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Increasing Demand for South Korean Shipbuilding Equipment
Needed Expertise
Increasing Demand for South Korean Shipbuilding Equipment
  • By matthew
  • April 20, 2015, 04:15
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A ship's hull being built at Hyundai Heavy Industries' shipyards.
A ship's hull being built at Hyundai Heavy Industries' shipyards.

 

Chinese and Japanese shipbuilders’ orders for South Korean shipbuilding equipment are “increasing,” the Korea Trade-Investment Agency (KOTRA) said on April 19. 

Jo Hyo-jae, a professor at Korea Maritime and Ocean University, told KOTRA that Japanese shipbuilders do not have enough design manpower to meet the recently-increasing demand for liquefied natural gas (LNG) ships. So, South Korean shipbuilding equipment companies’ entrance into the Japanese market seems “promising,” he said.

An official of Kawasaki Heavy Industries, Ltd. told KOTRA that the company is going to increase the number of overseas suppliers, as the company plans to construct more than three LNG ships annually for the increasing orders. 

A purchasing expert at BFD, a large Chinese shipbuilder, told KOTRA that China’s technical expertise for high-value added ships is weak. So China has high demand for South Korean premium components, he said.

While China has been ranked 1st in shipbuilding orders worldwide since 2012, it manufactures “mainly” small and medium-sized ships such as bulk carriers, and its shipbuilding capability for large ships is “weak”, KOTRA said. Therefore, Chinese companies consider the high-value-added shipbuilding of large container ships or LNG ships to be “vital.”

The market share of Japanese shipbuilders increased from the 10 percent range in 2010-2013 to 20 percent in 2014, as its price lowered due to the low yen, KOTRA said.  

Moreover, the Japanese government’s energy policy, replacing nuclear power with thermal power, is also helpful for Japanese shipbuilders, as the policy increases the demand for LNG ships for shale gas shipments, KOTRA said.

Thirty-six South Korean shipbuilding equipment companies in Busan, which account for almost half of the entire sector of the country according to KOTRA, had their revenues in 2014 decrease by 9.2 percent from last year, the Busan Chamber of Commerce & Industry said. 

Kim Sung-soo, director at the strategic marketing sector of KOTRA, said that the agency will expand its support for small and medium-sized South Korean companies’ exports, in accordance with the increasing demand for South Korean shipbuilding equipment from China and Japan. 

KOTRA is holding the South Korea-China shipbuilding equipment global partnering from April 20 to the next day in Guangzhou, China, it said.