Welders work at a shipyard in Jinjiang, in southeast China's Fujian province, Thursday, Oct. 29, 2009. China's shipbuilding industry, the world's largest, is seeing a resurgence in business following a slowdown due to the global economic crisis. (AP Photo) ** CHINA OUT ** *** Local Caption *** XAY804_China_Shipyard.jpg
Welders work at a shipyard in Jinjiang, in southeast China's Fujian province, Thursday, Oct. 29, 2009. China's shipbuilding industry, the world's largest, is seeing a resurgence in business following Show more

China aims to make more waves



There are vast cranes moving back and forth, a cacophony of hammering, welding and drilling, and a brisk pace of activity that no doubt helps the workers keep warm in the bitter cold of winter.

Here at the China Shipbuilding Industry Corporation (CSIC) yard in Tanggu, a coastal town an hour by fast train from Beijing, the BBC Fuji is taking shape.

Described by the company that will own her, BBC Chartering, as a "multi-purpose heavy-lifter", this 119 metre vessel is currently a vast brown and black shell.

Her bulbous bow towers over the blue platform on which she is being built, while over to the side, on the ground, her superstructure sits like a block of flats, waiting to be lifted on to the deck.

In a pen just behind, immaculate in shiny blue paint, float two completed sister ships, BBC Everest and BBC Nile.

The yard appears to the untrained eye to be a haphazard affair; uneven piles of girders and sheets of metal litter the ground, and a couple of dogs wander about looking slightly lost.

But in this case a little untidiness may not be hampering operations: the CSIC is China's biggest shipbuilder and China makes more ships than any other country in the world.

In the first six months of last year, the dragon economy delivered vessels totalling 22.7 million deadweight tonnage (DWT), compared with 18.3 million DWT for the second-placed South Korea.

One worker at the Tanggu operation, a veteran of 35 years' service who gives his name as Mr Gao, insists the secret of the yard's success is simple. "We are cheap and we are fast," he says with a toothy grin, adding that a 7,000 tonne ship such as the BBC Fuji can be built from scratch in just a few months.

Low labour costs and heavy demand from Chinese shipping interests have helped the country displace South Korea from the top spot.

"Particularly the labour costs, they are rather low," says Dr Lai Keehung, an associate professor in the department of logistics and maritime studies at Hong Kong Polytechnic University.

"Many of the shipping lines in the world are Chinese and they are a large [proportion] of the ship customers. [South] Korea and Japan have their own shipping lines, but in terms of the scale, Chinese ones are bigger."

China makes vessels including bulk carriers, oil tankers, container ships and multi-purpose craft.

According to a recent report by the China Association of the National Shipbuilding Industry (CNSI) carried by state media, from January to June last year China built 41 per cent of the world's ships and took 46 per cent of new orders.

In any industry, becoming the global leader would be cause for celebration, but perhaps this is particularly the case with Chinese shipbuilding, given that it did so during a global recession.

In the first nine months of 2009, orders at Chinese shipyards dropped to 16.9 million DWT, a slump of 70 per cent on 2008's figure of 57.2 million DWT.

The CSIC, which owns the yard where the BBC Fuji is being built, employs more than 170,000 staff spread across almost 100 enterprises that make military as well as merchant ships.

But for all the impressive scale of companies such as the CSIC, it is acknowledged the industry within China faces challenges.

Notably, the CNSI has highlighted low efficiency as a major concern and, while it trumpets the sector's ability to independently design and build complex vessels, it acknowledges overall research and development capacity is another weakness.

Data published by state media has suggested China is a decade behind countries such as South Korea and Japan in terms of shipbuilding technology, and several years behind in management capability.

Some Chinese yards may be cheap and fast, but they are not necessarily advanced or sophisticated.

Mergers are needed to improve economies of scale, suggests the CNSI, while some smaller firms should develop specialist expertise.

It is important the industry in China has recognised its need to improve, as competitors are snapping at its heels.

In particular, South Korea is keen to steal back first place in terms of orders won, an accolade it held from 2003 to 2008 before the country was knocked off its perch by China.

South Korean state media have suggested growing orders for large container ships and floating production, storage and off-loading vessels, which process and store oil and gas, could help the country displace China at the top.

Analysts also predict China will see a drop in orders for the lower-value bulk carriers that took it to first place in 2009.

The country's shipbuilding industry also faces rising labour costs and, says Dr Lai, increases in the prices of materials.

These challenges come on top of a global problem of oversupply.

A report released this month by the Korea Shipbuilders' Association and South Korea's ministry of knowledge economy predicted total shipbuilding output would fall this year because of weak demand for new ships over the previous two years.

The report, cited by South Korea's government-affiliated Yonhap news agency, forecast a 9.5 per cent drop in global output this year, from last year's 50.19 million compensated gross tonnage (CGT) - a figure produced by multiplying a vessel's gross tonnage by a coefficient related to how complex it is to build - to 45.4 million CGT.

Yet Dr Lai sees China as being well positioned to capture more orders for sophisticated, high-value vessels, a development many in the industry have acknowledged as being necessary.

"There are different shipbuilders [in China]. A lot of them are in the high end and some also on the low side," he says.

"China will be moving to more technologically oriented shipbuilding. This is the trend of the years ahead. Chinese shipbuilding is picking up very fast. I expect the volume will be growing."

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The major Hashd factions linked to Iran:

Badr Organisation: Seen as the most militarily capable faction in the Hashd. Iraqi Shiite exiles opposed to Saddam Hussein set up the group in Tehran in the early 1980s as the Badr Corps under the supervision of the Iran Revolutionary Guards Corps (IRGC). The militia exalts Iran’s Supreme Leader Ali Khamenei but intermittently cooperated with the US military.

Saraya Al Salam (Peace Brigade): Comprised of former members of the officially defunct Mahdi Army, a militia that was commanded by Iraqi cleric Moqtada Al Sadr and fought US and Iraqi government and other forces between 2004 and 2008. As part of a political overhaul aimed as casting Mr Al Sadr as a more nationalist and less sectarian figure, the cleric formed Saraya Al Salam in 2014. The group’s relations with Iran has been volatile.

Kataeb Hezbollah: The group, which is fighting on behalf of the Bashar Al Assad government in Syria, traces its origins to attacks on US forces in Iraq in 2004 and adopts a tough stance against Washington, calling the United States “the enemy of humanity”.

Asaeb Ahl Al Haq: An offshoot of the Mahdi Army active in Syria. Asaeb Ahl Al Haq’s leader Qais al Khazali was a student of Mr Al Moqtada’s late father Mohammed Sadeq Al Sadr, a prominent Shiite cleric who was killed during Saddam Hussein’s rule.

Harakat Hezbollah Al Nujaba: Formed in 2013 to fight alongside Mr Al Assad’s loyalists in Syria before joining the Hashd. The group is seen as among the most ideological and sectarian-driven Hashd militias in Syria and is the major recruiter of foreign fighters to Syria.

Saraya Al Khorasani:  The ICRG formed Saraya Al Khorasani in the mid-1990s and the group is seen as the most ideologically attached to Iran among Tehran’s satellites in Iraq.

(Source: The Wilson Centre, the International Centre for the Study of Radicalisation)

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