Shipbuilding, will it go to China or

Shipbuilding, will it go to China or Vietnam?, Could both competing countries flourish together in this industry? Options  

Shipbuilding is relatively labour intensive. You will need an army of welders, mechanics and other labourers.
So it is about labour cost, and Vietnam has an edge over PRC right now and in the future. Productivity is another aspect. But could both competing countries flourish together in this

industry?
Shipbuilding companies build a lot of shipyard in both countries. Where the trend is going ?
   
Gavin_wangjz  Jun 8 2006, 02:42 PM Post #2 

 I'm doubt Vietnam's shipbuilding capability. just a baseless doubt, who can provide some basic info about Vietnam and China 
   

glueckspilz  Jun 8 2006, 06:23 PM Post #3 

Just for information, PRC and Vietnam already compete head to head in this sector.
http://weblog.viet.net/article.php/20060511210247147
http://vietnamnews.vnagency.com.vn/showart...num=01DOM300506
http://www.shipconstructor.com/clients_list.html
   
 kyli  Jun 8 2006, 07:00 PM Post #4 

For next few years, China's shipbuilding capabilities would have double, and China had already gotten enough orders beyond 2008. Vietnam is still a new start up, and don't have the

infrastucture to compete against China yet. China had technology edge, mass infrastuctures and labors advantages. I think China would worry more about how to catch up with Korea

and Japan than Vietnam.
    
glueckspilz  Jun 9 2006, 05:18 AM Post #5 

All big Korean shipbuilders build new shipyards in China, some also in simultaneously in Vietnam.
China does not have a truly edge in technology and labours. Infrastructure is maybe an edge.
I've expressed my concern about China having shortage of skilled labours. There is a limited number of skilled welders. And China needs them for construction, car manufacturing,

pipeline, and many other industries, not only shipbuilding.
Korean and Japanese are too expensive, they only survive thank to heavy subsidy of their government.
Furthermore they are going to concentrate on passenger ships and other more specialized ships.
Vietnam has an edge on bereaucracy and cheaper wage.
 
kyli  Jun 9 2006, 08:49 PM Post #6 .

South Korean shipbuilders are scrambling to move production of ship hulls to China to take advantage of its cheap labor and vast factory sites. Making hull blocks is mainly labor-

intensive, so it is cost effective to manufacture hull blocks in China and assemble them back in South Korea. Eventhough, many foreign companies take a interest in Chinese

shipbuilding companies, Chinese government has been reluctant to allow these foreign companies to do so. Most shipbuiding companies are still state and domestic owned, and

with strict rules and bright future it would not be necessary for foreign involvement.

There are many new shipyard underconstruction, the new shipyard in Changxing Island which will quadruple Shanghai's current shipbuilding capacity to 12 million tons by 2015.

Dalian Shipbuilding Industry group also plans to expand its capacity to 6 million tons in 2010 from 2.6 million now. China had already been grabbing over 17% of the global shipbuilgin

market. China's shipbuilding capability will reach over 15 million in 2006 which would enable China to hold over 20% of the world's shipbuilding tonnage. In few years later, China

could easily excess Japan and south Korea as world biggest shipbuiling country.

Vietnam just doesn't have the resources and infrastructure to compete with more modernized and better financial Chinese Companies. Even if Vietnam could manage to attract more

investment and orders, it would take years to catch up with Chinese level of technology. And you have to take into account there are a lot of domestic orders also, China simply is a

bigger market by itself. China could provide cheap labor and bigger infrastructure to fullfill big orders.
   
 glueckspilz  Jun 9 2006, 09:33 PM Post #7 

 China has no shipbuilding technology advantage over Vietnam. Ship design are imported. Most of the important parts are imported or outsourced. Of the ship value, shipyard usually

only contribute 30% of added value.Infrastructure is better off in China than in Vietnam, but that is all what China has right now.
 
kyli  Jun 9 2006, 10:52 PM Post #8 

Eventhough China ship design are mostly imported, but you still need times and experience to absorb this kind of technology. Vietnam for now doesn't have experience from builiding

many kinds of ships, so China still has edge in certain areas.
   
MIGleader  Jun 10 2006, 04:30 PM Post #9 

 Well lets not forget, shipbuilding has many aspects to it. China has mroe trade relations with other countrys than vietnam. As a result, those countries will be inclined to have China

build the ships needed for trade. Ex: Iran and China inking natural gas deals. You dont see Iran asking vietnam to build the tankers, do you?
   
Keith NT (Sampanviking)  Jun 10 2006, 05:21 PM Post #10 

Migleader

Which is a good point I don't know how far that will carry in practice, but as long as the orders are competitive it will certainly be an advantage for China.

China must have in addition to better Infrastructure, economies of scale. I do not know what the Vietnamese Steel Industry is like, but I guess China has better access to these

resources than Vietnam.

If Vietnam is competing and China has a skilled worker shortage, I would guess that the most likely outcome will be the Chinese recruitment of skilled Vietnamese Ship Builders - or

joint ventures of some sort if worker mobility is still a problem in Vietnam.

glueckspilz  Jun 13 2006, 08:15 AM Post #11 

I am afraid , it is not that likely. Even now foreign shipbuilders are already building their shipyards in Vietnam beside their PRC subsidiaries. There are already numerous shipyards in

Vietnam.
I hope that China can design its own ship, this is the core of shipbuilding technology, not just a sweat shop armed with welders. Now Chinese shipbuilding industry is still too much

dependant of foreign technology and even material and components.
Vietnam try very hard to attract FDI and offer special treatments for foreign companies.

Keith NT (Sampanviking)  Jun 13 2006, 06:37 PM Post #12 

 In which case the next likely guess is that each side will start to specialise, afterall its not as though a ship is a ship is a ship, Different Classes, different concepts etc.

All the same though, I would be very surprised to learn anything other that the weaknesses you ascribe to the Chinese Shipbuilding Industry are not even more pronounced in Vietnam.

I also repeat that China has a substantial Iron and Steel Industry, but I have no idea what facilites are available domestically in Vietnam.

glueckspilz  Jun 13 2006, 09:18 PM Post #13 

I agree that Vietnam has its own problems but I could not emphasis enough that PRC should address skilled worker education issue more intensively.
For very big ship some steel parts need to be imported, even in PRC.
As I described on my first post, shipbuilding industry rely heavily on cheap skilled labour.
   
MIGleader  Jun 13 2006, 11:19 PM Post #14

If that is indeed the case, china would likely specialize in military vessels, supertankers, and larger cargo haulers, which it has had 25 years experience designing and building. as

international trade increases, these types will likely make up the majrity of the market.

Keith NT (Sampanviking)  Jun 16 2006, 06:24 PM Post #15 

More than likely, but personally I would not begrudge the Vietnamese a piece of the Miracle Pie. After all the more prosperous these other SE Asian countries become, the more stable

they are and the greater the market value for other Chinese made products.

China is actively spreading the benfits of development to all the countries which border it and it is vital to its future prosperity and security that it does.
 
glueckspilz  Jun 16 2006, 07:50 PM Post #16 

You may call it spill over, but current FDI flow to Vietnam is due to its lean beaurecracy. Shipbuilding is a strategic industry, which also important militaryly. It is about cost

competitiveness. Quality is somewhat seconded. (for merchant vessel)
 
kyli  Jun 16 2006, 09:30 PM Post #17 

Shipbuilding industry might has over capacities problem in next few years, the competition would be intensify by then. But I am not worry that China can't compete with Vietnam,

Chinese shipbuilding just lot more financial stronger. You can't underestimate the benefit of home markets advantage, China demands on ships should make a big percentage of all

the orders.
   
glueckspilz  Jun 17 2006, 05:16 AM Post #18

As long as the orders are government related, the demand will stay at home. If it is comercial one, it will look for the best price to quality ratio. So the home market advantage does not

really apply to commercial shipping lines
   
kyli  Jun 17 2006, 06:24 PM Post #19 

If the prices, quality and capabilities are similar, Chinese companies could prefer Chinese shipbuilding companies done to closer location.
  
glueckspilz  Jun 17 2006, 09:18 PM Post #20 

I am agree with you, but given that Vietnam does have cheaper labour than China , so price competitiveness may need another increase of productivity.
Vietnam labour might be cheaper, but it is not by much. Many businessmen in HK and Taiwan have been reluctant to invest in Veitnam, because they don't have good infrastucture. So

the costs of others items such as transportation will be higher, at the end of day Vietnam could only offer a little cheaper alternative. Vietnam might has some sucess in attracting FDI,

but it would not necessary ever to get as much attention and investment China is getting now.
   
glueckspilz  Jun 18 2006, 08:19 PM Post #22 

 Kyli, I agree of most of your arguments, but I am still worried, a competitor is still a competitor.
Some of my professors hinted the potentials of Vietnam. They are not so far as PRC right now, but they may catch up, then it will be a serious economic threat.
   
kyli  Jun 18 2006, 09:54 PM Post #23 

I think as a competitor for varities of sectors, Vietnam could be a threat. But as a global and regional competitor which would threat China as whole, Vietnam simply doesn't have the

market, comsumption and labour. China is more than times more people than Vietnam, the landmass, resources, labour and development all surpass Vietnam. If Vietnam could be

as sucessful as Korea(Which I doubt could be acheive in next thrity years), it still doesn't have the ability to outcompete China as the future biggest economy in Asia(i would argue India

has lot more pontential).
   
glueckspilz  Jun 19 2006, 10:01 PM Post #24 

I don't think that Vietnam could be the next Korea either. But in some sectors there are serious competition and shipbuilding is just too strategic to give it away.
   
kyli  Jun 19 2006, 10:40 PM Post #25 

China should prepare to take on any new competition, and it won't give up easy on strategic industry such as shipbuilding to Vietnam. The amount of funds are giving to build better

and more capabilities infrastucture demonstrate, China takes shipbuilding industry as important sector. By 2015, China would have world biggest shipbuilding capabilities, I would

worry more about overcapabilities and profitability than competition from Vietnam.
   
Gavin_wangjz  Jun 21 2006, 01:32 PM Post #26 

Vietnam will not got the chance to be another Korea. China will speed up their shipbuilding capability.concerned market, labour and technology, all of thoese drop behind China.so

they will be defeated if China start a price war .
   
glueckspilz  Jun 21 2006, 08:24 PM Post #27 

 By 2015 , I hope that defense contracts will absorb some of the overcapacity in PRC.
What PRC need to do to maintain competitiveness in this sector are:
1. Train more skilled workers
2. Foster creativity and innovation
3. Use home made design