China's Shipyards Rake in $87B in Revenue - With Slim Margins

China's CSSC is the largest defense shipbuilder and largest civilian shipbuilder in the world (CSSC image)

Last week, the China Association of the National Shipbuilding Industry (CANSI) released new data further revealing 2023 was a banner year for Chinese shipyards. During the year, the revenues rose by 20 percent, reaching $87 billion. With improving global competitiveness, profits of major Chinese shipbuilders surged by 131.7 percent year on year to $3.64 billion - a four percent profit margin.

According to CANSI, accelerated adoption of digital transformation and green technology has put most Chinese shipyards on a trajectory of financial success. In addition, most shipyards ranked well in global charts in terms of output, new orders and holding orders. State-owned giant China State Shipbuilding Corporation ranked first in all major shipbuilding indexes.

Chinese Ministry of Industry and Information Technology estimated that the country’s shipbuilding activity reached 42 million deadweight tons last year, representing an increase of 12 percent year-on-year. This milestone gave China a 50 percent share of total global output for the first time in history.

Commenting on the performance, CANSI’s Secretary General Li Yanqing said that China is now capable of building all major types of vessels, ranging from ultra-large boxships to cruise liners. Yanqing also added that China has bridged the technological divide with South Korea and Japan in the construction of the so-called green vessels running on alternative fuels and advanced navigation technology.

China has also been able to localize its shipbuilding supply chain with over 20 domestic steelmakers. This gives Chinese shipyards a cost-effectiveness edge, as China's domestic steel is affordably-priced. The only major concern is the volatile steel prices and yuan’s exchange rate to the dollar.

CANSI projects that output could rise by another 6.3 percent this year, to 45 million deadweight tons.

“The country’s shipbuilders are expected to receive new orders for 55 million tons in 2024. Orders in hand will reach over 130 million tons,” CANSI said in a statement released early this month.