China_cruise ship building 2015

Cruise Ship Building in
China
Liwei Tan, Senior Adviser
Finpro Shanghai
Mobile: +86 13916970205
E-mail: tan.liwei@finpro.fi

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, SCITS
Travel Agencies
SMU, DLMU, Coscoqmu
HR (hospitality staff & crew)
HRDD, COSCO Zhoushan, Xinya
Refurbishment &Maintenance
MARIC, SDARI
LR, 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
57 103
222 189 412
1025
1479
2000
28 40
79
110
169
335
366
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)
Source: CCYIA & Cruise Green Paper
Voyage-time
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 SailingsA 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
Beihai
Shenzhen
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 tons
Length: > 300 meters
Capacity: ~ 5,000 people
Hanging flag of convenience
A 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 welding
o block assembly
o 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

Refurbishment (I)
Huarun Dadong Dockyard Co., Ltd.
www.hrdd.com.cn
• Establish in 1994
• Join-venture invested by China Resources, Hudong-Zhonghua
Shipbuilding, 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

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
N/A 54M 294 M N/A 850 1791

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)
20,000 T 9 floors 163 M 22,8 M 628 780

• Policies
 Business opportunities for Finnish Offering

Business Opportunities for Finnish Offering
ProjectManagement
ShipyardFacilities
CruisesShip&Boats
Consulting
conceptual design
Production Preparation
project planning and
management
Design
basic design
Supply Chain
Management
> 1.000 supplies
Strict QHSE Control
Special Production
Technology
Technology, Know-how &
Experiences
Interior Outfitting
Public spaces & outdoor
decks
Special Machinery
Concepts
Automation & IT
Integrated Fancy Design
Demand
Total Solution
HVAC, catering, waste
handling
Supply
FinnishMarineClusters

• 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
CabinsSpecialized
Machinery
Automati
on & IT
Life
Saving
System
Interior
Outfitting
Architectu
ral 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, China
www.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

Cooperation Possibilities – Interior
Engineering Company
Shanghai Bestway Medusa Yacht Decoration Co., Ltd.
Add: No. 365, Haikun Road, Fengxian District Shanghai
www.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.

China_cruise ship building 2015

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