Why Does China Dominate the Shipbuilding Industry?

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On 06/30/2018, the container ship Daniel K. Inouye officially left the Philadelphia shipyard.

• This was the first in a series of 5 Aloha Class ships ordered by Matson Shipping

  • Each has a capacity equivalent to 3,220 twenty-foot containers, among the largest commercial ships ever built by the US.

A proud achievement for the Philly shipyard – until we look across the Pacific.

• In South Korea, giant cargo ships five times the size are being launched continuously.

• In the time it took the US to complete 2 Aloha ships, Korean shipyards delivered over 50 new-generation supertankers, dominating nearly all international maritime trade routes.

More bitterly, the Philly shipyard is no longer 'American.' It was acquired by a Korean conglomerate – the very competitor they were striving against in 2024.

Today, in the race to control the global shipbuilding industry, the balance has tipped heavily toward 3 Asian countries: Japan, South Korea, and China.

• The US and Europe – once powerful shipbuilding centers of the previous century – have largely withdrawn.

Interestingly, there is no 'obvious' reason why these 3 countries won. If you ask most people, they would say it's cheap labor. But in reality, labor costs account for less than 7% of a supertanker container ship's value.

• Most of it is steel, machinery, components, capital – factors that Asia itself has to import at higher prices.

In other words, South Korea, Japan, and China didn't win because they were cheap – but because they are better.

So why did other countries abandon such a strategically important industry? And how did the three Asian 'giants' overturn the entire order?

The story begins with history, as the shipbuilding crown successively left Europe – to the US – and finally landed in East Asia.

1. From Europe-US to East Asia: The Pivot History of the Shipbuilding Industry

2. Competitive Advantages of Japan - Korea - China

3. Why Did China Become the Leading Nation?

4. US and Europe: Focusing on Niche Segments

5. Strategic Implications & America's Dream of Reviving the Shipbuilding Industry