Given the huge potential of the Chinese cruise market, it may seem surprising that established industry players are slow to arrive. An underdeveloped market is challenging, of course. But those who come with open minds and the intention of supporting its sustainable development in the widest possible sense can expect many interesting opportunities. Our experience as first movers highlights some of the issues that we at Fincantieri China, and all others who wish to be involved in the Chinese cruise industry, have to look forward to.
2017 saw us make some major breakthroughs. In February 2017 in Beijing, in the presence of the President of China, Xi Jinping, the President of Italy, Sergio Mattarella and the CEO of Fincantieri, Giuseppe Bono, together with the CEO of Costa Group, Michael Thamm and the CEO of the CSSC, Wu Qiang, we signed a MOU for the construction of two ships in China dedicated to the Chinese market, with an option for an additional four. With the first delivery scheduled for 2023, the two Vista-class ships will be adapted to the Chinese market and built at the CSSC-owned SWS yard in Shanghai.
Building the first cruise ship ever in China is ambitious and requires a solid and reliable supply chain. That is why in May 2017 we signed a Letter of Intent with Su Ping, District Vice Director of Baoshan, and Chen Qi, Vice President of CSSC, for collaboration on the development of the cruise industry supply chain in Baoshan industrial park near Shanghai. The aim is to build a major hub for the cruise and other maritime sectors, attracting suppliers with preferential policies such as financial support, a fast visa process for workers or advantageous rates for land.
When you look at the figures, it seems extraordinary that we are only now building the first cruise ship in China. The market reached 2.1 million passengers in 2016 and is now the second biggest after the US. If you compare the penetration rate of the US market (3%, or around 12 million people) to the one of the Chinese market (a country with 1.4 billion citizens), you can see there is still huge room for growth.
A project to boost the country’s cruise industry – not just ships and passengers but the entire ecosystem, from supply and logistics to ports – is massive and both requires and enjoys the support of the Chinese government. Supporting the cruise industry will help upgrade the country’s shipbuilding capabilities in general, an aim outlined in the “Made in China 2025” plan. The government also sees cruising as a way to push up internal private consumption and create a more sustainable GDP structure. That’s why it’s important, firstly to become a preferred partner of the Chinese government, and secondly to widen our vision to encompass all aspects of cruising and not just building, converting and repairing the ships.
You might wonder why Chinese and other Asian shipbuilders don’t yet have a strong foothold in the cruise shipbuilding sector. The answer is simple: experience. Since delivering its first modern cruise ship in 1990, Fincantieri has built 80 cruise ships and developed experience in design, engineering and supply chain management. It will take Asian shipbuilders time before they can close the gap with European ones, especially with regard to complex supply systems and flexibility during production. With our experience, we can help the Chinese cruise industry in this path.
Want to read the full article? Download Seaview magazine!