Feature 1 | CHINA Yangzijiang secures the cost of success
Ship financing arrangements and a sideways shiſt into new business sectors have been key to the success of Yangzijiang Shipbuilding as the yard reports no cancellations, writes Sam Chambers
blanketing contracts with clauses such as 20 plus 20 payment methods, whereby owners had to sign up for an initial 20% down-payment and 20% bank guarantee, thus ensuring that the yard had not received a single order cancellation through to June this year. Among its most prestigious order intakes
T
has been Seaspan’s decision to invest US$700 million for seven 10,000TEU ships. Te contract, signed on 8 June 2011, comes with an option for a further 18 vessels that would take the contract to a staggering US$2.5 billion. Te fuel efficient design is a collaboration
between Seaspan, Yangzijiang, marine design and research institute MARIC and class society DNV. Te company said this year Yangzijiang
will keep working on new types of ships and improve shipbuilding technology. In the first quarter, the yard received seven ship orders, worth US$206 million bringing its orderbook to a more than respectable 96 ships. Yangzijiang’s success has meant the yard was one of the chosen few selected
he wily folk at Singapore-listed Yangzijiang Shipbuilding prepared well for shipping’s winter period,
from on high to survive the turmoil. Located in Jiangsu province, the region that along with Zhejiang province can claim the most amount of
shipyard
financial casualties during the downturn, Yangzijiang has been put on a list, that comprises just three names out of more than 100 private yards in the province, for central government support. Ren Yuanlin, the boss of Yangzijiang
says the company will take the opportunity during this period of industry consolidation to develop new business areas such as ship repairing and scrapping. “If we have shipbuilding, ship repairing and ship scrapping, we will have the complete industry chain.” Ren says. Yangzijiang is an old yard with over 50
years history. It has endured two crises very well in the past. In 1987 when the chips were down it transitioned from a domestic customer base to take in new clientele from Southeast Asia. Ten years later as the Asian financial crisis struck home Yangzijiang went further afield for business snaring its first European customers. Looking long term Ren feels China is in a
good position, with just the neighbours from across the Yellow Sea as genuine competition.
“China has all the necessary shipbuilding
elements, Vietnam and India will never exceed China, Japan will also be defeated by China, but the technology of Korea is 20 years more advanced than us, it is difficult to surpass Korea,” Ren admits. In 2008, the yard boss invested RMB35
million (US$5.48 million) to buy a 60% holding of a ship design company in Shanghai, and then spent a further RMB100 million (US$15.67 million) to buy a building in Shanghai to provide a good environment for his new designers, thus becoming the first yard in China to purchase a design company. For the yard, enhancing the ship design
business will be a focus in the coming years; to develop ships with its own brand and rights will be a very important source of revenues. Te downtime caused by the downturn
has also given the group time to focus on increasing productivity and this resulted in the decision this July to close its oldest yard in Jiangyin and shift that capacity to a more modern site in Jinjiang, also in Jiangsu province. It is all part of the plan to survive the latest economic storm. NA
Yangzijiang has taken an order from Seaspan for 10 ships with an option for a further 10 vessels of 10,000TEU each
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The Naval Architect September 2012
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