Notice of the Anhui Provincial People's Government on the Issuance of the Anhui Province Shipbuilding Industry Adjustment and Revitalization Plan

Wan Zheng [2009] No. 78

To all city and county governments, province departments, and directly-subordinate divisions:

The Anhui Province Shipbuilding Industry Adjustment and Revitalization Plan is hereby issued to you. Please implement it earnestly according to the situations of individual regions and departments.

People's Government of Anhui Province July 16, 2009

Anhui Province Shipbuilding Industry Adjustment and Revitalization Plan

Shipbuilding is a comprehensive industry that provides technology and equipment for the shipping industry, ocean resource exploitation, and national defense. It is a powerful engine driving development and expansion of exports in other major industries, such as the iron and steel industry, the petrochemical industry, the light manufacturing industry, the textile industry, the equipment manufacturing industry, the electronics industry, and the information industry. It has great significance for improving employment, developing the economy, and ensuring coastal security. The Anhui Province Shipbuilding Industry Adjustment and Revitalization Plan (hereafter referred to as the Plan) has been formulated to comprehensively implement the national Shipbuilding Industry Adjustment and Revitalization Plan on the basis of industrial development plans for eight major industries that have already been published by the provincial government. The period for implementation of this plan is 2009- 2011, with long-term implementation extending to 2020.

I. Situation and Circumstances of the Anhui Province Shipbuilding Industry (I) Industry Status Since the beginning of the period of the "11th Five-Year Period," by making full use of location and resource advantages, our province took the initiative to undertake the Yangtze River Delta shipbuilding industry shift and achieved rapid growth in the shipbuilding industry. As of 2008, our province has built a shipbuilding system composed of 107 companies with 36,000 direct employees, and has become a major national river shipbuilding base. First, rapidly increased shipbuilding capacity. The numbers of companies and cities that are capable of building 10,000-ton ships have increased from three to 31 and from one to six, respectively, with the largest model being a 57,300 deadweight ton bulk cargo ship. Shipbuilding capacity has increased from 500,000 to 1,300,000 deadweight tons. In 2008, the shipbuilding production volume was 1,214,000 deadweight tons; gross industrial output value was 6.07 billion RMB, increased by 102 percent compared to the previous year. Industry added-value was 1.86 billion RMB, increased by 133 percent. Export delivery value was 1.95 billion RMB, increased by 140 percent. Confirmed shipbuilding orders were 2,600,000 deadweight tons. Second, shipbuilding industry clusters have basically been formed. There are six clusters along the Yangtze River in Wuhu, Chaohu, Anqing, Maanshan, Chizhou, and Tongling, with the capability of building 10,000-ton ships. There are five clusters along the Huai River in Xuancheng, Bangbu, Fuyang, Huainan, and Liuan, with the capability of building 1,000-ton ships. The main products are river bulk cargo ships. The more advanced, high added-value varieties are 10,000-ton multipurpose bulk carriers, container vessels, petroleum tankers, chemical tankers, dredging boats, ocean tugboats, and cruise ships. These ships are exported to more than ten countries and regions in Europe, Africa, and Southeast Asia. Finally, basically established supporting enterprises for shipbuilding. The Anqing Ship Diesel Engine Company and Hefei Rongan Engine Company have become national bases for mid/low-speed diesel engines. Some of Anhui's shipbuilding products, such as ship steel, accommodation outfits, deck machinery, mooring equipment, deck outfits, cables, lightings, and paint, have rather high recognition nationwide and abroad.

(II) Circumstances Faced With While our province is witnessing fast development of the shipbuilding industry, there are many problems emerging at the same time. The technology level, added-value, and indigenous research and development ability are low, development of supporting industries is slow, and backbone enterprises are lacking in advantages and talented personnel. In the second half of 2008, the ocean vessel market was badly hit by the effects of the global financial crisis. New shipbuilding orders began to decrease, ship delivery risks increased, and company financing became difficult to obtain. Our province was facing grievous consequences in the shipbuilding industry.

It shall been seen that there are some comparative advantages through many years of development. The first advantage is our long shoreline. The Yangtze River runs through the province for 343 kilometers with 152 kilometers of shoreline suitable for shipbuilding, and 37 kilometers are used for shipbuilding presently, which is one quarter of the total. The second advantage is our abundant human resources. Our province is an agricultural province with a huge population with a large abundant agricultural labor force along the Yangtze River and the Huai River that will migrate. The labor cost is relatively low and the labor situation is favorable to shipbuilding labor requirements. The third advantage is our location. Our province is right next to the Yangtze River Delta and the Huanjiang city belt model zone for undertaking industry shift. Along with the implementation of our development strategy for accelerated growth, all these factors have greatly stimulated the shipbuilding industry along the Yangtze River and the Huai River, improved the cooperation and division ability to participate in the pan-Yangtze River shipbuilding industry development, and empowered the endeavor of carrying out a Yangtze River shipbuilding industry shift.

II. Guiding Ideology, Basic Principles, and Goals (I) Guiding Ideology Thoroughly apply the scientific development concept; act in accordance with the general requirements of maintaining development, expanding domestic demand, and adjusting structures; focus on industrial upgrading and transforming the development model. Seize the opportunity of industry shift to pursue staggered development, secure shipbuilding orders, improve supporting industries, address operational risks, and ensure fast and stable development of the industry. Promote mergers and regroupings, optimize industry structure, foster major advantageous companies, and obtain a relatively high competitive advantage. Speed up technology transformation, improve indigenous innovation ability, develop and manufacture high-technology, high-added-value ships, foster new growth points, and establish a solid foundation for us to reach the goals of the "double thousands program."

(II) Basic Principles 1. Secure shipbuilding orders and sustain growth. Actively deal with delivery risks such as delays and abandonments. Prevent large volume order cancellations, ensure in-time order completion from shipbuilding companies, and maintain stable and relatively fast growth.

2. Speed up indigenous innovation and improve capacity. Put efforts in technical renovation; encourage advantageous companies to research and develop high-tech, high added-value ships and key associated equipment. Improve overall production capacity and technical standard of our province’s shipbuilding industry. 3. Promote structure adjustment and speed up industry clustering. Speed up construction of concentrated shipbuilding areas, encourage companies to gather around each other, and optimize industry regional distribution. Vigorously foster some advantageous companies through merger and regroup, in order to improve competency.

4. Hold on to development opportunities and undertake industry shift. Hold on to the opportunities brought by HuanJiang city belt exemplary zone for undertaking industry shift, participate in the pan-Yangtze River shipbuilding industry cooperation and division. Promote introducing investment, optimize investment environment, and continue the good work on undertaking shipbuilding industry shift.

(III) Plan Goals 1. Ship production to increase at a steady pace.

By 2011, reach an annual ship production capacity of 4,500,000 deadweight tons; ship production volume should be 3500,000 deadweight tons, for an annual increase of more than 40 percent; gross industry output value should be 26 billion RMB, with an annual increase of more than 60 percent; industrial added-value should be 7.5 billion RMB, with an annual increase of more than 60 percent; and export delivery value should be seven billion RMB, for an annual increase of more than 50 percent.

2. Technical standards to be greatly improved.

By 2011, make breakthroughs in high-technology, high-added-value ships, such as automobile carriers and roll-on/roll-off ships, as well as in marine engineering equipment and technologies. Cultivate six companies with new and advanced technologies and set up one national, industry-owned technology center and eight provincial, industry-owned technology centers.

3. Supporting industries to be greatly improved.

By 2011, mid/low-speed diesel ship engines, accommodation outfits, deck machinery, and other key ship equipment to be greatly improved. Low-speed diesel ship engine production should reach one million horsepower, with a gross industry output value of two billion RMB; mid-speed diesel ship engine production to reach 800 units, with a gross industry output value of 1.6 billion RMB; and the gross industry output value in ship accommodation outfits and deck machinery to reach one billion RMB.

4. Progress to be made in structural adjustment.

By 2011, the industry structure to be more optimized and industry clustering to be greatly improved. Focus on seven concentrated shipbuilding areas along the Yangtze River that contribute 80 percent of the total provincial production capacity; form 12 shipbuilding industry clusters in the Huanjiang city belt and areas along the Huai River; and bring up five core shipbuilding companies with a shipbuilding capacity of more than 300,000 deadweight tons and a gross industry output value of more than two billion RMB.

5. Long-range Goals

By 2020, the shipbuilding industry to accomplish development and bounds, the provincial shipbuilding capacity to reach 10 million deadweight tons with a gross industry output value of 100 billion RMB. Backbone enterprises to show obvious advantages, establish a rational industry structure, greatly improve the overall standards and competency of the industry. Shipbuilding and its supporting industries to achieve coordinated development, and our province to become a major national shipbuilding industry development region.

III. Major Adjustment and Revitalization Tasks (I) Stabilize shipbuilding company production. Adopt effective measures to support shipbuilding companies and shipping companies in order for them to fulfill contracts. Proactively deal with the operating risks of delayed ship pickups, order cancelations, and ship abandonment. Guide companies to strengthen production management, properly arrange production plans, guarantee shipbuilding quality and schedules, and ensure production continuity.

(II) Accelerate construction of concentrated shipbuilding areas. Make use of the opportunities brought by the construction of the Huanjiang city belt model zone in undertaking an industrial shift, and plan as a whole and intensively exploit shoreline resources and improve comprehensive utilization of shoreline resources. Strive to promote construction of concentrated shipbuilding areas in Wuhu Sanshan, Wuwei, Hexian, Congyang, Wangjiang, Dangtu, Chizhou, and other such locations. Accelerate the construction of Wuhu shipbuilding and a supporting industry cluster composed of companies like Wuhu Xinlian Shipbuilding and Jiangdong Shipbuilding, accelerate the construction of a Wuwei shipbuilding cluster composed of companies like Anhui Wuzhou Shipbuilding and Anhui Far-east Shipbuilding, accelerate the construction of a Hexian shipbuilding cluster composed of companies like Anhui Zhongyang Shipbuiding and Anhui Zhongrun Shipbuilding, accelerate the construction of an Anqing shipbuilding cluster composed of companies like Oriental Shipbuilding and Anhui Shenzhou Shipbuilding, accelerate the construction of a Dangtu shipbuilding cluster composed of companies like Anhui Zhongyuan Shipbuilding and Anhui Province Heping Shipbuilding, accelerate the construction of a Chizhou shipbuilding cluster composed of companies like Anhui Zhongyao Meihua Shipbuilding, accelerate the construction of a Bangbu shipbuilding cluster composed of companies like Anhui Shujun and Bangbu city Shenzhou Machinary, accelerate the construction of a Xuancheng shipbuilding and supporting industry cluster, accelerate the construction of a Fuyan Taihe shipbuilding cluster, accelerate the construction of an Anqing shipbuilding supporting industry cluster composed of companies like Anqing Zhongchuan Diesel Engines and Anqing Changguchuan Shipbuilding Technology, accelerate the construction of a Hefei shipbuilding supporting industry cluster composed of companies like Hefei Rongan Engines, and accelerate the construction of a Xuzhou shipbuilding supporting industry cluster.

(III) Increase the pace of technological advancement and indigenous innovation. Actively introduce, digest, and absorb domestic and foreign advanced technologies; vigorously strive to improve indigenous innovation, integrated innovation, and successive introduction-digestion- absorption innovation; and acquire some key technologies and core technologies with indigenous intellectual property ownership rights in order to support and improve industry standards. Support major shipbuilding companies in speeding up technical transformation while focusing on building high- technology and high-added-value ships like 10,000-ton multipurpose bulk carriers, high-speed container vessels, petroleum tankers, chemical tankers, cruise ships, yachts, and engineering ships. Support the building of high-technology and high-added-value ships like automobile carriers and roll-on/roll-off ships, as well as marine engineering equipment. Support the building of key systems for marine engineering, and some key associated equipment such as mid/low- speed diesel ship engines, accommodation outfits, deck machinery, and electronic ship devices.

Support Wuhu Xinlian Shipbuilding Company's high-added-value product research and manufacturing center project for products such as car carriers, roll-on/roll-off ships, and multipurpose heavy-lifting vessels. Utilize Ruiqi Automobile Company to conduct key technical research on automobile carriers to obtain indigenous design and manufacture capabilities. Support Hefei Rongan Engines Company's low-speed diesel ship engine manufacturing center project, which involves introducing, digesting, and absorbing advanced international techniques for manufacturing low-speed diesel ship engines and improving the capability to develop related techniques. Support Anqing Zhongchuan diesel Engine Company's mid-speed diesel ship engine manufacturing center project, which involves introducing, digesting, and absorbing advanced international techniques related to mid-speed diesel ship engines and speeding up the domestication process and the building of an indigenous brand. Support Oriental Shipbuilding Company Congyang shipbuilding center's offshore engineering ship project, which involves developing by means of technical cooperation and indigenous research, gradually accumulating key techniques, and improving marketing capability. Support Anqing Changguchuan Shipbuilding Technology Company's ship engine-room equipment-set project, which involves developing by means of international technical cooperation; conducting research on fuel supply units, oil separators, and combustion furnaces; and achieving localized production. Support Anhui Zhongyao Huamei Shipbuilding Company's stainless steel chemical tanker manufacturing process research project, which involves gradually improving the technological level of shipbuilding.

(IV) Adjust the structure of the industry.

Take advantage of the opportunities brought by market adjustment, speed up elimination of outdated production capacity, achieve rational allocation of resources and production factors, and optimize the structure of the industry. Support enterprises in their mergers and reorganization, launch a program for rating and assessment of shipbuilding companies according to Basic Requirements and Methods for Assessment of the Production Conditions of Shipbuilding Companies (CB/T 3000-2007), and regulate the Anhui ship repair market.

(V) Actively promote ship repair services

Encourage shipbuilding companies to provide ship repair services by taking advantage of existing shipbuilding equipment. Strengthen research in ship repair techniques and improve ship repair and remodeling abilities. Guide small- and medium-sized enterprises to adjust their business structures, develop intermediate product manufacturing, and develop non-ship product markets.

(VI) Strengthen shipbuilding company management

Transform from an extensive development model to an intensive development model. Guide shipbuilding companies to speed up development of a modern enterprise system and to improve scientific decision-making and management. Speed up the establishment of a modern model of shipbuilding and promote general assembly shipbuilding and digital shipbuilding. Increase the study of new international regulations, conventions, and standards related to shipbuilding, and make reactive preparations. Promote new energy-saving and material-saving techniques and processes and improve energy efficiency and steel-use efficiency in order to reduce the consumption of energy and materials. Strengthen professional shipbuilding training and vocational shipbuilding training, improve overall personnel quality, and meet the requirements for sustainable development of the industry.

IV. Guarantee Measures (I) Take steps to stabilize production and operations. Guide shipbuilding companies to work hard on achieving high production efficiency and high product quality so as to guarantee on-time delivery of quality products for existing orders. At the same time, strengthen market development, actively take quality orders, improve ship repair services, promote indigenous shipbuilding, guide local shipping companies to give priority to local shipbuilding, and stabilize our province's shipbuilding market through joint effort.

(II) Strengthen and support ship product exports. Improve the import-export environment for ship products, implement appropriate and flexible export tax policies, expand credit loans to foreign ship buyers, and develop international markets. Encourage indirect exports of associated products for the shipbuilding industry and support shipbuilding companies in making bids for import-export licenses.

(III) Increase credit financing support for production and operations. Strengthen cooperation between banks and enterprises and implement mortgage financing. Each level of financing guarantee institutions for small- and medium-sized enterprises to give prioritized guarantee support to small- and medium-sized shipbuilding enterprises in good standing. Each related bank to guarantee liquidity to reputable companies to facilitate their ship production and contract arrangements. Provide loan extensions to shipbuilding companies experiencing delayed ship pickup and promptly issue payments and refund guarantees to reputable buyers and shipbuilding companies. Guide financing institutions to open business outlets in concentrated shipbuilding areas and to provide services to shipbuilding companies in nearby areas.

(IV) Increase investment on research and development and technological transformation. Promote the construction of technological innovation systems with enterprises as the main players, encourage company investment on technologies, speed up production structure adjustment, and improve indigenous innovation capability and core competency. Support the setting up of industrial technology centers and promote identification of high-technology enterprises. Provide special funds for technological transformation and innovation projects that will lead to adoption of advanced technology for shipbuilding industry improvements. These projects include those related to high-technology, high- added-value ships, marine engineering equipment, key associated equipment, etc.

(V) Increase policy support for concentrated shipbuilding areas. Provide favorable policies for establishment of concentrated shipbuilding areas. Relevant government divisions, such as appropriate departments of the National Development and Reform Commission, Ministry of Land Resources, Water Administration of the State Council, and Ministry of Transportation to give priority to concentrated shipbuilding areas' use of land and shoreline resources, to approve land use rights, ensure big-lot land and shoreline supplies, and guide companies to move in to concentrated areas in order to promote industrial clustering.

(VI) Strengthen training of shipbuilding professionals. Establish training, introduction, and motivation mechanisms for talented personnel. Encourage and guide relevant colleges and universities in the province to take advantage of their teaching resources, establish shipbuilding majors and courses, and provide support for our development of the shipbuilding industry in our province.

V. Plan Implementation Relevant provincial government departments shall jointly undertake the tasks in the Plan, increase communication and consultation, cooperate with each other closely, and quickly make and improve related policies and measures and ensure fulfillment of goals. A joint information announcement system shall be established to regularly publish relevant industry information to the community. Relevant provincial divisions shall carry out post-plan evaluations regularly and provide evaluation conclusions.

Each city and county shall make specific plans quickly, according to the goals, tasks, policies and measures laid out in the Plan and with consideration for local circumstances, and shall strive to ensure that real effects are achieved. Each city and county shall report promptly to the Provincial National Defense Science and Industry Office any new situations and problems that emerge in the course of implementing each specific plan.