend toward the mid-to-high end of the industrial chain and value chain. The journey from domestically manufactured aircraft carriers to large cruise ships and from ultra-large LNG (Liquefied Natural Gas) dual-fuel-powered container ships to deep-sea manned submersibles and polar research icebreakers demonstrates a remarkable ability to transition from “zero to one” and even beyond. This comprehensive capacity in ship construction is crucial for winning new international orders.
Additionally, the talent pool is quite impressive. Unlike many other industries that benefit from mass production and automation, ship construction still relies heavily on skilled labor. The enhancements in efficiency and reduced production times among Chinese shipbuilders can be attributed to the efforts of engineering technicians and management personnel in optimizing processes, as well as a significant number of skilled workers who are technically proficient, hardworking, and committed. From steel plate welding and painting to lifting operations and confined space work, these skilled workers play an essential role in turning blueprints into reality, ensuring the timely completion of massive ships.
With technical expertise and a strong workforce, China’s shipbuilding industry thrives on both intelligence and hard work, which underpins its global leadership.
The second factor is a principle that embraces market demand changes and continuously optimizes supply. The dynamics of industrial development are always shifting. New technological advancements, production methods, customer demands, and regulatory requirements create new market opportunities. A company’s success in capturing these opportunities largely depends on its ability to adapt and fine-tune its supply. Chinese shipbuilding enterprises have excelled in this regard in recent years.
Take automobile carriers, for example. Traditionally considered a niche segment of special transport vessels, Chinese shipbuilders had previously been less engaged in this market. However, with increasing global automotive trade and particularly the rise in China’s automobile exports, the demand for automobile carriers has surged. Seizing this opportunity, Chinese shipbuilders have innovated and tackled technical challenges. Companies such as Guangzhou Shipyard International have successfully developed key technologies related to thin plate deformation control, hull structure precision control, and the installation and commissioning of roll-on/roll-off equipment.
In addition, the push for green ships is noteworthy. In recent years, the International Maritime Organization and various governments have escalated their demands concerning vessel emissions and energy efficiency. In response, Chinese shipbuilders have accelerated their development of green propulsion vessels, incorporating LNG, methanol power, and even making provisions for ammonia and hydrogen fuel cell designs. As a result, Chinese companies have secured over 70% of global green ship orders in the first three quarters of the year.
Recent data indicates that among the 18 main vessel types worldwide, Chinese shipbuilders ranked first in new order volumes for 14 of them. By continuously responding to and anticipating market demands, the Chinese shipbuilding industry ensures ongoing growth.
The third factor is a belief that even in the lows of industry cycles, opportunities can emerge. Maintaining focus allows for the development of solid foundations.
LNG carriers are recognized internationally for their high technology requirements, high added value, and high complexity. In April of this year, China Shipbuilding Group signed a contract with QatarEnergy for 18 of the world’s largest LNG carriers, marking China’s entry into the global lead in this field. This is a remarkable leap considering that it was only in April 2008 when Chinese shipbuilders achieved their first LNG vessel construction.
The high performance during prosperous times is rooted in perseverance during challenging periods. The shipbuilding industry is notoriously cyclical. Following the global financial crisis in 2008, the industry faced a downturn characterized by reduced new ship orders and a bleak offshore market, leading many foreign firms to exit. However, Chinese shipbuilders did not succumb to despair; they remained resilient and committed to innovation, overcoming technical challenges related to advanced ship types such as cruise ships and large LNG carriers. As a result, when the industry began to recover, they captured a significant share of the market.
With synchronized growth across key indicators, sustained international market leadership, and improved revenue and export profits, China’s shipbuilding industry now shows a positive development trend marked by stability, progress, and enhanced quality. By leveraging its advantages, adhering to guiding principles, and upholding a strong belief in its capabilities, the Chinese shipbuilding sector is poised for even greater expansion into broader waters.
