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Notice of the People's Government of Shandong Province on Printing And Notice of the People’s Government of Shandong Province on Printing and Distributing the Shandong Province Shipbuilding Industry Adjustment Revitalization Plan Lu Zheng Fa [2009] No. 43 All people’s governments of all cities and all counties (county-level cities and districts), all departments and directly-subordinated agencies under the provincial government, and all major enterprises and institutions of higher learning in Shandong Province: The Shandong Province Shipbuilding Adjustment Revitalization Plan (hereinafter referred to as the “Plan”) is hereby printed and distributed to you. Please carry out this Plan earnestly. Currently, Shandong Province (hereinafter referred to as the “Province”) is in the key stage of shipbuilding development. The impacts of the global financial crisis on the real economy have brought both severe challenges and important opportunities of structural adjustment for shipbuilding development. Formulating and implementing this Plan is of significant meaning for carrying out the national Shipbuilding Industry Adjustment and Revitalization Plan, keeping the healthy and stable development of the shipbuilding industry in this Province, and accelerating industry optimizing and upgrading. All localities and departments shall, with the Deng Xiaoping Theory and the Three Represents ideology as the guiding ideas, deeply carry out the Scientific Outlook on Development, unify their thoughts and actions onto the decisions and arrangements of the Party Committee and the Government of this Province, further intensify their sense of opportunity, take initiative to make reasonable and practical steps to boost technical progress of shipbuilding enterprises, facilitate the implementation of major projects, accelerate shipbuilding industry structure adjustment, optimize the shipbuilding development environment, thus to ensure that the goals of the Shandong Shipbuilding Adjustment and Revitalization Plan is achieved as scheduled. All localities shall waste no time formulating specific implementation schemes and take concrete measures to organize the implementation work in accordance with the goals, tasks and policy measures determined in this Plan. All relevant departments under the provincial government shall formulate and improve various supporting policy measures and provide good guidance and support with respect to implementation of this Plan according to the specific division of work and working requirements of this Plan. This Plan also sets out a list of selected major supporting projects under construction or proposed to be built, which will be printed and distributed separately. All localities, competent departments and relevant enterprises shall also carry out the said list properly. People’s Government of Shandong Province April 20, 2009 Shandong Province Shipbuilding Industry Adjustment Revitalization Plan (2009-2011) Shipbuilding is a capital technology and labor-intensive industry and a comprehensive industry providing technical equipment for purpose of waterborne shipping, ocean development, and national defense construction. Being much related to other industries and being a powerful driver, shipbuilding has significant promoting force to the development of upstream and downstream industries such as iron and steel, machinery, electronics, chemical, shipping, ocean development, etc. Currently, this Province is in the key stage of leapfrog development to become a large shipbuilding province. The impacts of the global financial crisis on the real economy have brought both severe challenges and important opportunities of structural adjustment for shipbuilding development. This Plan is formulated in order to actively respond to the current situation, ensure the completion of the “Eleventh Five Year” tasks as scheduled, and lay a good foundation for the “Twelfth Five Year” development, thus to realize shipbuilding adjustment and revitalization in this Province. I. Status Quo and Situation (I) Status Quo. 1. In this Province, there are 73 shipbuilding and repair enterprises, 5 ocean engineering equipment manufacturers, 7 yacht manufacturers, and 34 supporting enterprises, all of which are included in industry statistics, and 100,000 people working in this industry. In 2008, the amount of backlog orders were 9,110,000DWT, that of new orders 2,040,000DWT, that of ships completed 1,030,000DWT, and the realized output value was RMB 40.3 billion, showing a year-on-year growth of 71%; the amount of added value was RMB 7.9 billion, showing a year-on-year growth of 24%; and the sales revenues were RMB 37.4 billion, showing a year-on-year growth of 71%. 2. Currently, there is one 500,000t-grade shipbuilding dock, two 300,000t-grade shipbuilding docks, one 100,000t-grade shipbuilding dock, one 80,000t-grade shipbuilding docks, one 50,000t-grade shipbuilding berth, and one 300,000t-grade, 150,000t-grade, 100,000t-grade and 50,000t-grade repair dock respectively. This Province currently has a 4,000,000DWT shipbuilding capacity, which is planned to become 6,000,000DWT at the end of the “Eleventh Five Year” period. 3. Ship-supporting products mainly include high/medium-speed diesel engines, boilers, large bent axles, steel plate, etc. The localized loading ratio within this Province is 30%. In 2008, the realized output value of supporting industries was RMB 17 billion, showing a year-on-year growth of 36%; the added value was RMB 4 billion, showing a year-on-year growth of 19%; and the sales revenues were RMB 16 billion, showing a year-on-year growth of 35%. 4. The ocean engineering equipment production capacity has reached 400,000 standard tons and main products include floating production storing and offloading ship (FPSO), self-elevating drilling platform, semi-submersible drilling platform, and ocean engineering vessel. In 2008, the realized output value was RMB 7.8 billion, showing a year-on-year growth of 89% and the sales revenues were RMB 7.5 billion, showing a year-on-year growth of 77%, taking a leading place in China. 5. This Province has indigenous design and R&D capabilities for ocean fishing vessels, semi- submersible drilling platform and some supporting products and products such as marine high/medium- speed diesel engine, structural steel plate and anchor chain are Chinese famous brands. However, this Province has weak ship R&D and design capabilities. 6. In the “Three major shipbuilding and repair bases” Qingdao, Yantai and Weihai, and the “Six shipbuilding clusters” Qingdao Economic and Technological Development Zone, Jimo City, Yantai Economic and Technological Development Zone, Penglai City, Weihai Economic and Technological Development Zone, and Rongcheng City, the construction has been accelerated and the scale effects are beginning to take shape, but the indigenous innovation capabilities are still weak, and problems such as small scale, dispersed layout and weak foundation are still prominent. (II) Situation. 1. New Ship Orders Decreased Sharply. Affected by the financial crisis, the shipbuilding market declined abruptly and new ship demand dropped sharply. In the fourth quarter of 2008, the amount of new orders in China was 2,610,000DWT, showing a year-on-year decrease of 77%, and that in this Province was 40,000DWT, showing a year-on-year decrease of 93%. In the next 3 years, the shipbuilding market will enter into a downturn. 2. Greater Risk in Ship Delivery as Prescribed. Bulk carrier is the ship type that has suffered the most severe impacts caused by the financial crisis. In 2008, bulk carrier accounted for about 83% of backlog orders in this Province. With the effects of the crisis going deeper over time, there will be greater risks such as order withdrawal by ship owner and delayed ship acceptance. 3. Structure Adjustment is Accelerated. Affected by the reversed transmission mechanism of the market, shipbuilding enterprises are forced to conduct structure adjustment and accelerate technical progress and new product development to re-establish their competitive edge in the market. The shipbuilding industry is facing a reshuffle, in which shipbuilding enterprises not competitive enough will be forced out of this market. II. Guiding Ideology, Guidelines & Principles and Goals (I) Guiding Ideology. Under the guidance of the Scientific Outlook on Development, with firm confidence and positive attitude, take concrete measures to carry out policy measures of the Central Government and the Provincial Government concerning shipbuilding development, promote the implementation of the “Eleventh Five Year” Shipbuilding Development Plan, exert great efforts in industrial structure adjustment and technological innovation, give a boost to industry upgrading and transformation in development mode, and solve prominent problems confronted currently in development to ensure the operational quality and benefits and promote the stable and fast development of the shipbuilding industry of this Province. (II) Guidelines and Principles. 1. Explore the Market Vigorously and Avoid Market Risks. Stabilize the old market, explore the new market, surrender profit rather than market, try to break even but not lose any client, ensure sustained rise of new ship orders, expand market share gradually, to realize stable growth. Improve product quality, ensure ship delivery on time to minimize the risk of the financial crisis. 2. Change Development Mode and Accelerate Structure Adjustment. Change from purely going for large scale to emphasizing quality and benefit, change from simply depending on factor input to underlining
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