Shipbuilders plying dire straits

PUBLISHED : Sunday, 30 May, 1999, 12:00am
UPDATED : Sunday, 30 May, 1999, 12:00am

SURVIVAL has become the priority for China's shipbuilding industry despite preferential policies from the state to keep it afloat.

Dalian New Shipyard vice-president Dong Qiang said the corporation, which has the largest shipbuilding facilities in China, had yet to secure a contract this year.

'Last year we got contracts for eight ships and seven have been completed,' Mr Dong said. 'The last one should be finalised this week.' The nine-year-old shipyard, one of two in Dalian, is expecting profits to drop 30 per cent to 50 per cent next year. It made a net profit of 11 million yuan (HK$10.3 million) from sales of 2.2 billion yuan last year.

Keen competition from Japan and Korea has cut the cost of shipbuilding by more than 40 per cent since the early 1990s.

'Our objective at present is survival, not profitability,' Mr Dong said.

The strong yuan has exacerbated the situation as it has made imports and exports more expensive and thus raised production costs.

Despite the gloomy prospects, Mr Dong affirmed the role of shipbuilding as a labour-intensive industry which utilised other heavy industries and therefore helped them in turn.

The visit by Premier Zhu Rongji to the shipyard last year resulted in some state measures to help the ailing industry, such as raising the tax returned to the industry from nine per cent in 1997 to 16 per cent last year.

But the preferential policy had little impact as the company had to pay its 4,300 staff without any prospective contracts.

On average, each worker made about US$2,000 (HK$15,500) last year.

The shipyard has laid off about 500 staff in recent years.

A dockyard worker said days would probably be spent on political studies if there were no ships to build.