Korean deals in US will rock, but not sink, China’s giant shipbuilding sector: analysts
Trump’s efforts to make US shipbuilding industry more competitive could test Chinese shipmakers down the line, but analyst notes ‘pretty much every other market remains open to China’
South Korea’s investments announced this week for the US shipbuilding sector will mildly rock China’s busy shipyards but – at least in the short term – are unlikely to put a dent in the Chinese industry, which enjoys scale and cost advantages over other countries, according to analysts.
The rack of intended investments from major companies in South Korea, the world’s second-largest shipbuilding nation after China, could test the Chinese sector after the US projects get moving several years down the line, they said.
“Of course there will be an impact on the Chinese yards, but I would say ‘modest’ because you have the rest of the world to cater to,” said Jayendu Krishna, a director at Drewry Maritime Services in Singapore.
“What it may do is stem the surge of the Chinese yards and their competitiveness and facilitate the growth of the dying shipyards of Japan and may give a new lease of life to the Korean yards,” he said.
But China’s labour and steel cost less than what Korea or the US can offer, making its vessels attractive to buyers overseas, especially in countries with emerging economies such as Indonesia, Krishna and other experts said.
“China may be concerned about this investment, but it won’t affect their business at this point,” said Andrew Collier, a senior fellow with the Harvard Kennedy School’s Mossavar-Rahmani Centre for Business and Government.