Disengage the “Inhibiting Magic Phrase” for Local Marine Equipment Enterprises

Since the beginning of this year, Chinese shipbuilding backbone shipbuilding enterprises have taken the lead in reducing costs and increasing efficiency, in order to promote highquality development of enterprises. Some industry players believe that the domestic shipbuilding industry should further emancipate their mind, join hands with all parties to create a fairer development environment for the development of the local marine equipment industry, and promote the better development of the local marine equipment industry, thus providing sustained and strong momentum for their own high-quality development.

Two Inhibiting Magic Phases Restrict Development of Local Marine Equipment Industry

Although the Chinese shipbuilding industry has maintained a leading position in the world for many years, the domestic marine equipment industry has not developed synchronously.Wang Ruhua, deputy general manager of Wuhu Shipyard Co., Ltd, said that in the ships it built, most of the ships owned by European shipowners used imported equipment. A technical director of Jiangsu Yangzijiang Shipbuilding Group Company said that some shipowners would demand initiatively for import of major mechanical and electrical equipment. Chen Zhifeng,deputy general manager of Nanjing CSSC Oasis Machinery Co., said there were few orders received by the company from domestic shipbuilding companies in 2018,whose explanation was “non approval by shipowners”.

Gu Guobiao, chairman of Hansheng(Shanghai) Marine Equipment Technology Co., Ltd., believes that for a long time,“l(fā)ack of global after-sales service,non approval by shipowner” are two“inhibiting magic phases” on the head of domestic marine equipment enterprises.Gu Guobiao said: in ship construction,especially in the construction of export ships, some domestic shipbuilding enterprises do not take the initiative to contact and understand domestic marine equipment enterprises, do not actively recommend domestic equipment are not willing to incorporate domestic marine equipment enterprises in the equipment supplier list because of risk prevention considerations. He believes that such a cautious attitude of domestic shipbuilding enterprises to domestic marine equipment constrained the development of domestic marine equipment enterprises to a certain extent. “Export-oriented oceangoing ships generally have equipment configuration requirements on board higher than those of domestic trade vessels of the same specifications. Domestic marine equipment enterprises must elbow their way into the ocean-going ship equipment export market, compete with their international counterparts on the same platform, and vie for quality and price of their products as well as delivery date and service if they are to achieve better development. However, in the bidding of some typical mechanical and electrical equipment for exportoriented ocean-going ships, even wellknown marine equipment enterprises in China do not have the qualification to bid.In this case, domestic marine equipment enterprises cannot show themselves no matter how strong their marine equipment supply capacity is.”

“The two labels ’lack of global after-sales service, non approval by shipowner’ were affixed to domestic marine equipment years ago. Now, it is obviously unfair to look at domestic equipment from an old-fashioned point of view after so many years.” Gu Guobao said: “Since the reform and opening up, domestic manufacturing and science and technology industries have accumulated considerable experience,and China has also become the second largest economy in the world, with the number of patents filed annually ranking first in the world for seven consecutive years. China is one of the largest trading countries in the world. The continuous improvement of the overall manufacturing level is conducive to the continuous use of advanced technology in the domestic marine equipment industry to transform production equipment, the rapid development of the scientific and technological industry has provided a solid foundation for technological innovation of the domestic marine equipment industry, and the establishment of the position of a major trading country has created favorable conditions for more domestic marine equipment to enter the global market.”He believes that the domestic marine equipment industry has had a lot of changes. The whole series of marine environmental protection equipment produced by some marine equipment enterprises, such as Hansheng, has replaced the imported equipment,supplied to domestic export ships, and some domestic marine equipment have realized batch export. Some marine equipment enterprises have developed quite a number of after-sale maintenance service agents overseas, e.g., CSSC WinGD Engine Global Service has fully started, and the Zhenhua Port Machinery and Ship Spare Parts Global Service Network using the advantages of its service providers spread major ports all over the world is about to be opened.A number of listed companies, such as Zhejiang Weixing New Building Materials Co., Ltd., which were originally industry“outsiders”, also carried strong capital and relied on strong R&D and production capacity to gradually enter the marine equipment industry and became fresh forces rapidly rising in the domestic marine equipment field.

Henan Guangcai Electric Co Ltd is a private marine equipment enterprise set up in Anyang, Henan province in 1998. General Manager Li Jiwen said his company production base is located in Anyang, Henan Province, the technology marketing center is in Shanghai, and 23 after-sales technology service contract outlets have been developed overseas,becoming the OEM of Schneider, ABB and other global well-known brands in China, products are supplied in batches to series of large-scale export tankers,bulk carriers and other ships built by many backbone domestic shipbuilding enterprises.

Gu Guobiao said that now an increasing number of domestic marine equipment begin to gradually replace imported similar products, supplied in batches to export-oriented ocean-going ships, and even achieved bulk exports.Whether it is an independent brand or an OEM foreign brand, at least it shows that the manufacturing capacity of domestic marine equipment enterprises is more and more recognized by foreign shipowners.A German shipping company’s newbuilding supervisor in China believes that the quality of some domestic marine equipment is comparable with Japanese,Korean and European similar products.

Break Out Of Old Ideas, Join Hands to Create a Fair Development Environment

For a long time, foreign shipowners choosing to build ships in China will designate major mechanical and electrical equipment in a few foreign brands,resulting in the monopoly of these foreign brands in China. Foreign brand equipment suppliers use their absolute voice in market, resulting in high product prices.Even if the market is depressed and new ship prices keep falling, prices of some foreign brand marine equipment in China are still strong.

In the case of marine generators,Chinese brands are only Landian (Lanzhou Electric Machinery Co., Ltd.), Sanbo Motor(former Jiangxi Sanbo Electric Machinery Factory, now transformed into Kangfu Technology Co., Ltd.), Stanford, Marathon,Leroysomer and other foreign brands almost occupied the domestic market for marine generators. Hong Xiaohua,chairman of Kangfu Technology, said that in the early days of his company, domestic national brand marine generators had little influence in the domestic market,and the prices of foreign brands of marine generators sold in China would rise almost 5% to 10% a year; Later, after marine generator business of Kangfu and other national brands slowly expanded, foreign brand marine generators not only did not increase prices as in the past, but also took the initiative to reduce prices, and waged a price war with domestic brands.Hong Xiaohua joked that if one day, voice of Kangfu Technology and other national brands in the marine generator market is gradually weakened or even disappears,overseas brand marine generators in China will immediately increase prices.

In order to break the unfavorable situation of monopoly of a small number of foreign brand marine equipment products in China and to inject sustained and strong momentum into the highquality development of the domestic shipbuilding industry, some insiders called on the domestic shipbuilding industry and shipowners to break the old idea that “the domestic marine equipment is not as good as overseas”, and under the same technical conditions, provide an opportunity for the domestic marine equipment to compete fairly with the foreign marine equipment. Zhang Minghai, a senior engineer in the Yangzijiang Shipbuilding,said, under the same technical conditions,shipyards are of course willing to choose domestic equipment that is reliable in quality, cheap in price, more timely and considerate in installing and commissioning services. However, when signing shipbuilding contracts, shipowners are entitled to voice their opinions, and shipbuilding companies need to negotiate with shipowners or make compromise with shipowners in order to pick up orders.

“Under such circumstances, shipbuilding enterprises should take the initiative to join hands with relevant domestic marine equipment enterprises to actively engage in technical negotiations with shipowners.” Gu Guobiao said that in order to increase the chances of success in negotiations between shipbuilding enterprises and shipowners, it is necessary to work hand in hand with all parties to make preparations in three areas.

First of all, shipbuilding enterprises should strengthen communication with marine equipment enterprises, timely understand the technical R&D strength of marine equipment enterprises,production capacity and quality assurance system and other true situations. Shipbuilding enterprises should take marine equipment enterprises with strong technical strength, advanced production and processing equipment, strong quality brand awareness as their strategic partners. Marine equipment enterprises should join forces with domestic colleges and universities and scientific research institutes to form a technological innovation alliance, make targeted goals for gradual localization of imported equipment,continuously carry out technological innovation,and strive to develop imported substitute products with close or even better performance in a bid to enhance their own right to speak in business negotiations with foreign brand equipment companies.

Secondly, an effort should be made in building up the technical reliability verification capability and the quality traceability capacity of domestic marine equipment, especially replacing imported equipment. The Outline of Action Plan for Upgrading the Marine Equipment Industry Capacity (2016-2020) clearly states to strengthen the capacity-building of key technology and product test verification; Improve product life cycle quality traceability. The relevant state departments should implement this development goal as soon as possible and encourage domestic shipbuilding, marine equipment, shipping,universities and research institutes to jointly establish a technical reliability verification center for marine equipment in China under the guidance of the competent government quality department to grasp the technical reliability of domestic marine equipment from a technical point of view as well as from the actual ship application. The state will guide shipbuilding,marine equipment, scientific research and other relevant shipbuilding enterprises to hold mutual insurance in accordance with the guideline of“whoever is benefited should contribute”, and establish a domestic marine equipment product quality credit deposit in line with market rules to carry out the quality credit commitment to domestic marine equipment which has passed the quality and performance reliability verification of marine equipment products. Once a quality accident occurs in the certified domestic marine equipment, all economic losses suffered by the user will be paid by the product quality credit guarantee.

Finally, the relevant government departments should draw lessons from the successful practices of Japan and Korea in developing their own marine equipment industry, and actively guide domestic shipowners and shipowners to give preference to domestic equipment under the same technical conditions when formulating industrial development policies. At the same time, market supervision will be strengthened, foreign marine equipment enterprises should be resolutely stopped from colluding with shipowners through the dominant position of some of their products,adjusting prices, packaging supplies,running against domestic manufacturers,and ultimately harming the interests of shipbuilding enterprises, providing a good fair development environment for high-quality development of the domestic marine equipment industry.

“Blindly rejecting marine equipment of good domestic enterprises and blind faith in foreign brands will only increase the shipbuilding costs of shipbuilding enterprises, increase shipowners' costs of spare parts and technical services, and reduce the development space of the domestic marine equipment industry, with the ultimate victims falling on the domestic shipbuilding and shipping industries.”Gu Guobiao said, “Aware of this, some people of insight in China unanimously call on trusting marine equipment of domestic excellent brands.” He said that with the growing understanding of the importance of the domestic marine equipment industry chain, more and more excellent domestic marine equipment will stand out. Sooner or later, the installation rate of domestic marine equipment in China will reach 85%, 90% and even higher.