China's shipbuilding and automobiles are advancing by leaps and bounds, and South Korea and Germany are really angry
Recently, data released by the British analyst Clarkson showed that global new ship orders have decreased significantly, falling by 21%. This trend has severely affected shipbuilding powers, especially South Korea, while China has been relatively stable, with a decrease of only 6%. Specifically, South Korea faced a 39% reduction in orders, while China saw a 6% reduction. In addition, South Korea only accounts for 25% of the total tonnage of global order takers, while China accounts for 58%.
Considering that there is only one month left at the end of the year, South Korea** such as Yonhap News Agency and "World**" have expressed concern about this situation and actively reported on it. This shows that South Korea's shipbuilding industry is facing serious challenges, especially in the context of China's rapid development.
As of the end of November, only one of South Korea's three major shipbuilders had successfully achieved its annual target, while the other two were still far from the target, with the worst of them only achieving 43% of the target. Given the character of the Koreans, they are reluctant to admit that they are inferior to China in the field of shipbuilding, so they are looking for reasons to explain the situation. Based on the reports and analysis, two main reasons are mentioned.
First of all, there are voices that the shipbuilding industry is experiencing a so-called "super cycle", that is, a surge in orders in the short term, and shipping companies are overwhelmed and have to selectively take orders. This is due to the fact that South Korea has a relatively small territory, unlike China, which has enough space to build a large number of shipyards. However, objectively speaking, this reason does not hold water. As mentioned above, the number of new ship orders worldwide is declining, and there is no situation where there are too many orders that lead to production failure. Even if there are additional orders, they can be addressed by expanding production or outsourcing. Obviously, the decrease in orders received by South Korean shipbuilders is more due to a lack of orders than a lack of production capacity.
Second, there is a view that South Korean shipbuilders have improved the quality of their orders, focusing on high value-added vessels such as ammonia carriers, liquefied carbon dioxide carriers and liquefied natural gas carriers (LNG). This statement implies that South Korean shipbuilders are reluctant to accept orders with lower profitability, which has led to a decrease in the number of orders. In this regard, it can only be said that South Korea may overestimate the strength of South Korean shipping companies.
There is no doubt that South Korea has a first-mover advantage in the field of high-tech carrier manufacturing, but this is not the main reason for the decrease in orders. In fact, the real problem is that South Korean shipbuilders have lost their technological and industrial advantages. Some South Koreas** generally believe that South Korea is 2 to 3 years ahead of China in shipbuilding technology, so China receives more orders because it has undertaken a large number of low-tech orders, which has led to a decrease in South Korea's orders. However, this perception is not actually accurate, because China has also successfully taken on many high-tech shipbuilding orders.
Taking LNG carriers as an example, public data shows that in the first half of this year, Chinese companies accounted for 35% of the world's orders, an increase of five times from 7% in 2021. This is a clear indication that China's share in the field of high-tech carrier manufacturing has been increasing. Therefore, the argument that South Korean shipping companies are focusing on receiving high-quality orders is clearly unfounded. In fact, many of the so-called high-quality orders of Korean shipping companies have become the performance of Chinese companies.
In addition to the loss of technological advantages, South Korean shipbuilders are also facing the loss of industrial advantages. At its peak, South Korea had 200,000 shipbuilders, however, by the end of last year, that number had fallen to 950 thousand. The reason behind this phenomenon is that the high cost of raw materials used in South Korea, coupled with the outflow of funds due to the Federal Reserve's interest rate hikes, makes the profits of Korean shipbuilders not high. Against this background, South Korean shipbuilders were either forced to leave their jobs or laid off. The large-scale loss of personnel has led to the loss of South Korea's industrial advantage. In contrast, China is relatively less affected, so the client is more willing to hand over the order to the Chinese company.
In fact, not only in the shipbuilding industry, but also in the semiconductor and automotive industries in South Korea, they are also facing a downward trend. Especially in the automotive industry, South Korea is not at the same level as China in terms of new energy vehicles, which Germany deeply feels.
In the past few decades, China's domestic sales of fuel vehicles have mainly relied on imported or joint venture brands. Although domestic automobiles have made some progress during this period, they are still unable to compete with traditional automobile powers. Take the German Volkswagen Group as an example, its brand cars sell well in the Chinese market and generate considerable profits every year. However, when it comes to new energy vehicles, the popularity of German brands drops significantly. What's more, China's electric vehicles are also reverse-exported to Germany, putting huge competitive pressure on the Volkswagen Group.
This is also true in the semiconductor sector, where the semiconductor industry is also facing many challenges. Overall, South Korea's competitive position in a number of key industries is waning, which is a stark reality for the Asian country.
According to Germany** on November 28**, in order not to lag behind in the field of new energy vehicles, the Volkswagen Group has put forward an ambitious plan, that is, "to launch at least 14 trillion yuan worth of electric vehicles in China in 2026". To achieve this goal, Volkswagen has decided to abandon its R&D in Wolfsburg, Germany, and instead of insisting on local components, it plans to relocate its R&D center in Wolfsburg, Germany, to China, and use 95% of Chinese-made components on a large scale.
The Volkswagen Group claims that this is done to better meet the needs of Chinese consumers, but in fact it is unable to compete with Chinese companies in the field of new energy electric vehicles. The reactions of South Korea and Germany confirm the view that China is on the right path to independence and technological innovation, and should continue to do so in the future.