china shipbuilding

7/31/2019 China Shipbuilding

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Where the Chinese Luxury Consumer Lives

No. of

millionaires* %

Beijing 170,000 17.7%

Guangdong 157,000 16.4%

Shanghai 132,000 13.8%

Zhejiang 126,000 13.1%

Jiangsu 68,000 7.1%

Fujian 36,000 3.8%

Shandong 33,000 3.4%

Liaoning 29,000 3.0%

Sichuan 24,000 2.5%

Henan 16,500 1.7%

Others 168,500 17.6%

Total 960,000 100.0%

* Individuals in China with personal wealth of 10 million Yuan or more

In this context it should be remembered that only certain countries can be defined as "emerging markets

for luxury yachts": Russia, China, India and the United Arab Emirates.

In conclusion, the Chinese market shows all the potential signs for development of a yachting market,

especially in the upper range, but this will only be possible when a series of objective conditions are

concretely developed (port structures, regulations etc.) as well as proper consumer education, the latter being necessary for effective development of the potential market.

General understanding of yachts and private jets among the rich and super rich is very low

but expectations for these markets is high. Qingdao and Hong Kong are preferred places for

berthing yachts. Hurun wealth Report

http://www.hurun.net/hurun/listreleaseen427.aspx ( the rich and super rich trends)
http://www.hurun.net/hurun/listreleaseen427.aspxhttp://www.hurun.net/hurun/listreleaseen427.aspxhttp://www.hurun.net/hurun/listreleaseen427.aspx


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th China Shipbuilding Holdings (HK) Ltd. (SCS for short), an experienced vessel developer in Hong

Kong, is founded subsequent to its exclusive acquisition of an originally Chinese state-owned shipyard

(established in 1958). Combining the professional qualities of shareholders with the shipbuilding

competence of the former shipyard, SCS has become one of the most competitive and

internationally-renowned modern vessel enterprises in China. For the structural frame of SCS, please

refer to the SCS Main Structural Frame Guide.

The headquarter of SCS, the South China Marine Ltd. (SCS-HK), is located in Hong Kong and engages

in ship business & marketing affairs, which includes taking up new shipbuilding orders for all different

sorts of vessels, marine equipment and ocean offshore installations from worldwide, and also the sale of

newly-built vessels that are manufactured by our shipyard, the South China Shipyard (SCS-JM).

South China Shipyard (SCS-JM) is located at Xinhui District, Jiangmen City, Guangdong Province, China

and is approximately 80 nautical miles away from Hong Kong. It occupies a land area of over 130,000M 2.

Equipped with advanced and complete special shipbuilding facilities, the dominating business of SCS-JM

is the construction, maintenance, renovation and upgrade of vessels, ocean offshore installations and

associated facilities.

SCS has established Ship Design and Research Institute (SCS-DR) in Guangzhou, China, which is

responsible for the classification technical design of new vessels and Ship Technical Research Institute


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in shipyard that takes charge of the shipbuilding technological design and provides professional technical

supports.

SCS also possesses an overseas base in Singapore which is in charge of offshore services and

ocean-going operation fleets as well as provides offshore support services, ocean-going towage servicesand ship chartering services to global clients.


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China super rich set to propel luxury yachtsalesBy Kelvin Chan, Associated Press

Updated 5/14/2011 2:53 PM |

| Share

HONG KONG With their sleek, modern lines and polished finish, the twoyachts built by Samuel Wong's shipyard fit right in among themultimillion-dollar floating palaces moored at a tony Hong Kong yacht club.

Kin Cheung, AP

Staff members take pictures on the Chinese-made yacht Accelera 83 at a boat show in

Hong Kong on May 6, 2011.

Kin Cheung, AP

Staff members take pictures on the Chinese-made yacht Accelera 83 at a boat show in Hong Kong on May 6,

2011.

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Onboard, a disco ball, karaoke system and garish neon blue accent lighting inthe living quarters are hints that the vessel is aimed at the luxury yachtindustry's newest growth market: wealthy Chinese.
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Yacht makers are hoping they will be the latest to benefit from China's boomingeconomy, which is creating a growing class of wealthy tycoons splurging onluxury lifestyle pursuits. Rich Chinese are already known for spending lavishsums of money on flashy apartments, designer labels such as Louis Vuitton

and high-end cars such as Porsches and Rolls-Royces."People in China first will buy houses. Then cars. Then the next step will be theyacht industry," Wong said hopefully at a recent boat expo in Hong Kong. Hisfamily-owned shipyard located in Zhuhai, across the border from Macau inmainland China, has been building fishing and house boats for 40 years.

PHOTO: Gallery: Superyachts in Asia

Two years ago, it expanded into luxury yachts under the Accelera brand, aname chosen for its vaguely European sound. That illustrates another recenttrend: Chinese companies are expanding into high-end boatbuilding, a field

traditionally dominated by the Americans and Europeans. But in Wong's favor are high import duties for foreign yachts, part of China's strategy to helpcompanies in a range of industries develop into global competitors.

About 20 companies in China, including 11 backed by foreign investment, areproducing superyachts, which some define as longer than 80 feet. HongKong-based Kingship Marine is building a 144-footer at its yard in Zhongshan inChina's southern Guangdong province. The company hasn't found a buyer yetfor the $27 million vessel, which is the biggest being built in China, butManaging Director Roger Liang believes there won't be any shortage of

interest.China is "just like Russia five years ago. Suddenly Russia became a veryimportant player, so this could happen to China," he said, a reference tobillionaires such as Roman Abramovich , who owns at least three yachts.Yacht companies report that China sales started taking off two years ago,raising the possibility that some are being bought with improperly divertedstimulus money and bank lending that flooded the economy as part of government efforts to deflect the 2008 financial crisis. However, sailing expertssay many are also being bought by young entrepreneurs who have made

fortunes taking their companies public.China's yachting industry is still in its infancy but local governments are hopingfor rapid expansion.The city of Tianjin is building a 9-billion yuan ($1.4 billion) yacht port that will bethe country's largest, with 750 berths to accommodate luxury yachts up to 295feet long, according to a report in the China Daily newspaper.Hainan Island on the southern coast, meanwhile, is being positioned as theChinese Riviera. Qingdao, Xiamen and other ports along China's 9,000 milecoastline are also being developed to attract the yachting crowd.

There's no shortage of wealthy Chinese with money to spend on luxury motor yachts, a notoriously expensive pasttime.
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China has 875,000 millionaires and nearly half of them want to buy a boat, according

to a survey last year by the Hurun Report, China's version of the Forbes Rich List

Let your corporate image shine through.

There is plenty of room for growth, with about 1,300 private yachts in China,according to figures cited by state media. In the U.S., the world's biggest yachtmarket, there are 17 million privately owned recreational boats, according toindustry publication International Boating Industry.However, some sailing enthusiasts are skeptical and say China still has a longway to go before it can rival the superyacht's natural habitats of theMediterranean or Caribbean.One problem is murky regulations that vary from province to province. Somecities have rules governing boat ownership and how and where they can be

operated, while others don't. That makes it difficult for sailors to make longer journeys.Poor sailing infrastructure is also a problem, with relatively few experiencedstaff at a small number of marinas, some of which are located in the middle of industrial areas.Meanwhile, imported boats are subject to an import duty of at least 43%compared with about 15% for locally made watercraft. Some yachting expertsbelieve the Chinese government is using the tax to help develop the country'sfledgling yacht building industry.

"The Chinese really want to control it, up to the point where probably their ownindustry has developed to a level that it can run by itself," said Bart Kimman,who runs a yacht management company based in Hong Kong.To get around red tape, Chinese yacht owners are buying and registering boatsin Hong Kong, a special administrative region of China with a separate legalsystem.

Albert Wu, general manager of the Gold Coast Yacht and Country Club, said anincreasing number of his 220 berths are occupied by mainland Chinese-ownedboats.

Stiff duties don't seem to be deterring status-conscious Chinese from buyingships from established American and European boatbuilders.Frankie Chan, who traveled with his boss from Beijing to visit the show, wasplanning to buy five British-made Sunseeker boats.Chan is vice president of Oursjia, which rents out luxury cars and high-endfurniture to 500,000 clients in 60 cities around China. About 10% of them havebeen requesting luxury yachts.The pair were inspecting two 60-footers that their company would take deliveryof, including a sleek, black Predator model costing about 20 million Hong Kong

dollars ($2.6 million). They also plan to buy three others that are at least 90 feet


7/13

long, and come fitted with flat screen televisions, full size fridges and a rear "garage" hatch to stow dinghies, jetskis and other toys.Chan and his boss plan to travel to Italy later in May to look for more boats tobuy. Eventually, they want to have a fleet of 50 yachts from a range of brands

based at marinas around China."You can't compare with the European boats. If you talk about high-end boats,European boats are the best," said Chan.Gordon Hui, managing director of Sunseeker Asia, said that until two years ago,it had almost no sales to Chinese customers. Since then, he's sold about 25boats to Chinese customers and the market now accounts for 8% to 10% of thecompany's annual production of about 200 yachts a year.Chinese shipyards are hoping to compete with their foreign rivals byundercutting them on price. Wong's company sells three yachts under the

Accelera brand, including a 98-footer that sells for HK$38 million ($4.9 million).Wong reckons that's a quarter of the cost of a comparable American or European model. The company equips its boats with imported generators andother equipment but benefits from lower labor costs at its shipyard in Zhuhai,

just over the border from Macau.Wong has sold some 10 vessels, including one to a company boss from Chinawho paid his deposit of several million Hong Kong dollars in cash."We couldn't it count it quickly enough, so we had to go buy a cash-countingmachine," he said.

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

http://www.usatoday.com/money/world/2011-05-14-china-superyachts_n.htm

On Dec. 31st, 2009, Opinions of the State Council on Propelling Construction of Hainan as an International Tourism Destination was issued. The construction of Hainanas an international tourism destination becomes a major strategy of Chinesegovernment, while yacht tourism becomes a major part for the international tourism of Hainan. The Opinions clearly presents the plan to research and perfect the yachtmanagement measures, create conditions to expand the open water appropriately,provide quality services for the mooring of overseas yachts in Hainan, support theholding of international sailboat rally race in Hainan, actively promote the constructionof yacht docks and develop the manufacturing industry of tourism equipment likeyachts and light floatplanes.

The policy support of Chinese government greatly promotes Chinese yacht industry.Through the development in recent years, Chinese yacht economy gradually becomes

familiar to Chinese consumers. In the coming years, yachts will become an aquaticleisure activity and prosperous developing sport in China.
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Chinas boat business has been picking up steam especially after Beijing specifiedleisure boating as a direction for tourism development. Several cities are vying to

become Chinas Riviera, including Tianjin, Qingdao, Dalian in the north, Shenzhen,Sanya, Xiamen in the south, Shanghai and Hangzhou in the east. The number of

marinas is expected to double to 60 by 2014. Regulators are working on cutting thered-tape involved in operating a boat. ( yacht industry news)

Its amazing to see how boating is no w part of the new luxury lifetyle of the secondgeneration of wealthy Chinese. This trend is growing very fast, said Pierre Gervois, CEOof China Elite Focus, a high end public relations agency targeting Chinese super-richconsumers

But a lack of proper of proper infrastructure support for boat owners could be a barrier to growth. Right now there is not enough standardised marinas, fueling and

maintenance facilities, as well as qualified people to run them. China needs a mentor to improve infrastructure, we want to set up a school to train boating professionalshere, says Eriberto Morsanuto, Asia country manager of Nettuno Yachts.

In the coming few years, yachting will become a thriving recreational activity inChina, said Haikou Mayor Xu Tangxian. Governments of coastal cities should work out development plans for yachting tourism in time.


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11/13

Choppy waters: Yards may have to spend more on building complex ships

Not long ago Zhang Zhirong, a successful young property tycoon in Shanghai, decided to try something

new: shipbuilding .

In 2005, he started building his first shipyard. A mere three years later, he delivered his first ship, setting

an industry record for China. Mr Zhangs company, Rongsheng , was on its way to becoming the sixth

largest shipyard in the world, the position it occupies today.

EDITORS CHOICE

Maersk Line orders worlds biggest ships - Feb-21

Shipbuilders lift Seoul out of doldrums - Feb-18

Japanese shipyards demand action on won - Feb-07

Shipbuilders struggle as foreign rivals thrive - Feb-07

The rapid rise of Rongsheng, which raised $1.8bn in a Hong Kong IPO last year , underlines the meteoric

expansion of Chinas shipyards. Ten years ago, China built less than 10 per cent of the worlds ships.

Today, it is t he worlds largest builder, measured by deadweight volume.

Mr Zhang, and entrepreneurs like him, have ridden this wave, which has given birth to shipping magnates
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such as Simon Liang of Sinopacific and Ren Yuanlin of Yangzijiang . Mr Zhang, 41, is now on the Forbes

billionaire list at number 374, and lives on Hong Kongs leafy and secluded Bowen Road.

Chinas shipyards did not grow so quickly by chance. They were fuelled by the shipping boom just before

the global financial crisis, and have given their Japanese and Korean counterparts a run for their money

by offering lower costs, as well as attractive financing for foreign ship buyers.

Those incentives were a powerful catalyst during the economic downturn, when global liquidity dried up

and ship buyers sometimes defaulted on paymen ts. Chinas yards have also been boosted by growing

numbers of Chinese shipowners who prefer to buy domestically.

Some analysts see the shift as a strategic move for China. The history of shipbuilding for the last 150

years has been about commodity depend ent nations, says Jon Windham, analyst at Barclays Capital in

Hong Kong.

China is by far the single largest driver of bulk commodity demand today. So from a strategic point of

view, the government decided that for their own national security they needed to become a shipbuilding

nation.

That decision translated into a boost for the industry in 2009, when the government announced a

three-year stimulus programme for Chinese yards, encouraging banks to lend to shipbuilders hit by the

crisis, and also to provide credit to foreign ship buyers.

The goal, according to the stimulus announcement, was for Chinese yards to control 10 per cent of the

global offshore engineering market by 2011.

China ExIm Bank provided credit lines of Rmb160bn ($24bn) to Chinas two biggest state -owned yards

alone, in addition to separate loans to other companies.

The government was also eager to encourage shipbuilding because it supports a whole host of other

industrial activities, from steel mills to maritime engineering.

Chinas yards have also been able to succeed because they are extremely competitive on cost.

While there are some complex ships, such as LNG (liquefied natural gas) carriers, which have yet to be

produced in China, most Chinese yards have perfected the more simple bulk carriers used to carry things

such as coal or iron ore, and they now dominate production in that market.

However, with the global shipbuilding industry falling into the doldrums, Chinas ma ssive shipbuilding

complex is starting to look a little like a house of cards. Higher steel prices, overcapacity and very low

global bulk rates have hurt shipyards margins, and analysts are divided on how Chinese yards will

weather the downturn.

I would not be surprised if more than 100 small [Chinese] yards went bankrupt in the next two to three
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years, says Zhou Jiliang, head of new building for Clarksons Shanghai.

It will not have a big impact on the industry, though, since most of the big yards, whic h account for about

85 per cent of Chinas capacity, will be all right.

According to Mr Zhou, the changing market will force Chinese yards to spend more on research and

development in an effort to become more efficient and produce more of the most complex types of ships,

such as LNG carriers.

Others paint a more grim picture. The shipbuilding industry of China is actually a sandcastle, says Sokje

Lee, senior analyst at Mirae Asset Securities.

Nobody cares about the real profit figures of Chinese yards. When they have continued new orders, it is

easy to hide. But without orders they will see easy cash drain. Generally speaking, I doubt the real

profitability of Chinese yards. He believes they will be hard hit by rising labour costs in China and byhigher global steel prices.

A big question is the impact of Chinas credit tightening, and whether the governments efforts to cool the

economy will result in fewer loans to strategic industries, such as shipbuilding.

Mr Zhangs company, Rongsheng, has seen its share price see-saw since it listed in November,

underlining the uncertainty the sector faces.

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