A growing number of shipbuilders in China have gone bankrupt in recent years, plagued by a severe recession in the global shipping industry and capital shortages, industry experts noted.EO Link.
More than 20 Chinese medium-sized and large shipyards, including Jiangsu Eastern Heavy Industry Co and Sinopacific Shipbuilding Group, have closed since the beginning of 2015, Beijing-based newspaper the Economic Observer reported on Sunday.
...But what’s worse is the capital drain that has hit many shipbuilders, as “shipbuilding is a capital-intensive industry with a cost averaging tens of millions of yuan,” experts noted.
“A shipowner’s down payment for an order has dropped from the previous 20 percent to 30 percent to less than 10 percent this year,” Wu explained, noting that this put strains on shipbuilders’ capital, as they need to pay in advance.
Lenders are gloomy on the prospects of the shipping industry, which makes it difficult for shipbuilders to secure finance through loans. They are left with no option but to undergo bankruptcy, the Economic Observer reported, citing industry players.
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