Ship Trading Company Explores African Private Ship Market

By Ao Yangli

On March 11, Algerian Newspaper“Veterans” carried the news that Guangzhou Shipyard International Co Ltd and Algerian International Shipping Co(ENTMV) signed ro-ro passenger ship building contract and quoted comments of a source of the Representative Office of the Chinese Embassy in Algeria: “This is another witness of half-a-century-plus friendship and economic partnership of China and Algeria.”

Algerian Ro-Ro Passenger Ship Project is another breakthrough made by the China Shipbuilding Trading Corp. in opening the African private ship market in recent years. As the bellwether of ship and offshore engineering product exports of CSSC, China Shipbuilding Trading Corp.has grasped the strategic opportunity of “Belt and Road”construction and military-civilian integrated development,given full play to military trade overflow effect, succeeded in opening the African emerging private ship market. Over recent years, the Company has assisted ship enterprises affiliated to CSSC in winning three projects including Algerian Ro-Ro Passenger Ship Project and accumulated useful experience in developing African new market of civilian ships.

Opening channel,achieving zero breakthrough

China Shipbuilding Trading Corp. along with Guangzhou Shipyard International participated in ENTMV tendering for one luxury ro-ro passenger ship project in 2016 and received the Notice of Award in May 2017, and both parties officially signed the contract on March 11, 2018. The luxury ro-ro passenger ship, which can carry 1800 passengers and 600 vehicles, meets ENTMV increasing shipping requirement,and is expected to deliver by 2020.

This ro-ro passenger ship is China Shipbuilding Trading Corp.’s second project for developing Algerian private ship market. “Algerian Government attaches great importance to the cooperation and the ro-ro passenger ship will be Algerian largest ship of its kind.”An inside source of China Shipbuilding Trading Corp. told the reporter “Algerian local media extensively covered the project even during the negotiation period when we were yet to get the project.”

Previously, China Shipbuilding Trading Corp. assisted Jiangnan Shipbuilding (Group) Co Ltd in signing 1+1 13000m3 LPG carrier construction contract with Hyproc under Algerian National Oil Company and the first LG carrier is projected to deliver this year.

In fact, before concluding Algerian ro-ro passenger ship and LPG carrier projects, China Shipbuilding Trading Corp. had assisted CSSC Huangpu Wenchong Ship Trading Co in signing one offshore multi-function auxiliary vessel construction project, realizing China Shipbuilding Trading Corp.’s zero breakthrough in developing African new private ships. The ship was delivered to the shipowner in April 2017. orders of offshore engineering auxiliary vessels,LPG carriers and ro-ro passenger ships China Shipbuilding Trading Corp. has over recent years obtained from Egypt and Algeria markets have contributed to exploring the African new private ship market.

“We’ve been focusing on private ship market exploration in Asia-Pacific, Europe and US, but the shipbuilding market has been in the doldrums in recent years, and to help ship enterprises survive and develop,we must play the role of ‘bellwether’and actively support ship enterprises in grabbing orders.” A businessman of China Shipbuilding Trading Corp.noted developing a new market and signing a major project was by no means easy. Active communication, paying a visit, good negotiation and signing a contract, each link is crucial. For that purpose, China Shipbuilding Trading Corp. designated relevant department and personnel in charge of developing the African private ship market and enhancing coordination of military ship,private ship and non-ship sectors.

Giving play to overflow effect of military trade

Each progress made by China Shipbuilding Trading Corp. primarily benefited from vigorous play of overflow effect of military trade. Such effect means yielding positive results on the basis of military trade business. This is a major move made by China Shipbuilding Trading Corp. in actively implementing the integrated development strategy of the military-civilian business sector and also its advantage in developing the African new private ship market.

African military export market has been a key point for military trade business of China Shipbuilding Trading Corp. Over three decades, China Shipbuilding Trading Corp. has been cultivating the African market by setting up representative office. The Company has established good mutual trust and strategic partnership with Egypt and Algerian governments. They have become the most mature and complete markets for military trade business development of China Shipbuilding Trading Corp.Therefore, the two countries naturally became the sally point for their opening the African private ship market.

With the help of the military trade department of China Shipbuilding Trading Corp., private ship African business sector has worked with many domestic and overseas forces, closely assisted with financial institutes and energy enterprises and CSSC subsidiaries affiliated to CSSC,promoted project competitive tender and negotiation, and gradually plied open the African market “The African market has been led by European and Japan and Korean players.”The inside source of China Shipbuilding Trading Corp. told the reporter that in the Egypt offshore engineering auxiliary ship project,European ship enterprises including Dutch Damen Shipbuilding Group participated in competitive bidding; in Algeria LPG project, the chief rival of Jiangnan Shipbuilding key rival was Korean Hyundai Weipu Shipbuilding.

“As known to all, Damen Group is an advantageous ship enterprise of offshore engineering ship on a global scale, and Hyundai Weipu Shipbuilding is Korean Hyundai Heavy Industries backbone ship enterprise. That we finally defeated the strong rivals and obtained the project orders relied on our comprehensive strengths and overflow effect of military trade.” The businessman of China Shipbuilding Trading Corp. said 2018 is the 60th anniversary of the establishment of diplomatic relations between China and Algeria. Taking the opportunity of building the first ro-ro passenger ship, we believe there will be more and more cooperation opportunities with Algeria private ship business in future.

In the course of China Shipbuilding Trading Corp. developing the African private ship market, its representative office in Africa played an important role.They had built rich interpersonal network,obtained information about shipowner’s demand, technical requirements of governmental tendering project and timely sent to the business department, favorable for seizing the first chance. Assisted by the representative office, the African private ship sector directly participated in preparation for the African project tendering -- putting forward views on the technical requirements of the Egyptian Tenderee. This undoubtedly won the first chance for subsequent participating in competitive tendering. “We can strive to make no deviation in bid design, precisely fitting their requirements, hence higher bid winning rate,” said the business man.

Further, the representative office was familiar with legal requirements of African tendering projects and had language advantages. As most African private ship projects are large projects affiliated to governmental or large oil and gas companies, which generally adopt public tendering. If bidders are not familiar with the requirements of local relevant laws and specification requirements of tender documents, it is very easy to be eliminated in the first round.

Snowballing, go on with market expansion

Africa has abundant oil and gas resources, but suffers industrial foundation, and exporting agricultural produce and oil and gas resources is the primary source of getting foreign currency. In recent years, international market demand for clean energy has been robust, and major African oil and gas resource countries advocate“resource nationalization”, and gradually take back control power over local resources. For instance,LNG exports of two LNG exporting countries -- Nigeria and Algeria --have substantially increased.

“Trade transport demand shortage brought about by African national resource exports is large, this brings opportunity for Chines energy enterprises and ship enterprises, and compared with developing and mature market such Asia-Pacific, African private ship market gains are more considerable.” The businessman said this was an important reason why China Shipbuilding Trading Corp. has been vigorously developing African market.

Massive resource exports will naturally bring about shipping trade requirement and African private ship market has a huge potential.According to China’s strategic requirement of “resource import and equipment export”, as next step,China Shipbuilding Trading Corp. will continue to tap Algerian and Egyptian private ship market cooperation projects and further widen the African market to West Africa and South Africa. Based on the concluded three private ship projects, under dual effect of snowballing and military trade overflow effect, plus unremitting efforts, China Shipbuilding Trading Corp. is expected to take in more project orders.

Based on trust built through military trade, considerable improvement in CSSC design,building and service capacity and CSSC strategy of becoming globally competitive world first class enterprise, China Shipbuilding Trading Corp. will practically perform its duties as bellwether of ship and offshore engineering product exports of CSSC, further give play to military trade overflow effect, overcome difficulties with greater courage and strive to make more breakthrough in African emerging private ship market.★