cruise ship building in china

Cruise Ship Building in China

Liwei Tan, Senior AdviserFinpro ShanghaiMobile: +86 13916970205E-mail: [email protected]

Content

• Value Chain of Cruise Industry in China

• Market Size and Prospect

• Cruise Companies in China

• Policies

• First Cruise Ship to be Built in China

• Potential Shipyards for Cruise Ship Construction and Refurbishment

• Business opportunities for Finnish Offering

• Market Entry Method

• Cooperation Possibilities

© Finpro Shanghai 11/17/20152


Value Chain of Cruise Industry in China



• Policies






Value Chain of Cruise Industry in China


Development Construction Operation

Carnival, Royal Carbbean, Genting, Ctrip, Bohai Ferry, HNA, MSC, NCL

Cruise Companies

NDRC, MOT, MPS, MIIT, China Customs, AQSIQ, CNTA

Regulators (Government level)

CCTA, CCYIA, CANSI, CLIA

Associations

Funds (ICI)Investors

EXIMBC, CMBC, CMB, CDB etc.Financers

Deltamarin, Fincantieri

Cruise Liner Conceptual Developers (Consulting)

SWS, GSI

New-building

Wärtsilä

Mechanical & Electrical System

MSI

Automation and IT

Textile fabrics, Carpets, Furniture

Interior Outfitting Materials

Fincantieri

Project Management

Cruise Companies

Operators

Shanghai, Tianjin, Xiamen, Sanya etc.

Ports Services

Ctrip, Spring Tour, Satrip, SCITSTravel Agencies

SMU, DLMU, CoscoqmuHR (hospitality staff & crew)

HRDD, COSCO Zhoushan, Xinya

Refurbishment &Maintenance

MARIC, SDARILR, DNV-GL, CCS

R&D, Classification

Society

Marintec, CCS,Shiptec, INMEX

Conferences &

Exhibitions Deltamarin, MARIC

Architectural Design

Medusa, Zhaoxiang

Engineering, Workers



Market Size and Prospect


• Policies






Market Size and Prospect – China Outbound Tourists


• China became the biggest source of the international travel market• In 2014, only 700K of 110 million tourists traveled abroad by cruise

Market Size and Prospect – Chinese Tourists by Cruise

57 103222 189 412

1025

1479

2000

28 4079

110

169

335366

500

0

500

1000

1500

2000

2500

2008 2009 2010 2011 2012 2013 2014 2015 (E)

0

100

200

300

400

500

600

Tourists from Mainland China Homeport Voyage-times

Expon. (Tourists from Mainland China)

© Finpro Shanghai 11/17/20157Source: CCYIA & Cruise Green Paper

Vo

yage

-tim

e

Average annual growth ratio

75%

China Cruise Market vs Western Market


China US&EU

Small Family

Age: 45-70

Big Family:

3 generations

Age: 30-50

Chinese prefer Short Sailings A kind of social activity for Chinese




Cruise Companies in China

• Policies






Cruise Terminals in Mainland China


sh

Shanghai (Homeport)

Tianjin (Homeport)

Xiamen (Homeport)

Sanya (Homeport)

Qingdao

Zhoushan

In operation

Under construction or to be built soon

Dalian

Yantai

Haikou

BeihaiShenzhen

Guangzhou

Cruise Companies in China (I)


Cruise Companies Ship Name Tonnage(Tons)

Cabins(unit)

Low Beds (Pcs)

From China Homeport

Royal Caribbean

Mariner of the Sea 138.000 1.557 3.114 2009

Voyager of the Sea 138.000 1.577 3.144 2012

Legend of the Sea 70.000 900 2.074 2012

Quantum of the Sea 168.000 2.101 4.180 2015

Ovation of the Sea 168.000 2.101 4.180 2016

Carnival (Costa)

Fortuna (Replace Classica)

103.000 (52.926)

1.358(654)

3.470(1.680)

2016(2009)

Victoria 75.166 964 964 2012

Atlantic 103.000 1.358 3.470 2013

Serena 114.000 1.500 3.780 2015

Carnival (Princess Cruise)

Sapphire Princess 111.600 2.101 2.676 2014

Golden Princess 109.000 N/A 2.600 2016

Majestic Princess 143.000 N/A 3.560 2017

Cruise Lines in China (II)


Cruise Lines Ship Name Tonnage(Tons)

Cabins(unit)

Low Beds (Pcs)

From China Homeport

Carnival (AIDA) New-build ship N/A N/A N/A 2017

Carnival (Carnival) New-build ship N/A N/A N/A 2017

MSC Cruise MSC Lirica 65.875 988 2.679 2016

Norwegian Cruise Line Norwegian Bliss 163.000 N/A 4.200 2017

Genting Hong Kong (Star Cruise)

Superstar Virgo 65.338 935 1.870 2015

Superstar Libra 43.385 709 1.418 2015

SkySea Cruise Line

SkySea Golden Era (former Mein Schiff 1)

71.545 907 1.814 2015

N/A (former Mein Schiff 2)

77.713 943 1.886 N/A

Bohai Cruise Chinese Tai Shan (former Costa Voyager)

24.427 416 927 2014

HNA Cruise (will stop operating on Nov. 2015)

Henna (former Pacific Sun)

47.262 654 1.308 2013





Policies






Policies (I)

June 2008, “Guidance of the Promotion for China Cruise Industry Development” issued by NDRC (National Development and Reform Commission)

– In long-term, build up domestic cruise ship design and construction capability though technology transfer, cooperation and innovation gradually.

2013 & 2014, the State Council issued two documents regarding to tourism industry development to support localization of cruise and yachts manufacturing.

– “Opinions of the State Council on Accelerating the Development of Tourism Industry”

– “Opinions on Promoting the Reform and Development of Tourism Industry”

March 2014, Ministry of Transportation published the “Guidance of Promotion for China Cruise Transportation Development”.

– Cruise lines, cruise ship maintenance, design and construction should be developed energetically.

– Relaxing and adjusting the age limitation for import second-hand cruise ships. (Current age limitation for second-hand ferries, Ro-Pax and passenger ships purchase and charter is 10 years).


Policies (II)

May 2015, “Made in China 2025” was published by the State Council

– Make breakthroughs in cruise ship manufacturing in a 10-year.

April 2015, “National Coastal Cruise Port Layout Plan” made by the Ministry of Transportation

– Build 12 ports as departure ports: Dalian, Tianjin, Qingdao, Yantai, Shanghai, Ningbo -Zhoushan, Xiamen, Shenzhen, Guangzhou, Sanya, Haikou and Beihai.

– Establish 2-3 cruise homeports by 2030.

Sep. 2015, 6 Ministries and commissions: MIIT, NDRC, MOT, AQSIQ, CNTA, CAAC jointly issued the "Opinions on Promoting Tourism Equipment Manufacturing"

– Accelerating cruise ship design and construction listed as the first one of five key tasks.

– Taking cruise and yachts manufacturing into top-level design and industrial development planning.

– Using diversified funds to support related science and technology innovation.

– Providing financial and taxation policies for key spare parts localization.






• Policies

First Cruise Ship to be Built in China





First Cruise Ship to be Built in China

• Owner: the HK based joint venture (60% owned by CSSC and CIC; 40% owned by Carnival)

• Operator: the HK based joint venture (Mainly reply on Carnival)

• Builder: Shanghai Waigaoqiao Shipbuilding (SWS), a subsidiary of CSSC

• Construction period: 2016-2020 (the first ship)

• Designer:

o Fincantieri – conceptual design & basic design

o MARIC (708) – conceptual design(?), basic design & detailed design

o SDARI (604)– basic design(?), detailed design

o SWS Engineering – production design

• Classification Society: Lloyd’s Register of Shipping

• A CSSC executive said that the yard will cooperate with foreign companies on the five ships.


Tonnage: > 130,000 tonsLength: > 300 meters Capacity: ~ 5,000 peopleHanging flag of convenienceA series of 5 cruise ships

Shanghai Waigaoqiao Shipbuilding (SWS)

• Founded in 1999, wholly owned subsidiary of CSSC

• 5 million square meters area, 4K meters coastline

• 4 four outfitting piers, 3 docks, 8 over 600-ton gantry cranes

• 7 million DWT annual production capacity

• China's first shipyard (top 1 on volume and profits)


No. of vessels / 10,000 DWT

• Main product types: Bulk Carriers (61,5%), Oil Tankers (9,9%), Container Ships (10,4%), VLCC (14,6%), VLGC (2%), Drilling Rigs (0,8%) and FPSO (0,8%) etc.

• Produced the most advanced deep-water drilling platform "Offshore Oil 981", the largest container ship of 18000TEU and leading 83K VLGC ship.

Delivery time: 2020

Capacity for 2 large cruise ships

The first China made cruise ship will be delivered before end of 2020

Capital

Facilities

People


• project management team; • suppliers and engineering

subcontractors

• production facilities; • workshops o thin sheet cutting and weldingo block assemblyo interior outfitting;

• storage center• outfitting pier

• multi-channels financing• governmental subsidies • financial organizations (EXIMBC) • social capital funds

Procurement Procedures of SWS


I• Supplier brands should be listed on the preferred supplier list of the owner,

shipbuilder, designer and engineering company

II• Probably, SWS will use most of Fincantieri’s suppliers

• SWS wants to develop its own supplier chain during the construction process

III

• SWS has project team for the supplier/brand/material selection.

• The team members come form different departments such as procurement, technical, finance and legal.

IV• A Vice General Manager of SWS is responsible for cruise ship project, final approval

will be made on the top management level.

SWS - normal mechanical and electrical products, steel, pipes and cables etc. Designer – particular equipment and products, interior outfitting Engineering company – outfitting materials





• Policies


Potential Shipyards for Cruise Ship Construction and Refurbishment




Potential Shipyards for Cruise Ship Construction


Guangzhou Shipyard International Company Limited(GSI) www.chinagsi.com

• Founded in 1954, restructured to GSI in 1993

• Listed both on Hong Kong and Shanghai stock market since 1993, CSSC holds 35,71% shares

• Three factories: Liwan and Nansha District of Guangzhou, Zhongshan City

• Acquired Longxue Shipbuilding to own 2 large docks (500K tons), 4 piers and 4 of 600-ton gantry cranes

• Main products: tanker, cargo ship and multi-purposed ship, RO/RO vessel, RO/Pax, semi-submersible heavy lift vessel and handy-size ships

• Designed annual production capacity will be 7,5 million DWT

http://www.chinagsi.com/

Potential Shipyards for Cruise Ship Refurbishment (I)


Huarun Dadong Dockyard Co., Ltd.www.hrdd.com.cn

• Establish in 1994

• Join-venture invested by China Resources, Hudong-ZhonghuaShipbuilding, Shanghai Yatong and Shanghai Datong NGS

• more than 1 million m2 area and 2,300m coastline

• 5 docks (50K- 200K tons), 8 piers

• 2015, 18 months maintenance for the “Costa Atlantica” including dry-docking, coating and interior outfitting.

Tonnage Height Length Breadth Cabin Low Beds

85,619 T 15 floors 292,5 M 32,2 M 1057 2680

http://www.hrdd.com.cn/

Potential Shipyards for Cruise Ship Refurbishment (II)


COSCO (Zhoushan) Shipyard Co., Ltd. www.cosco-shipyard.com

• Start operation in 2004

• A subsidiary company of COSCO

• 2 million m2 area and 4,060m coastline

• 3 docks (80K – 300K Tons), 7 piers (70K-300K tons)

• Focusing on ship repairing and conversion

• October 2015, gain a contract for the refurbishment of the cruise ship “Queen Elizabeth 2” into a luxury five-star floating hotel

Tonnage Height Length Breadth Cabin Low BedsN/A 54M 294 M N/A 850 1791

http://www.cosco-shipyard.com/

Potential Shipyards for Cruise Ship Refurbishment (III)


Zhoushan Xinya Shipyard Co., Ltd. www.xinyashipyard.com

• Start operation in 2002

• Private company

• 229K m2 area and more than 1,500m coastline

• 2 docks (200K & 80K tons), 3 piers (200K, 150K & 80K tons )

• 2011, 2 months maintenance for the “Ocean Dream“, owned by Hong Kong Runfeng Cruise Company

– Route: between Hainan Island and Vietnam (3-4 days)

Tonnage Height Length Breadth Cabin Low Beds20,000 T 9 floors 163 M 22,8 M 628 780

http://www.xinyashipyard.com/





• Policies



Business opportunities for Finnish Offering



Business Opportunities for Finnish Offering


Pro

ject

Man

age

me

nt

Ship

yard

Fac

iliti

es

Cru

ise

s Sh

ip &

Bo

ats

Consulting conceptual design

Production Preparationproject planning and

management

Designbasic design

Supply Chain Management

> 1.000 supplies

Strict QHSE Control

Special Production Technology

Technology, Know-how & Experiences

Interior OutfittingPublic spaces & outdoor

decks

Special Machinery Concepts

Automation & IT

Integrated Fancy Design

Demand

Total Solution HVAC, catering, waste

handling

Supply

Fin

nis

hM

arin

e C

lust

ers





• Policies




Market Entry Method


Market Entry Method (I)


Sale Channel Development:

Agent, Distributor, Dealer

Representative in China:

Soft-landing Platform - Finchi

Legal Entity:

Consulting, Trading or Manufacturing

Company

For New Comers: partner search; brand building; technical support; IPR issue

Market Entry Method (II)

• For Finnish Companies already represented in China, become an alliance

– Strengthening the image of Finnish Group and Finnish Technology

– Being able to provide a total solution larger and wider

– Multi-Win

– Stronger bargaining power


Finnish Group (National Brand)

HVAC System

Catering

Garbage Handling

Sewage System

Modular Cabins

Specialized Machinery

Automation & IT

Life Saving System

Interior Outfitting

Architectural Design





• Policies





Cooperation Possibilities

Cooperation Possibilities - Trading Company

China Shipbuilding Trading Co., Ltd. (CSTC)

Add: 8-12th Floor, Bldg.1, No.9 Shouti South Road, Haidian District, Beijing, Chinawww.cstc.com.cn

• Establish in 1982, a subsidiary company of CSSC

• Main business including

– Export for civil/merchant ships, defense and offshore products

– Import technology, equipment and materials for merchant ship, offshore engineering and special ship

– Components and accessories purchasing for main engine maker

– Factory facilities and equipment procurement

• A partner with Chinese major shipyards

• CSSC wants to centralized purchase through CSTC’s global purchase platform


http://www.cstc.com.cn/

Cooperation Possibilities – Interior Engineering Company

Shanghai Bestway Medusa Yacht Decoration Co., Ltd.Add: No. 365, Haikun Road, Fengxian District Shanghaiwww.medusash.com

• Founded in Oct 2001, a subsidiary company of Bestway (www.bestwaysh.com)

• Owns 130 employees and covering an area of 12,000 square meters

• Certificates: ISO9001 ISO14001 OHSAS 18001

• Except neoclassical style furniture design and manufacture, Medusa also make land

decoration and interior decoration of yachts and luxury passenger ships.


http://www.medusash.com/