BUSINESS

Chinese Shipbuilder Could Soon Restart Production on Back of MSC Mega Order

Published: Nov. 6, 2024 8:04 p.m. GMT+8

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A gantry crane in use in 2011 at Jiangsu Rongsheng Heavy Industries’ shipyard in Nantong. Photo: VCG

China’s onetime largest shipyard may restart production as soon as this month after idling for nearly 10 years, Caixin has learned, in a sign that the global shipbuilding boom is still going strong.

Jiangsu Rongsheng Heavy Industries Co. Ltd., the company that runs the dormant shipyard, has been hiring staff and repairing equipment in preparation for production to resume, sources said.

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Jiangsu Rongsheng Heavy Industries Co., Ltd. may restart production after nearly a decade, driven by a recent order from MSC Mediterranean Shipping Co. SA amid a global shipbuilding boom.
The shipyard, once China's largest, faced financial difficulties due to a global industry downturn post-2008 but is now preparing to resume operations.
Founder Zhang Zhirong is reportedly backing the revival, although past financial troubles and the need for significant investment pose ongoing challenges.

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Who’s Who

Jiangsu Rongsheng Heavy Industries Co. Ltd.: Jiangsu Rongsheng Heavy Industries Co. Ltd., once China’s largest private shipbuilder, is planning to restart production after nearly a decade of inactivity. It faced a downturn post-2008 financial crisis and stopped production in 2015 due to financial troubles and a cash crunch. The revival is reportedly driven by founder Zhang Zhirong, seeking to capitalize on the current shipbuilding boom. However, it faces challenges such as needing significant infrastructure investment and overcoming past financial issues.

MSC Mediterranean Shipping Co. SA: MSC Mediterranean Shipping Co. SA has placed an order with Jiangsu Rongsheng Heavy Industries Co. Ltd. for 10 large container ships. This order has contributed to the potential restarting of Rongsheng's previously idle shipyard, indicating MSC's role in the ongoing global shipbuilding boom.

Zheshang Securities Co. Ltd.: Zheshang Securities Co. Ltd. is referenced in the article for its July report on China's shipyards. As of earlier this year, there were 157 active shipyards in China, a reduction of 66% from the 2008 peak of 462. This decline aligns with a similar global trend, where the number of active shipyards fell by 64% over the same period.

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What Happened When

2006：: Rongsheng received orders for 19 bulk carriers and 30 oil tankers, becoming the largest private shipbuilder in China by orders.

2011：: Rongsheng's parent company achieved an annual profit of 1.72 billion yuan.

2012：: Rongsheng's parent company lost nearly 573 million yuan due to a drop in orders, despite receiving over 1.2 billion yuan in government subsidies.

Early 2015：: Rongsheng stopped production due to financial difficulties.

February 2016：: Rongsheng's debts amounted to 22.6 billion yuan.

2018：: Rongsheng's parent signed a deal to sell its shipping business to a company in the British Virgin Islands for HK$1, but it failed due to debt-related issues.

2022：: An attempt to restart production at Rongsheng shipyard was made but failed.

July 2024：: A report by Zheshang Securities Co. Ltd. stated there were 157 active shipyards in China.

August 2024：: News circulated that Rongsheng would start shipbuilding again after winning an order for 10 large container ships from MSC Mediterranean Shipping Co. SA.

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