The German Shipbuilding and Ocean Industries Association (VSM) has issued a very strongly worded release, demanding Berlin and other European governments reduce their dependence on China for all things maritime.
The VSM, which has been railing against Asian yards’ pricing tactics for many years, has highlighted how the Chinese maritime picture today is similar to the situation Europe finds itself in with regard to its reliance on Russian energy.
Without a fundamental change in shipbuilding policies, Europe will lose the capability to build seagoing merchant ships on any significant scale over the coming 10 years, the VSM predicted, hitting out at the price dumping tactics adopted by Asian rivals.
The VSM claimed that despite the record demand seen in some market segments, Chinese shipyards are offering shipbuilding prices today which are up to 30% lower than 15 years ago although average wages in China have risen by nearly 400% within the same period. Korean shipyards which have kept up with this price competition recorded losses of $3.3bn in 2021, VSM pointed out.
While the global demand for new ships has doubled, orders placed in Europe declined by another 20% in 2021, according to VSM data. Europe’s market share has dropped to less than 4%.
European companies are massively reliant on China for maritime equipment and yet international manufacturers have told VSM of increasing problems of doing business in the People’s Republic including issues over local content requirements, discrimination, and interference by party officials.
It isn’t as if the UK shipbuilding industry’s demise wasn’t a stark warning was it. Or the USA’s
The world depends on China mot only for building new ships, but also for ship repairs. Chinese ship repair yards offer the lowest cost for steel renewal,grit blasting and coating work as well as other jobs related to ship repair. The quality of workmanship may not be as good as western shipyards, but these low costs offered by Chinese yards matter a lot.
Ship owners have diverted their ships from the western hemisphere to reach China for ship repairs, after calculating huge savings in repair cost.
Having said that we also depend on China for manufacturing numerous Marine Equipment and spare parts, due to the low Labour cost in China. Many western makers have established Licensees in China, for manufacturing their equipment in China.
We will forever depend on China, unless China Government turns democratic and wages in China are increased to Global levels and terms.