October 5, 2017 8:00 am JST

Veteran Japan shipbuilder tries its luck with Chinese cruise ships

Tsuneishi mounts challenge to European groups' virtual monopoly on big passenger vessels

Tsuneishi's site in Zhejiang Province is the only wholly foreign-owned shipyard in China.

TOKYO -- As its lead in commercial vessels ebbs, Japan's Tsuneishi Shipbuilding is setting out to produce large passenger ships in China, home to one of the world's fastest-growing populations of cruisegoers.

With Mitsubishi Heavy Industries' de facto withdrawal from building cruise ships, the Japanese have all but ceded this business to European names such as Italy's Fincantieri and Germany's Meyer Werft. In bulkers and other commercial vessels, meanwhile, Tsuneishi and its Japan-based peers have endured rising competition from Chinese and South Korean shipbuilders.

Tsuneishi, part of closely held transport and engineering group Tsuneishi Holdings, will begin building cruise ships in the early 2020s at its Chinese shipyard in Zhejiang Province. It expects its first order to come from a group affiliate.

The vessels will measure 200 meters to 240 meters long and hold 600 to 800 passengers, comparable to the Asuka 2 -- Japan's biggest luxury ship -- operated by compatriot Nippon Yusen. Building on its first sale, the company will try to win orders for ships capable of carrying several thousand passengers from Chinese cruise operators. 

To secure a site for fitting out the ships, Tsuneishi will begin work this year on extending the reach of the massive crane next to its Zhejiang shipyard by roughly 40 meters. It will also build a storehouse to centrally manage construction materials.

Most of the world's passenger ships have made for American and European cruise lines, which have relied on Western engineers and designers to build them. But Tsuneishi will be fishing in more familiar waters. Based east of Hiroshima, it is the only foreign shipbuilder to operate a wholly owned shipyard in China. The company plans to recruit local talent for its Zhejiang and Shanghai design centers, in order to build ships tailored to Chinese tastes. 

Global cruise ship travel has doubled in the last 10 years to over 20 million passengers annually, generating some $115 billion in annual cruise-related spending. Chinese cruise travelers are increasing at a rapid clip of 70% a year. 

Seeing growing demand, Chinese shipbuilders are now starting to make moves as well. China State Shipbuilding has announced a partnership with Fincantieri to deliver China's first cruise ships in 2022. 

Japan's Mitsubishi Heavy, which built the Asuka 2, has pulled out of large passenger ships after suffering 254 billion yen ($2.25 billion) in losses on a roughly 100 billion yen order in 2011 for two vessels from Germany's Aida Cruises.

(Nikkei)

Nippon Yusen KK

Japan

Market(Ticker): TKS(9101)
Sector:
Industry:
Transportation
Marine Shipping
Market cap(USD): 3,501.93M
Shares: 170.05M

Mitsubishi Heavy Industries, Ltd.

Japan

Market(Ticker): TKS(7011)
Sector:
Industry:
Producer Manufacturing
Industrial Machinery
Market cap(USD): 13,595.20M
Shares: 337.36M

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