The document provides an overview of the Chinese shipbuilding industry, including its current state, challenges, opportunities, and future strategy. It notes that while China has the most shipyards worldwide, the top shipbuilders are from South Korea in terms of orderbook size and value. The industry faces challenges from rising costs and currency appreciation. However, opportunities exist from market recovery and government support policies. The future strategy is to focus on consolidation, technology improvement, and high-value vessels, in line with China's economic shift toward quality and services. Rongsheng Heavy Industries aims to transform from a shipbuilder to a marine equipment provider, targeting vessels like bulk carriers and offshore units.

1. A Briefing on Chinese Shipbuilding
Industry – Now and Future
Chen Wenjun
Rongsheng Heavy Industries
June 6, 2013

2. Agenda
• The Chinese Shipbuilding Industry Nowadays
• Challenges and Opportunities
• Strategy for the Future

3. 0
20 000 000
40 000 000
60 000 000
80 000 000
100 000 000
120 000 000
140 000 000
160 000 000
180 000 000
1970
1971
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1973
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1976
1977
1978
1979
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2005
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2011
2012
DWT
Vessel Delivery History
China
Japan
South Korea
World
The Chinese Shipbuilding Industry Nowadays
• Encouraged by the booming market in 2006-2007, the wave to construct shipyards was surged in China. Now
with over 5000 shipyards, the country has become the largest shipbuilding base in the world.
• From 1999 to 2001, vessels fabricated by China reached only 1.2 million DWT per annum. However, during the
period of the Eleventh Five Year Plan (2006-2010), the number went up by 43% per year, which largely
exceeded its counterparts including South Korea and Japan.
Source: Fairplay

4. CSIC
CSSC
Large private
owned yards
The Chinese Shipbuilding Industry Nowadays
• The shipyards in China can be divided into 3 categories.
• Most shipyards are rather small and lack of competitiveness in the
world.
Chinese
Shipbuilding
Industry
Large state
owned yards
e.g. CSSC &
CSIC
Large private owned yards
(mainly in Jiangsu & Zhejiang)
e.g. Rongsheng, New Times, etc.
Other small-to-
medium yards
(Dominate in
number of the 3
categories)

5. 3 045 376
3 103 440
3 319 840
3 597 300
3 675 818
3 890 942
4 192 227
4 361 144
4 850 463
5 176 148
5 279 478
5 303 496
6 457 200
6 932 008
9 771 863
9 936 878
10 601 612
10 758 540
11 416 111
11 793 449
Tsuneishi Zosen
Atlantico Sul
Hudong Zhonghua
Koyo Dock K.K.
Sungdong S.B.
Jiangsu New YZJ
Jinhai Heavy Ind.
Hyundai Mipo
STX Dalian
Hyundai Samho
Namura Shipbuilding
Japan Marine United
Dalian Shipbuilding
Oshima S.B. Co.
Shanghai Waigaoqiao
Hyundai H.I.
Jiangsu Rongsheng
STX S.B.
Samsung H.I.
Daewoo
Orderbook Ranking as of May 2013 (DWT)
The Chinese Shipbuilding Industry Nowadays
• Although China has
the most shipyards
worldwide, the top 3 in
orderbook ranking are
all from South Korea.
• Among top 20: 7 from
China, 7 from South
Korea, 5 from Japan
and 1 from Brazil.
• The country’s
shipbuilding sector is
rather fragmented.
China
South Korea
Japan
Brazil
Source: Clarkson Research

6. The Chinese Shipbuilding Industry Nowadays
0
20 000 000
40 000 000
60 000 000
80 000 000
100 000 000
120 000 000
2005 2006 2007 2008 2009 2010 2011 2012 2013
(As of
May)
New Contracts (DWT)
China South Korea Japan
0,00
20 000,00
40 000,00
60 000,00
80 000,00
100 000,00
2005 2006 2007 2008 2009 2010 2011 2012 2013
(As of
May)
New Contracts (USD Million)
China South Korea Japan
• Although China obtained the most new contracts per annum in the world since 2007, the gap between it and
South Korea has become smaller and smaller in recent years.
• However, in terms of contract value, South Korea was far beyond that of China.
Source: Clarkson Research

7. The Chinese Shipbuilding Industry Nowadays
Tanker
11 %
Bulker
4 %
Container <
3000TEU
0%
Container >
3000TEU
18%
LNG Carrier
14 %LPG Carrier
2 %
Offshore
48 %
Other
3 %
South Korea’s Orderbook in Value (As of
May 2013)
Tanker
12 %
Bulker
36 %
Container
<
3000TEU
2%
Container >
3000TEU
13%
LNG Carrier
3 %
LPG Carrier
2 %
Offshore
24 %
Other
8 %
China’s Orderbook in Value (As of May 2013)
• The orderbook of Chinese shipbuilding industry now is still mainly supported by numerous traditional bulk
carriers. This is in line with the extensive economic growth mode of the country.
• Although Chinese shipyards have started transformation towards the high end, they still lag behind the Korean
counterparts.
Source: Clarkson Research

8. Agenda
• The Chinese Shipbuilding Industry Nowadays
• Challenges and Opportunities
• Strategy for the Future

9. Challenges and Opportunities
Challenges Minimum Wage Standard in China (Source: Wind)
Standard (RMB) Increase Rate
1-year RMB rate again USD (Source: Yahoo Finance)
Ever-rising cost
• Suicides issues in Foxconn's iPhone factories brought
waves of pay increase.
• In 2012, the minimum wage standard in china went up by
11.93%.
• Steel price also increased by 32% in comparison with
August 2012.
The appreciation of RMB
• RMB has seen great appreciation against US Dollars in
recent years, while Korean Won and Japanese Yen all
depreciated.
• The low-price advantage of Chinese shipyards will be
weakened.

10. Challenges and Opportunities
Challenges
New regulations by international conventions
• World economic development is towards the direction of low carbon, energy efficiency and environment
friendly.
• New regulations including EEDI has been released.
• The design and construction capability of Chinese shipyards will face even greater challenges.
More fierce market competition
• South Korea will keep its advantage in high-tech vessels and offshore products.
• The greatly depreciated Yen strengthened competitiveness for Japanese yards in price.
• Through policies of State Vessels Built by State Yards, Brazil and Russia also entered competition.

11. Challenges and Opportunities
Opportunities
0
10 000 000
20 000 000
30 000 000
40 000 000
50 000 000
60 000 000
70 000 000
2006-Q1 2007-Q1 2008-Q1 2009-Q1 2010-Q1 2011-Q1 2012-Q1 2013-Q1
New Contracts (DWT)
Market
• The shipbuilding market was recovered in 2013 with new contracts received increasing by 46.7%.
• Not only traditional ship owners, but also fund companies are involved in investment: Oaktree Capital with
Oceanbulk, JP Morgan with Ceres, JP Morgan with Bernhard Schulte, etc.
Source: Clarkson Research

12. Challenges and Opportunities
Opportunities
Labor
• China has reserved many local
talents in manufacturing, and
the labor cost is still largely
lower than South Korea and
Japan even with the rising
payment.
• World equipment
manufacturing industry has
further shifted to China.
Finance
• In comparison with western
counterparts, Chinese banks
are relatively stable in
operation.
• Ship owners may have more
access to buyer’s credit from
Chinese banks.
Policy
• According to the "Twelfth Five-
Year Plan" for Shipbuilding
Industry, China will strive to
become a leader in global
shipbuilding by 2015.
• The Chinese government will
further consolidate and support
the sector, which may benefit
local yards.

13. Challenges and Opportunities
Goals set at the "Twelfth Five-Year Plan" for shipbuilding industry for 2015
Scientific and technological comprehensive strength ranks the world
• To form more than 50 brand products that meet the latest international regulatory requirements and lead the
international market.
Upgrade the industrial structure
• To significantly improve concentration, with top 10 shipbuilding enterprises accounting for more than 70% of
vessels built by the nation.
• To take 20% of worldwide offshore market shares.
Efficiency and effectiveness significantly improved
• Increase industrial value added rate.
• An average increase of 15% of the overall labor productivity.
• Digital shipbuilding capacity to be significantly improved.

14. Challenges and Opportunities
5000 shipyards
60% vessels built
by top 10
China
70 shipyards
80% vessels built
by top 4
South Korea
• Now the average orderbook by a single yard in China is less that 1/5 of that in a South Korea yard.
• The government will further consolidate the sector by encouraging mergers and acquisitions and
reorganization among Chinese shipbuilders, said by the Ministry of Industry and Information Technology.
• The new policy will see more government support to large-scale shipyards like Rongsheng, while most
small and weak ones will be merged.

15. Agenda
• The Chinese Shipbuilding Industry Nowadays
• Challenges and Opportunities
• Strategy for the Future

16. Strategy for the Future
Promoted by investment and export Promoted by technology and quality
Focus on construction capability
expansion Focus on technology improvement
Manufacturing oriented Service oriented
Low end of value chain High end of value chain
Environment jeopardized Environment friendly
• In general, the strategy for Chinese shipbuilding industry in the future is to match the trend of Chinese
economic development: high technology and green growth.

17. Rongsheng has started transformation – from shipbuilder to a marine equipment provider
Highlights
• A Hong Kong listed company
• Three marine related business segments
• Largest newbuilding yard
• Good track record
• Largest orderbook in China
• Strong financial support
Strategy for the Future

18. Strategy for the Future
Target vessel products – Rongsheng Shipbuilding
Panamax Bulker
Capesize Bulker
Suezmax Tanker
Ice-class Panamax Bulker
7000 TEU Container Vessel
Kamsarmax Bulker
Very Large Ore Carrier
Panamax Tanker
VLCC
9400 TEU Container VesselAframax Tanker
New Castlemax Bulker

19. Target offshore products – Rongsheng Offshore & Marine
Strategy for the Future
Drilling Rigs
• Jack up
• Semisubmersible
• Drillship
Production Unit
• FPSO
• FSU
• FSO
• Shuttle Tanker
Service Vessel
• Pipe Laying Heavy-Lift Vessel
LNG, FSRU and FLNG in Offshore Engineering

20. Thank You
Welcome to visit our stand at Nor-shipping
Stand T02-04