Feature 1 | CHINA Full reverse


China’s engine scene has changed drastically in the downturn, but authorities are still determined to make the nation a leader in the field


global shipbuilding industry over the past seven years. During the great freight rally in the


T


previous decade one of the greatest impediments to fleet growth was in limited engine manufacturing capability. As every shipowner clamoured for urgent ship deliveries, a period where quantity overrode quality,


there simply were not enough


engines to go around. Fast forward to the present day and the


situation is reversed. Beijing placed ship equipment manufacturing as a key tenet of two consecutive five year plans and encouraged foreign firms to set up shop. Engine factories sprung up everywhere. However, ship orders suddenly abated as the global financial crisis kicked in. All of a sudden the situation was dramatically different – from feast to famine. Grand new factories are not operating


at anywhere full capacity and have had to retool machines to churn out non-marine products.


he evolution of marine engine production in China is arguably symbiotic with the fortunes of the


“No one could have seen quite how


bad things were going to get,” one leading European executive at a Chinese joint venture marine engine manufacturer tells Te Naval Architect. “We have had to turn our attention to other products to keep things ticking over. This includes bus engines and even machinery not related to engines at all. Te real concern is that the overcapacity in the sector is likely to remain for years to come.” Unlike the shipbuilding sector there has


yet to be mass layoffs or consolidation among the massed ranks of engine manufacturers in China yet. On the contrary consolidation is faltering. For instance this July China’s largest private shipyard, Jiangsu Rongsheng Heavy Industries came under fire from investors for failing to complete a protracted takeover of engine maker Quanchai Power. Investors in Hong Kong where Rongsheng is listed demanded to know what is happening with the planned buy out, which has now dragged on for nearly a year. The investors of Quanchai Power,


Aegon-Industrial Fund Management and Orient Securities, have asked Rongsheng


China’s engine market is moving – but in which direction?


to coordinate with Quanchai and fulfil the tender offer obligations and protect the interests of the investors. However, the real reason for the


industry not contracting in size during the downturn is largely thanks to Beijing’s dogged determination to raise its game when it comes to ship equipment. According to the targets of the twelſth


five year plan of the China shipbuilding industry not only are their goals set to be the number one shipbuilder, but also to reach a point by 2015 where the nation is producing 14.71million kW of marine low speed diesel production capacity, and importantly 85% of all vessels built in China will have Chinese made engines. “To achieve these goals it is inevitable


that a period of mergers and acquisitions will be needed,” says a Beijing-based shipbuilding analyst. “A lot of weaker names will need to be weeded out.” Greater investment in domestic


research and development is something deemed of paramount importance if China is to achieve its goals. NA


60


The Naval Architect September 2012


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60  |  Page 61  |  Page 62  |  Page 63  |  Page 64  |  Page 65  |  Page 66  |  Page 67  |  Page 68  |  Page 69  |  Page 70  |  Page 71  |  Page 72  |  Page 73  |  Page 74  |  Page 75  |  Page 76  |  Page 77  |  Page 78  |  Page 79  |  Page 80  |  Page 81  |  Page 82  |  Page 83  |  Page 84  |  Page 85  |  Page 86  |  Page 87  |  Page 88  |  Page 89  |  Page 90  |  Page 91  |  Page 92  |  Page 93  |  Page 94  |  Page 95  |  Page 96  |  Page 97  |  Page 98  |  Page 99  |  Page 100  |  Page 101  |  Page 102  |  Page 103  |  Page 104  |  Page 105  |  Page 106  |  Page 107  |  Page 108  |  Page 109  |  Page 110  |  Page 111  |  Page 112  |  Page 113  |  Page 114  |  Page 115  |  Page 116  |  Page 117  |  Page 118  |  Page 119  |  Page 120  |  Page 121  |  Page 122  |  Page 123  |  Page 124  |  Page 125  |  Page 126  |  Page 127  |  Page 128  |  Page 129  |  Page 130  |  Page 131  |  Page 132