A Study On Development Of China’s Shipbuilding Industry: Industry Chain Integration Perspective

Shipbuilding industry is labor, capital and technology intensive industry which provides essential equipments and constructions for water transport, marine resources exploitation and naval defense. Through extensive interactions with both upstream and downstream industries, shipbuilding industry not only plays a strong leading role in the development of many other industries such as mechanical and electrical manufacturing, steel and chemical, shipping and the exploration and exploitation of marine resources, but also can become the key factor in promoting employment, coastal defense and export with its derivative spillover effects and social effects. Regarding the intensifying international competition and China’s rising international influences, the country has raised higher demands for further development of the national shipbuilding capability. But as far as its enormous scale is concerned, China’s shipbuilding industry is for from mature and competitive which can be described as following: serious capability discrepancies with its production scale, lack of influences in international market regulations and rules, irrelevance in the whole national economy. As competition in the shipbuilding industry has been brought to the level of whole industry chain instead of certain point or link of it, operational capability and control of the chain is the core competencies of sustainable industrial development, which requires new ideas and perspectives to the research on industrial development and upgrade accordingly.Based on the above assumptions and existing research work, the present paper explore and explain the possible development path of China’s shipbuilding industry from the perspective of industry chain integration. Based on the characteristics of China’s shipbuilding industry, propose the general idea of chain integration at different stages which can be summarized as: increasing control in upstream, adjusting of the structure in midstream, stimulating vitality in downstream. The purpose is to achieve positive interactions inside industry chain, enhance R & D capability, optimize the manufacturing layout, and promote the transformation and upgrading of ancillary service sectors, thus enhance the overall competitiveness of China’s shipbuilding industry through integration.The analytical structure of the present paper is the following:1. Combining the existing researches in shipbuilding and chain analysis as starting point, define the boundaries and connotation of ship design, shipbuilding and ship ancillary production as three integrated links of the whole ship industry chain. Refine the characteristics of industry chain according to the internal properties of shipbuilding industry. Construct the theoretical frame work on the basis of industrial organization theory, transaction costs theory and business capability theory.2. Analyze the shipbuilding industry from the perspective of driving mechanism of industry chain integration. The driving force of China’s shipbuilding industry chain integration is both internal and external: internally the chain integration process is inspired by the obstacles existing in upstream, midstream and downstream of the chain which hamper the competitiveness, externally the chain integration can improve the performance of the shipbuilding industry through reduced operating costs, improved capability of innovation. Based on the above hypothesis, the micro, meso and macro basis of ship industry chain integration are built.3. Discuss the operational mechanism of chain integration shipbuilding industry consisting five aspects: first, trust mechanism which is the foundation for integration of industry chain; Second, communication and coordination mechanism coordinating among different subjects of interest in the chain; Third, benefit distribution mechanism focusing on interest allocation methods; Fourth, competitive negotiation mechanism focusing on the analysis of the possible paths of industry chain integration; Fifth, supervision and incentive mechanism which is the guarantee of proper distribution of benefits inside the chain.Based on the above analysis and long term trends of shipbuilding industry development, the present paper make benchmark study of the differences between domestic and international shipbuilding industry chain in upstream, midstream and downstream stages and foreign, put forward China’s shipbuilding industry chain integration strategic goal as achieving four evolutions: structural transition from the multi-functional enterprises to more specialized inter-cooperated sub systems, market focus from domestic market to global market; property structure adjustment from state-owned dominated to mixed ownership; emphasis of industry chain from manufacturing to service.Finally, propose the practical path options of China’s shipbuilding industry integration from upstream, midstream and downstream stages: Increased control over ship design sector; structure optimization in shipbuilding sectors; enhanced vitality and technical upgrades in marine ancillary service sector.