While rumors that massive Chinese shipyards will file for bankruptcy in a few years spreading around, Li Sheng, the head of Shanghai-based S&P and newbuilding broker Mainland Shipping, has rather an optimistic view.
He pointed out that predictions of a mass extinction of Chinese shipyards are exaggerated and forecast that most of approximately 400 'emerging Chinese shipyards', which have been established after 2005 with having heavily invested in shipyard facility and infrastructures, will survive recent crisis.
Despite the new order drought, contract cancellations, some private shipyards' collapses, etc., Li emphasized that China's emerging yards have already adapted successfully to the present harsh environment.
Li explained emerging yards that have made a 'serious and adequate' investment are doing quite well, with a strong financial background.
However, 20% of emerging yards (around 80 companies), which were set up speculatively by non-shipping related industries with minimal capital expenditures, are likely to die out.
Li said, "The inefficient, lower-quality shipyards will be pushed out and Chinese shipbuilding industries will be on a healthier track."