China overtakes Korea in global shipbuilding competitiveness
China overtook Korea in overall competitiveness in the shipbuilding industry in 2023, according to the report titled “Comprehensive Competitiveness of the Shipbuilding Value Chain and New Directions for Korea’s Maritime Strategy” released by the Korea Institute for Industrial Economics and Trade (KIET) on May 13. This marked the first time that China has beaten Korea in the shipbuilding sector since 2020 when the institute began to release related reports, according to BusinessKorea.
According to the report, China’s overall competitiveness stood at 90.6 in 2023, 1.7 points ahead of Korea’s 88.9, amid the world’s growing shipbuilding dependence on China and China’s, Japan’s, and Korea’s growing shares of the world’s shipbuilding market. Korea had an advantage over China in research and development (R&D), design, and procurement, but its gap with China narrowed and it lost ground to China in production. Korea was also overtaken by China in the aftermarket (AM) for ship maintenance and repairs and in the service and demand sectors, the institute analyzed.
Among single shipyards, Samsung Heavy Industries, HD Hyundai Heavy Industries, Hanwha Ocean, and HD Hyundai Samho Heavy Industries ranked first through fourth in terms of order backlogs in March. However, when looking at shipbuilding groups, China Shipbuilding and Shipbuilding Corporation (CSSC), the largest state-owned shipbuilding group of China, topped the list by a wide margin. Other Chinese state-run enterprises such as China Ocean Shipping Corporation (COSCO) and China Merchant were also in the top 10 club.
KIET believes that state-run shipyards have realized the qualitative growth of China’s shipbuilding industry. China’s state-owned shipbuilding groups are capable of building, repairing, and modifying ships, offshore plants and specialized vessels such as warships. China also has a number of design firms, research centers, and financing companies that can provide total solutions. In addition, it has been able to build a competitive industrial ecosystem with a large number of orders and production volumes. Another advantage for Chinese shipbuilding is that building warships can be a cash cow for Chinese shipbuilding companies even when they are in a recession.
China has the largest navy in East Asia and is likely to surpass even the world’s most powerful nation, the United States, in terms of the number of warships. China has the world’s largest merchant fleet, four times the size of the next largest, Korea.
Korea and Japan, on the other hand, have difficulty competing with China due to limited support for shipbuilding under the World Trade Organization’s fair competition system and a shortage of human resources, the KIET noted.
