China’s Shaoxing yards to get greater bank financing

In a recent statement released by Shaoxing city’s banking regulatory commission, the commission is requesting various local banks including People’s Bank of China to open up credit facilities to the ailing shipbuilding sector.

“A lack of cash flow has always been the problem for shipyards. We have to deliver our existing newbuilding orders and use the payments to purchase materials to start building another new vessel, giving rise to many operational delays,” a spokesperson at Shaoxing Songling Shipyard was quoted saying. He added that this is a common challenge for Shaoxing shipbuilders.

Shaoxing is a prefecture-level city on the southern shore of Hangzhou Bay in northeastern Zhejiang province, China. In 2014, Shaoxing shipbuilders delivered 111 new ships, mostly domestic feeder container vessels.

A spokesman from Shaoxing port authority said: “The city’s local banks have given very little support to the shipbuilders. The reasons are due to the industry’s slow pace of development in the last few years, and the banks are not familiar with the shipbuilding industry.”

He added that if the banks would choose to avoid the shipbuilding industry and extend their loans to other industry sectors. The local port authority has on several occasions met with the banks to get them interested in both the shipbuilding and shipping sectors, but few take the bite.

The latest action taken by Shaoxing city’s banking regulatory commission, in line with the central government’s plan to revitalise China’s shipbuilding segment, is expected to give a boost to the Shaoxing shipbuilding business.

“The latest call by the commission is clear: lenders should not ‘sever ties’ with the shipbuilding and offshore industries just because they are experiencing a downturn. Instead, there should be stronger policies in place to help these industries tide through the recession,” an analyst was reported saying.

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