A Transfer from“Knee-jerk Measures” to “White List”

Reporter Zhang Xianghui

On September 3, the Department of Industry of the Ministry of Industry and Information of China published the first batch of 51 enterprises qualified for the standard conditions of shipbuilding industry. The issuance of the “white list”,as quoted by the shipbuilding industry indicates that the nation has changed its supervision method for the shipbuilding industry.

Over a long term, the management of China’s shipbuilding industry is fragmented and there was no uniform management regulation and standard for the shipbuilding enterprises, and it is difficult to perform effective management according to the law. Huge market demand is a stimulus for the sharp increase of medium and small shipbuilding enterprises. Taking Zhejiang for example, the number of shipbuilding enterprises has reached more than 500 in only a few years, but few of them are scale enterprises. A large quantity of small and medium-sized shipbuilding enterprises have the common problems of poor production hardware conditions, backward technology and management level, relatively low quality consciousness and so on. From January to March of 2005, three new ships built in Wenzhou, Zhejiang and Yueqing regions had hull cracking accidents successively, causing shocks throughout the country and leading directly to the specific action targeted at low quality ships taken by the four ministries including Ministry of Transport, State Commission of Science and Technology for National Defense Industry (COSTIND),Ministry of Agriculture and State Administration of Work Safety. On October 1, 2007,the “Basic Requirements and Evaluation Methods of Production Conditions of Shipbuilding Enterprises”was formally implemented,which ended the history of constructing and managing shipbuilding enterprises without a unified implementation basis.

In March 2006, the development of shipbuilding industry was included in the national “eleventh fiveyear plan”; in September of the same year, the National Development and Reform Commission and COSTIND,jointly and officially, released the “Long-term and Medium-term Development Plan for Shipbuilding Industry (2006-2015)”, which clearly stated that China will focus on the planning and construction of 3 modern and large-scale shipbuilding bases and at the same time avoid over investment and low level and repeated construction

To improve the industrial concentration, in January 2013, the Ministry of Industry and Information Technology, the National Development and Reform Commission, the Ministry of Finance and other 12 ministries and commissions jointly issued the “Guidance for Accelerating Merger and Reorganization of Key Industry Enterprises”. In 2015, the output of the top ten shipbuilding enterprises accounted for over 70%of the total output in China and more than five are listed as the world’s top 10 shipbuilding enterprises.The determination of Chinese government to promote the concentration of shipbuilding capacity on large enterprises can be seen. Again in July of the same year, the State Council issued the “Implementation Plan for Speeding up Structural Adjustment and Promoting Transformation and Upgrading of Shipping Industry (2013 ～ 2015)”, which explicitly put forward“strengthening management of shipbuilding industry and improving industry entry conditions”.

On November 4, 2013, the Ministry of Industry and Information Technology issued the “Standard Conditions of Shipbuilding Industry” to further strengthen the management of shipbuilding industry,dissolve the conflict of excessive capacity, speed up structural adjustment and promote transformation and upgrading. It is learned that the original file name of the draft is the “Entry Conditions of Shipbuilding Industry”, this was later changed to the “Standard Conditions of Shipping Industry”. The change reveals the changes of the competent administration in its concept of administrative service to provide guidance for overcapacity dissolve, strengthening of graded management of shipbuilding industry and promoting the industry’s transformation and upgrading. The word“entry” was changed to “standard” indicates that not only the objective of dissolving excessive capacity should be realized, but also the fair and orderly competition of the market should be maintained,reflecting the principle of delegating approval right and implementation of graded guidance. All parties shall play their role.

According to Jiang Botao, the Deputy Director of the Newbuilding Department of China Classification Society, as the main national survey body, as well as the independent third party for maritime safety technology and other safety technology, CCS, and the other related expert bodies shall come to the front stage to provide expert technical support and relevant service for healthy and sustainable development of the industry after the government has changed its concept in supervision and service for shipbuilding industry.

For shipbuilding companies, the introduction of “white list” of shipbuilding enterprises has given a staggering blow to the backward shipbuilding capacity. We believe that with the continuous fermentation of the chain effect of “white list” in the future, the backward capacity will get even bigger blow. The strong will be always strong,this will be the apparent characteristic of the future shipbuilding market.