South Korea is a global manufacturing powerhouse, with the world's fifth-largest manufacturing output, behind China, the United States, Japan and Germany, and roughly the same as India. In the past, South Korea had a comparative competitive advantage in steel, LCD panels, smartphones, electric vehicles, new energy batteries, and shipbuilding.
With the rapid rise of Chinese enterprises, in the face of competition from Chinese enterprises, a series of advantageous pillar industries in South Korea have been severely challenged and constantly overtaken by Chinese enterprises.
Even the shipbuilding industry, which has always been a source of pride for Koreans, has been overtaken by China in recent years. South Korea has been a global leader in shipbuilding since the early 2000s, especially in the direction of liquefied natural gas (LNG) carriers. But since 2022, China has received significantly more new shipbuilding orders than South Korea and Japan combined.
The global market share of South Korea's shipbuilding industry has shrunk sharply, and the dominant position in the high-end field has been comprehensively challenged by China, and key technical barriers including LNG ships and cruise ships have been broken.
According to data released by Clarkson, a British shipbuilding and shipping industry analysis agency, in 2023, the global newbuilding market will have a total of 41.49 million revised gross tons, a year-on-year decrease of 187%。Among them, Chinese shipbuilders undertook orders for 24.46 million revised gross tons of new ships, accounting for about 58 percent of the global market share9%, ranking first in the world. Orders for export ships increased by 64% year-on-year1%。
South Korean shipbuilders received 10.01 million revised gross tonnage of new ship orders, a year-on-year decrease of 376%, accounting for about 24 percent of the global market share1%。This is also the third consecutive year since 2021 that the annual new orders received by Chinese shipbuilders have surpassed South Korean shipbuilders and ranked first in the world.
According to data released by the Korea Shipbuilding and Marine Industry Human Resources Development Committee in May 2023, there were about 200,000 shipbuilding manpower in South Korea in 2014, which fell sharply to 9 in November 2022, according to data released by the Korea Shipbuilding and Marine Industry Human Resources Development Committee in May 202350,000 people.
At the same time, in addition to market share, the profitability of China's shipbuilding industry is also significantly better than that of South Korea. According to data from the China Shipbuilding Industry Association, in 2023, the main business income of shipbuilding industry enterprises above designated size will be 623.7 billion yuan, a year-on-year increase of 200%；The total profit was 25.9 billion yuan, a year-on-year increase of 1317%, and the industry average profit margin is about 415%。
Recently, Yangzijiang Shipbuilding, known as China's most profitable shipyard, announced its 2023 fiscal year annual report, and its performance hit a record high.
In 2023, Yangtze River Group's total revenue increased by 165% to RMB24.1 billion, gross profit increased by 69% year-on-year2% to RMB5.4 billion, net profit also increased by 57% to RMB4.1 billion, and net profit margin on sales reached 17%. In previous years, the average net profit margin was also close to 15%.
Hot Engine Plan Although the operating performance of South Korea's three leading shipbuilders in 2023 has improved, their profitability is still weak, and there is a significant gap compared with Chinese companies.
Among them, South Korea's leading company HD Korea Shipbuilding & Offshore Engineering Co., Ltd. lost 356 billion won in 2022, but in 2023 it achieved its first operating profit in three years, making a profit of 282.3 billion won (2.).$12.6 billion). Sales increased 23% year-over-year to 212 trillion won, operating profit margin of only 133%。
Samsung Heavy Industries achieved an operating profit of 233.3 billion won in 2023, turning losses into profits for the first time in nine years, with an operating profit margin of only about 3%. Hanwha Marine's operating loss in 2023 was 196.5 billion won, up from 1.5 billion won in 202261 trillion won.
In 2023, after a period of losses, the Korean shipbuilding industry is still facing challenges in terms of profitability as a whole, although some companies have begun to turn losses into profits.
In the past few years, South Korea's shipbuilding industry has taken on many low-margin orders in order to meet the order volume target in the face of the industry downturn and the competitive pressure of Chinese shipbuilders, thus squeezing profit margins. In order to enhance their competitiveness, Korean shipbuilders have begun to focus on the delivery of ships with high technical requirements.
But at the same time, China's shipbuilding enterprises have also turned to higher value-added products, and made breakthroughs in the fields of high-end equipment and new energy equipment, according to the data of the China Shipbuilding Industry Association, among the 18 major ship types in the world, China has 14 new ship types in the world, ranking first in the world. Orders for green ships such as LNG and methanol power have grown rapidly, and orders for zero-carbon ships such as ammonia fuel reservation and hydrogen fuel cells have made breakthroughs.
In the future, Korean shipbuilders will continue to face all-round challenges from Chinese enterprises, and the operating pressure is still huge.