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Article 06/2022
South Korea is a humble giant in the shipbuilding industry. Currently out of 8 major shipbuilding companies 04 are in South Korea. The quality and availability of skilled human resources with a great understanding of this sector give a decisive edge to South Korea.
China had taken over South Korea’s leading position in recent years with CCP’s support and large investment in this strategic Industry. Chinese state Shipbuilding Corporation (CSSC) and Chinese Shipbuilding Industries Corporations (CSIC) were merged and the Chinese Shipbuilding Group (CSG) , the world’s largest company was formed by Xi Jinping.CSG was provided substantial support in terms of tax breaks, loans and subsidies. This made Chinese shipbuilding a low-quality high quantity producing industry, however, due to better quality, South Korea maintained its superiority over Chinese shipbuilding.
Since 2019, the South Korean government has laid out plans to revive the country’s shipbuilding and shipping industries. It promoted the merger of Hyundai Heavy Industries and Daewoo Shipbuilding to create the world’s largest shipbuilder. South Korean shipbuilding giant Samsung Heavy Industries (SHI) announced in Sep2021 the closure of its plant Ningbo in the eastern Chinese province of Zhejiang. The SHI has two plants in China, SHI Ningbo, and SHI Rongcheng. Established in 1995, the Ningbo plant is focused on the production of ship blocks with iron structures as well as shipbuilding for overseas and domestic markets. It has produced and supplied nearly 200,000 tones of ship blocks per year.
At the time when China was still trying to comprehend the closing of the South Korean SHI plant in Ningbo in the eastern Chinese province of Zhejiang, another South Korean Shipping giant Hyundai Heavy Industries (HHI) has also dealt a huge blow to the Chinese Shipbuilding Industry on 05 Jan 2022. HHI, the world’s largest shipbuilder, by sales, announced its plan to lead the future shipping industry by launching the world’s first self-driven ship with autonomous navigation technology by mid-2022. The plan of “Future Builder” included several innovative green technologies like autonomous navigation systems, liquid hydrogen fuel-based propulsion systems & intelligent robotics.
South Korea has set a target for shipbuilders to capture up to 75%of the market share of environment-friendly vessels with no or close to zero carbon emission by 2030.
A combination of all the above factors has given nightmares to the ambitions of Xi Jinping and the Chinese shipping industry, being a strategically important sector. Thus increasing the global dominance of South Korea in the shipping industry, with innovative green technologies and quality has started inflicting heavy damage to Beijing’s economic aspirations in this sector.
(Commodore Vijesh Kumar Garg, VSM is Executive Director of the Chennai Centre for China Studies. The views expressed are personal.)
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