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People’s Daily: China’s Shipbuilding Industry Makes No Profit

People’s Daily recently reported on the tough situation the entire Chinese shipbuilding industry faces. According to the data that the China Association of the National Shipbuilding Industry (CANSI) released, the industry is suffering a major decline in profits. By the end of July, 80 key companies that the association monitored had a total profit of only RMB 200 million yuan (around US$33 million). At the same time, these companies are unable to collect the pending payments that their customers owe them. As of now, the industry is owed payments totaling RMB 100 billion (US$16.33 billion). This financial dead lock was partially caused by the recent sharp decline in shipbuilding prices. This has led many customers to believe that their original contract price was unfairly high. Cash flow in the shipbuilding industry is becoming a major challenge, making it much harder to get a loan from any bank. Competition from Japan is also an important factor. Since the beginning of the year, the Japanese yen has depreciated 20 percent.
Source: People’s Daily, August 22, 2013