Challenges

The key is to improve the industry's efficiency and productivity, say analysts. The efficiency of the country is about half of that of Japan and South Korea.

Among the problems still plaguing the industry are:

The ship design and supply chain are major bottlenecks and there is less cooperation among the country's shipbuilders which leads a slow diffusion of the technologies within the industry;

Many older shipyards are not designed to follow the most-rational manufacturing process.

The industry is slow to adapt new eco-friendly methods as manufacturers fear cost will rise. And the appreciation of the yuan is a potential threat due to weaker the industry's weaker earning capabilities.

The situation also points to the industry's vulnerability to market and raw supply fluctuations.

"The biggest challenge is how Chinese shipyards can improve their competitiveness," Hu says.

(China Daily April 28, 2008)