"Is Korea Not No.1 in Shipbuilding Desired by the US? China Leading the Market [Reality of Chinese Technology?]③"

China's shipbuilding industry is rapidly growing and surpassing South Korea in the global market. The market share of Chinese shipyards is sharply increasing across various vessel types, including liquefied natural gas (LNG) carriers, container ships, and very large crude carriers (VLCCs). While South Korea still maintains competitiveness in high value-added ship sectors, analysts suggest that considering China's low-price offensive and rapid technological advancements, it poses a significant long-term threat.

China's Shipbuilding Industry, Led by 'Made in China 2025', Widens Gap with South Korea

According to newbuilding data from S&P Global Market Intelligence on the 20th, the global newbuilding orders in 2024 reached 4,143 vessels, totaling 138.43 million deadweight tons, marking a 61% increase from the previous year and the second-highest level ever recorded. Among these, China led the market with about a 70% share.

The Export-Import Bank of Korea also analyzed in its report titled 'Status and Implications of Large Vessel Orders in Korean Shipbuilding' that South Korea's shipbuilding order share decreased from 20.6% in 2023 to 18.1% by November 2024, while China's share rose from 60% to 70% during the same period, further widening the gap between the two countries.

China's remarkable progress is especially notable in the large tanker and container ship markets. In the Suezmax tanker segment, where South Korea previously held an advantage, China surpassed South Korea with a 52% market share compared to South Korea's 41% in 2024. Although South Korea's share in the VLCC market recovered from 0% in 2023 to 22% in 2024, it still lags behind China.

The background of these changes lies in the aggressive investments and support from the Chinese government, spearheaded by the Made in China 2025 initiative. China operates large-scale shipyards that maximize production capacity by manufacturing not only commercial vessels but also warships. For example, the Jiangnan Shipyard and Hudong-Zhonghua Shipyard near Shanghai simultaneously produce commercial ships and naval vessels, supporting the modernization of the Chinese navy.

Another strength of China's shipbuilding industry is the advancement of eco-friendly ships and smart shipyard technologies. With the International Maritime Organization (IMO) tightening environmental regulations, demand for eco-friendly vessels such as LNG-powered ships and ammonia- or methanol-powered ships is increasing, and China is rapidly securing technological capabilities in this market as well. Clarkson Research analyzed that as of 2023, Chinese shipyards accounted for more than 50% of orders for ammonia- and methanol-powered ships and are expanding their market share even in LNG-powered ships, where South Korea had been strong.

Moreover, major shipbuilders including China State Shipbuilding Corporation (CSSC) are enhancing production efficiency by adopting AI-based production management systems, automated welding robots, and digital twin technologies in their shipyards.

South Korean Shipbuilding Faces Competitiveness Crisis

In contrast, South Korea's shipbuilding industry is evaluated as losing competitiveness. South Korea maintained the global number one position from the late 1990s through the early 2010s but began facing difficulties after the mid-2010s due to overlapping structural problems.

The biggest cause is an excessive low-price order strategy. The Export-Import Bank of Korea's Overseas Economic Research Institute pointed out that Korean shipbuilders continued to secure orders at low prices without considering costs after the global financial crisis in the late 2000s. In the early 2010s, heavy investment in offshore plant projects led to massive losses as projects were canceled one after another due to falling oil prices.

Labor shortages and declining productivity have also been identified as issues. A representative from the Korea Institute for Industrial Economics & Trade (KIET) said, "Shipbuilding is an industry where long-term technological accumulation is important, but since 2015, restructuring and deteriorating performance have caused a large number of skilled workers to leave. Meanwhile, China is actively securing skilled workers through large-scale technical education and workforce development programs, enhancing its competitiveness."

South Korea still holds a technological edge in high value-added vessels such as LNG carriers. HD Hyundai Heavy Industries, Hanwha Ocean (formerly Daewoo Shipbuilding & Marine Engineering), and Samsung Heavy Industries maintain dominant competitiveness in the LNG carrier market, with the average price of LNG carriers ordered by South Korea about 20-30% higher than those from China.

However, industry observers caution that it is uncertain how long this technological advantage will last. China is strengthening research and development (R&D) to acquire LNG carrier technology and accelerating its entry into the high value-added ship market by expanding cooperation with global shipowners.

The official stated, "China's shipbuilding industry is not growing solely through price competitiveness. It is executing strategies to dominate the global shipbuilding market through government support, technological innovation, eco-friendly ship development, and smart shipyard construction. For South Korea to maintain its status as a shipbuilding powerhouse, it is essential to continuously secure technological superiority in high value-added ship markets such as LNG carriers while strengthening competitiveness through the development of smart shipyards and eco-friendly technologies."