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China's "deadbeat" shipyards; merged threads
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Topic Started: Apr 7 2014, 07:11 AM (292 Views)
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MSantor
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Apr 7 2014, 07:11 AM
Post #1
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I placed this here since this mainly affects the Chinese commercial shipbuilding industry for now. But it may have an impact on China's naval shipbuilding plans later on.
How can they hope to maintain a world-class blue water navy if their domestic shipyards suffer from problems like this? Reliance on foreign acquisitions like the Russian-built Sorenemmy class destroyers?
Reuters
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Deadbeat Chinese shipyards stick banks with default bill Reuters By Pete Sweeney
SHANGHAI (Reuters) - Chinese banks are stuck in a lose-lose legal battle between domestic shipyards and foreign buyers over billions of dollars in refund guarantees that are supposed to be paid out if shipbuilders fail to deliver on time.
One in three ships ordered from Chinese builders was behind schedule in 2013, according to data from Clarksons Research, a UK-based shipping intelligence firm. Although that was an improvement from 36 percent a year earlier, it was well behind rival South Korea, where shipyards routinely delivered ahead of schedule the same year.
That means Chinese banks may be on the hook to pay large sums to buyers if the yards can't come through per contract, with little hope of recouping the cash from the yards. China is the world's biggest shipbuilder, with $37 billion in new orders received last year alone. Buyers pay as much as 80 percent of the purchase price upfront.
Chinese bankers rushed to finance shipbuilding after the 2008 global financial crisis as Beijing pushed easy credit and tax incentives to lift the industry and sustain industrial employment levels in the face of collapsing exports.
Fees generated by offering such guarantees looked like easy money until massive oversupply and falling demand started taking a toll on the yards around 2010. Shipyards fell behind schedule and buyers demanded their money back. But behind or not, the builders, keen to keep orders on the books and prepaid money in their pockets, have submitted injunctions against banks in Chinese courts to prevent them from paying out.
"China's ambitions to take over South Korea as the top major shipbuilder meant that all the banks were encouraged to open up their wallets and lend money to the shipbuilders without making thorough due diligence," said AKM Ismail, former finance director for Dongfang Shipyard, the first Chinese shipyard to be listed on London's AIM Stock Exchange in 2011.
Since ships cost millions of dollars and can take years to deliver, a shipbuilder generally asks for part of the purchase price upfront to cover material and labor costs. Buyers normally obtain a refund guarantee from a bank to assure their money is returned if the yard defaults, and the yard pays the bank's fee for the service.
(....EDITED)
Edited by MSantor, Jan 19 2015, 07:18 AM.
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"If you think you can do a thing or think you can't do a thing, you're right." - Henry Ford
"Courage is going from failure to failure without losing enthusiasm." - Winston Churchill
"If everyone is thinking alike, someone isn't thinking"- Gen. George S. Patton
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MSantor
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Jan 19 2015, 06:43 AM
Post #2
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Reuters
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China's shipyards brace for leaner times as oil slump sours rig building spree
By Brenda Goh and Rujun Shen
SHANGHAI/SINGAPORE (Reuters) - For China's shipyards, the oil rig market that was supposed to be a blessing is in danger of becoming a curse.
As crude prices slide, oil producers are slashing new project spending. With a near 40 percent slice of a global market worth tens of billions of dollars, Chinese rig builders that offered juicy financing terms and discounts to leapfrog Asian rivals in recent years are now the most exposed to a slowdown.
Diversifying to pull out of a downturn in traditional shipbuilding, China's state and privately owned yards have lured orders away from regional peers, building scores of rigs for down payments of as little at 1 percent. Many haven't yet been chartered by oil explorers, industry watchers say.
Some in the industry fear that rig builders are now heading toward a slowdown, possibly with cancellations and price cuts, that could persist longer than the oil market's slump. Even if oil prices recover enough to stoke exploration, an inventory of ready-made rigs will be on hand, delaying new construction.
(...SNIPPED)
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"If you think you can do a thing or think you can't do a thing, you're right." - Henry Ford
"Courage is going from failure to failure without losing enthusiasm." - Winston Churchill
"If everyone is thinking alike, someone isn't thinking"- Gen. George S. Patton
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MSantor
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Oct 22 2015, 09:16 AM
Post #3
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Nikkei
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Manufacturing slump creating ghost towns MASAHIRO OKOSHI, Nikkei staff writer
NANTONG, China -- Beijing says China's economic slowdown is a necessary phase in the country's transition to sustainable growth, but that is little consolation to the scores of manufacturers fighting for survival amid tanking demand. Job cuts are rippling through the shipbuilding and other industries by the thousands, and local businesses and communities are struggling to cope as their livelihoods disappear.
China's growth slowed to below 7% for the first time in six and a half years in the July-September quarter. The government has implemented one stimulus measure after another, but the manufacturing industry, which many say holds the key to a recovery, remains mired in a slump.
The shipbuilding industry is a prime example of how bad things have gotten. China is the world's No. 1 shipbuilder, controlling about 40% of the global market. But the sector is reeling, with orders for the January-September period plunging 70% on the year.
(...SNIPPED)
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"If you think you can do a thing or think you can't do a thing, you're right." - Henry Ford
"Courage is going from failure to failure without losing enthusiasm." - Winston Churchill
"If everyone is thinking alike, someone isn't thinking"- Gen. George S. Patton
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