Challenges pile up for China's yards

Beijing: Zhang Guangqin, chairman of the China Association of the National Shipbuilding Industry (CANSI), has emphasized that the domestic shipping sector faces many formidable challenges.
Chinese shipbuilding firms have to face escalating raw material and labour costs. In addition, it is so hard for China's shipbuilders to win European orders after 2011, chiefly because the US subprime mortgage crisis has stopped shipping companies and institutions of Europe entering into new contracts.
Shipbuilding is regarded as a capital-intensive industry, so more clouds will likely cast over the profitability and capital chain of China's shipping companies in the coming several years, if they do not innovate in business, shipbuilding, and marketing, predicted the China Development Bank CIO Hu Bengang.
Meanwhile, the domestic shipbuilders, especially the small- and medium-sized ones, are handicapped by insufficient working capital, and then it is urgent for them to broaden the financing channels.
Chen Qiang, chairman and president for Jiangsu Rongsheng Heavy Industries Group Co., Ltd., a private shipbuilding firm in Southeast China, recently figured out that the nation's shipbuilders underwent slipping gross profit margin in the first half of 2008, due to continuous renminbi appreciation and the tight shipbuilding steel plate supply.
Therefore, Rongsheng Heavy Industries expects to set foot in the global capital market as soon as possible, with a view to further sharpening its competitive edge and reaping more profits in the near future. On August 4, 2008, the company revealed that it preliminarily intended to launch its IPO at this yearend at the earliest, raising USD 2 billion or so. [17/9/08]