Not long ago, the Ministry of Industry and Information of the mainland released the latest data of the shipbuilding industry in the first three quarters of 2024, showing that the new orders of the mainland shipbuilding industry accounted for 74.7% of the global total. The old shipbuilding hegemon Korea accounts for only 18% of the total number of ships ordered in the world, which is completely crushed by the mainland. After 14 years of confrontation in the shipbuilding industry between China and South Korea, it has finally ushered in a historic moment where the winner has been decided.
Back then, Korea's shipbuilding industry was unlimited, with seven of the world's top ten shipyards dominating. Every order competition can make the mainland suffer, especially LNG and other high value-added ship types, which leave the mainland shipbuilding industry far behind.
However, in just ten years, the balance of victory and defeat between China and South Korea has been quietly reversed. Last year, among the 18 ship types in the mainland shipbuilding industry, 14 ship types ranked first in the world in terms of orders, and the three major indicators of the shipbuilding industry also dominated the world's first, and even high-end ship types are gradually eating away at Korea's market share. How did the mainland complete the comprehensive overtaking of Korea?
The world's shipbuilding industry competes
Modern shipbuilding originated in Europe during the Industrial Revolution, and at the end of the 19th century, United Kingdom controlled global trade and produced more than 60% of the world's ships, occupying absolute dominance. In the middle of the 20th century, Japan completed the industrialization transformation of the Meiji Restoration, and became the largest country in the new shipbuilding industry by virtue of its industrialization foundation and labor advantages, and the proportion of shipbuilding completions in the world reached 50% at its peak.
In 1973, an oil crisis devastated Japan. In the same year, Korea established the Ulsan Shipyard, and the Park Chung-hee government listed the shipbuilding industry as a key development area, producing the first 260,000-ton giant cruise ship in just two years. In 1975, Samsung also joined the shipbuilding ranks, acquiring the Yujin Shipyard and renaming it Samsung Geoje Shipyard.
Under the strategic policy of "building a shipbuilding country", the Korea shipbuilding industry, led by Hyundai and Samsung, can produce products about 10% cheaper than the lowest price of European ships in less than half the time of European masters.
At this point, Korea ships sailed to the vast sea, creating the miracle of the Han River, which became famous all over the world. At the same time, Korea companies have also continued to innovate in the field of high-end technology, and a number of self-developed engine companies have risen one after another, further improving manufacturing efficiency.
After entering the new century, the world ship market has entered a new round of expansion. Korea shipbuilding seized the opportunity to make large-scale investments and joint ventures in China, Brazil, Viet Nam, the Philippines and even many places in Europe, completing its global layout. After 2008, Korea began to focus on the development of high-tech ships, and the scale growth trend bid farewell to the era of rapid growth, and the total orders at the peak accounted for about 50% of the world.
In the many years when the shipbuilding industry in Japan and South Korea dominated the world, China's shipbuilding industry has been in a state of accompaniment. In 1978, China's shipbuilding industry was in the stage of all-round management of the planned economic system, and the main orders still came from a large number of military products. A large number of shipbuilding units were faced with the dilemma of lack of rice, and many shipyards applied to the central government for task orders, but the reply was: self-sufficiency.
Until 2000, China's shipbuilding industry had a measly 5% share of the world. It was not until a year later that China joined the WTO, all domestic industries entered the international economic cycle, and the shipbuilding industry officially entered the world cycle and became the focus of exports.
As mentioned above, after the new century, global trade has created a large amount of shipping demand, the shipbuilding industry has entered a new upward cycle, and the Korea shipbuilding industry, which occupies a dominant market position in the same period, has chosen to turn to mid-to-high-end development, which provides a once-in-a-lifetime development opportunity for the mainland. During this period, the mainland has become the best choice to undertake various types of ships such as small and medium-sized and bulk carriers around the world.
From 2000 to 2008, the number of active shipyards in China soared from 79 to 414. In 2010, China's shipbuilding completion volume was 67.57 million tons, new orders were 76.08 million tons, and hand-held orders were 195.04 million tons, accounting for 41.9%, 48.5%, and 40.8% of the global share, officially ranking Korea first in the world.
During this period, Japan began to gradually abandon the shipbuilding market. According to the statistics of the Ministry of Industry and Information, in 2023, China's global proportion of these three data will increase to 50.2%, 66.6%, and 55% respectively, and all indicators will still maintain the first place in the world.
During the more than a decade of rapid growth in China's shipbuilding industry, Korea naturally did not choose to sit idly by, and they also tried to curb mainland development by launching a price war. In order to compete for orders, Korea has squeezed its profit margins to the extreme, and even sold at a loss. Although this kind of behavior has succeeded in winning market share in the short term, in the long run, it has continuously weakened the competitiveness of enterprises and seriously damaged corporate profits, which is quite short-sighted.
Moreover, as far as the price war alone is concerned, the natural defects of the industrial chain of Korea's shipbuilding industry also put them at a disadvantage. Because many key materials in Korea's industrial chain can only be satisfied by imports, such as the Yin tile steel of LNG ships, which is exclusively supplied by France, the high import cost limits Korea's performance in the "price war", and finally can only watch China, which has a huge labor dividend and the entire industrial chain, gradually occupy market share.
High-end shipbuilding industry pattern
In fact, in addition to the industrial chain and cost advantages, the mainland has also explored another new track - green ships, that is, ships that reduce pollution and greenhouse gas emissions. There are two directions for this technology, the first is to increase the desulfurization system and optimize the power unit; The second is the use of new green fuels for ship power, such as liquefied natural gas (LNG), biofuels, methanol fuels, etc.
At present, mainland has undertaken more than 70% of the world's green ship orders, while Korea's order share is only 22%. Secondly, whether it is ammonia dual-fuel ships, battery hybrids, LNG dual-fuel, methanol dual-fuel, all ship types can be produced and manufactured in the mainland, while Korea's current production orders are only LNG dual-fuel ships.
In contrast, Continental has a larger share of the green ship track, more advanced technology, and a wider range of types, which can be said to lead the global technology wave. At present, the only thing that lags behind Korea's shipbuilding industry on the mainland is LNG carriers.
In 2008, Korea has built a second-generation LNG ship, while China's first LNG ship, Dapeng Hao, has just been delivered. LNG ship and aircraft carrier, large cruise ship as famous, known as the world's shipbuilding crown of the three pearls, it is the international shipbuilding industry recognized set of high technology, high added value, high difficulty in one of the representative ship type, during the transportation process in the cabin need to maintain the ultimate constant temperature of minus 162 °C, otherwise liquefied natural gas will be volatilized in an instant.
As of 2023, the total order volume of global LNG carriers is 554 CGT, of which Korea has undertaken 4.41 million CGT, with a share of nearly 80%, compared with only about 20% of Chinese shipbuilders. At present, there are only 8 LNG production companies in the world, including 3 in Korea and 5 in China, but Korea still has achieved a comprehensive lead in China in this field by virtue of its technical advantages accumulated for many years.
Not to mention, Korea's LNG carrier gas evaporation rate is 0.07% per day, while China's evaporation rate is 0.1%, although it is only 0.. A slight difference of 3%, but in the face of tens of thousands of tons of natural volume, the daily volatilization is still very large.
In the face of this situation, China's shipbuilding industry must not only achieve a rise in order volume and market share, but also fully enter high-value products, such as LNG ships and advanced large ships. In this regard, we can only achieve this by continuously strengthening independent innovation and international cooperation, so as to make China's shipbuilding industry occupy a more critical position in the global ship pattern.
On April 29 this year, Continental Shipbuilding Group signed a contract with Qatar Energy LNG Company with a total value of 40.4 billion yuan for ultra-large LNG carriers, including 18 ultra-large LNG carriers of 271,000 cubic meters, with a single cost of 305 million ~ 310 million US dollars. It is believed that China's LNG carriers will make greater progress in the future growth path.
Information sources:
China Report: Japan and South Korea's road to dominance in the shipbuilding industry
Market value observation: In the past 20 years, China's shipbuilding has finally overturned Japan and South Korea
International Ship Network: Throw another 50 billion! Korea's shipbuilding "Big Three" want to join forces to resist China?
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