China Rongsheng Heavy Industries Group is China’s largest private shipbuilder. In July 2013 it announced that it had sought financial help from the Chinese government and big shareholders after laying off some workers and delaying payments to suppliers.
Rongsheng puts case for rescue to officials
Bloomberg in Shanghai
China Rongsheng Heavy Industries is in talks with two coastal cities in Jiangsu and government departments to secure financial assistance, as the mainland's shipowners association forecast that a slump in vessel orders will continue next year.
The country's largest shipyard outside state control was in discussions with the cities of Rugao and Nantong and some ministry-level departments related to the shipping industry, Rongsheng spokesman William Li said yesterday. The company said on Friday that it was seeking financial aid from the government after a plunge in orders forced it to reduce production and "restructure" its workforce.
Rongsheng has a production base in Nantong, a prefecture-level city that has administrative jurisdiction over Rugao.
China Shipowners' Association vice-president Zhang Shouguo said yesterday it was "difficult to see an obvious recovery" in demand for ships before the end of next year. "The shipping industry has been in a downturn for at least three years," he said.
Rongsheng and other mainland shipbuilders are struggling as a global vessel glut makes orders more difficult to win and pushes down prices. The central government has also identified shipbuilding as an industry with overcapacity, with the authorities saying they will not approve new projects and will limit financing.
A third of the shipyards on the mainland may be shut in about five years, the China Association of National Shipbuilding Industry said last week. It said their order books were down 23 per cent at the end of May compared with the same period a year earlier.
Rongsheng said last week it may post a net loss for the first half of the year. The firm's shares rose 3.8 per cent in Hong Kong yesterday to close at 82 HK cents.