Ship building industry recovers after economic recession

18:19, November 26, 2010      

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A deserted shipyard is seen in Sanmen County of Taizhou City, east China's Zhejiang Province, Oct. 18, 2009. (Xinhua/Tan Jin)

In more than 40 years, the vast and deep ocean gave Li Changxian everything except worries. But ever since the inception of the global financial crisis two years ago, the 44-year-old billionaire has fallen in the blues.

Standing in the once-bustling Hongda Shipyard he run in Taizhou, Li Changxian put his hand on the rusty hull of an unfinished ship and wondered whether it would set sails at sea.

Li Changxian's question also rang in the ears of the private shipyard owners in the coastal city, now a world manufacturing center of small and medium-sized vessels.

Li Changxian made his foray into the shipbuilding industry in 1997 by joining his uncle's shipyard. Thanks to the fast-growing maritime market, Li soon earned a fortune and started his business with two partners in 2007.

However, the tide turned abruptly in the wake of the 2008 global economic crisis. Cash-strapped shipping companies froze fleet expansion plans by scrapping or delaying orders of new ships, which quickly drained the liquidity of private shipyard owners like Li Changxian.

Financial difficulties threw Taizhou's shipbuilding industry into deep recession, leaving more than 100 vessels abandoned on the shipway or kept at anchor.

Instead of waiting for their wealth ebbing away, private shipyard owners in Taizhou expanded their business scope by means of setting up repair service, leasing out shipways or putting unsold ships for charter, as advised by the Chinese government.

The Chinese government has rolled out measures to change the business development mode of export-dependent factories along the eastern coast. Technology assistance programs and tax incentives were put forward to facilitate a speedy adjustment of the industrial structure.

In the first 10 months of 2010, China's shipbuilding industry saw a strong growth in tonnage terms with ships totaling more than 50 million deadweight tons hitting the ocean, according to the Ministry of Industry and Information Technology.

Helped by government incentives and the quick recovery of global shipping industry, private shipyards in China restarted their suspended shipbuilding projects.

Now, the number of unsold ships, whether finished or not, dwindled to less than 30 and none of Taizhou's private shipyards went bankrupt.

Though still walking on thin ice, Li Changxian, who has lost 40 million RMB yuan (6 million U.S. dollars) in profit, grew more sanguine about tiding over the hard times.

Just a couple of days ago, one of the four ships abandoned in his shipyard was rent out, bringing the shipyard owner a monthly money inflow of 800,000 yuan (120,000 dollars).

"I know what happens when my ship goes out."

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