Nanjing yard set to build modern reproduction of ill-fated liner

With China's shipbuilding industry mired in its steepest earnings slump in three years, the announcement from one of Australia's wealthiest businessmen to construct a replica of the Titanic comes as sweet music to the ears of Chinese shipyard CSC Jinling Shipyard Co Ltd.

Though company spokesman Li Wenbao says it is too early to talk about economic gains from the contract, Li noted that the company "hopes the deal will expand our international influence and thus win us more orders".

In late April, Clive Palmer unveiled plans to build the Titanic II with plans for a maiden sailing from London to New York in 2016. CSC Jinling Shipyard Co Ltd, based in Nanjing, Jiangsu province, signed a Memorandum of Understanding on April 20 with the Australian tycoon to construct the ship in China.

"We will try to build a liner that has the same dimensions as the original Titanic. The Australian side is in charge of the design," Li says.

The deal comes as China's shipbuilding industry faces choppy waters amid sluggish demand and intensified competition.

In the first quarter, China built ships amounting to 11.2 million deadweight tons, down 22.5 percent year-on-year, according to the China Association of the National Shipbuilding Industry.

New orders totaled 5.59 million deadweight tons, a drop of 48.7 percent from a year earlier. Combined outstanding orders were 141.9 million deadweight tons, down 5.3 percent from the end of 2011.

Industry heavyweights, including China Shipbuilding Industry Co Ltd, reported a drop of 11.5 percent in revenue from January to March, posting a 27.3 percent drop in net profit. Revenues from China CSSC Holdings Ltd also slumped by 20.2 percent, with net profit sliding by 62.7 percent year-on-year.

The shipbuilding industry has undergone vast development during the 11th Five-Year Plan (2006-10). Chinese shipyards surpassed South Korea to become the world's top manufacturer in terms of new deliveries, new orders and outstanding orders, says Xiao Zhijia, an industry analyst at the China Shipbuilding Economy Research Center.

The industry for cruise ships is growing in China. According to the China Association of Port-of-Entry, the number of people traveling in and out of China on cruises reached 718,000 in 2011, accounting for just 0.4 percent of overall inbound and outbound travel.

"However, the financial crisis became a turning point, where demand for ordinary ships such as bulk cargo ships and oil tankers slumped the most. The need for value-added vessels is on the rise, which will put Chinese yards in an unfavorable position," Xiao says.

The Chinese shipbuilding sector is reportedly on the cusp of evolving, with shipyards becoming less dependent on bulk carriers and seeking to increase the share of, for instance, container ships and liquefied natural gas storage tanks.

The building of the Titanic II in a Chinese shipyard could be a strategic shift as the shipbuilding sector becomes less dependent on bulk carriers and seeks to increase its share of containers, says Steen Lund, managing director of international ship classification society Germanischer Lloyd's Southeast Asia-Pacific operations.

Of the 21 orders CSC received last year, the majority came from overseas.

Li says preparatory work is being done on the Titanic replica. He was unable to disclose the cost of the deal.

The ship will be equipped with "the latest navigation and safety systems", Palmer was quoted by the Australian Associated Press as saying in Brisbane.

Palmer said design work in conjunction with a historical research team has begun on the Titanic II, which will have 840 rooms and nine decks.

"It will be designed as a modern ship with all the technology to ensure that (an accident) doesn't happen," he said. "But of course if you are superstitious, you never know what could happen."

He added that the Titanic II will be "the ultimate in comfort and luxury, with onboard gymnasiums and swimming pools, libraries, high-class restaurants and luxury cabins. The only differences will be below the waterline. The ship will be powered by diesel rather coal and will include a bulbous bow for greater fuel efficiency, plus an enlarged rudder and bow thrusters for improved maneuverability. It will have four smoke stacks like the coal-powered original, but they will be purely decorative".

Apart from the Titanic II, the tycoon's shipping company, Blue Star Line Pty Ltd, has commissioned the Chinese shipyard to build bulk cargo ships.

In 2011, bulk carriers delivered the largest tonnage at Chinese shipyards, while deliveries in South Korea were more diversified over a wide range of vessel types.

Xiao says the Titanic II will be a pioneering endeavor for the Jinling shipyard. It will be the first Chinese yard to embark on such a large-scale luxury cruise ship.

Globally, there are seven to eight new orders for luxury cruise ships each year. For a 120,000-160,000-ton cruise, contracts usually range from $600 million (464 million euros) to $900 million.

"Chinese yards have taken steps to become builders of offshore installation vessels and are entering the cruise vessel segment," Lund says.

"It is also part of the trend where, driven by cost reductions, the market has seen the construction of such high-tech and high value-added ship types as cruise vessels move from Europe to Asia."

But Xiao foresees possible hurdles in designing the ship.

"Any cruise ship will be tailor-made. They cannot be mass-produced. Therefore it poses challenges for ship makers, as it requires coordinated efforts in integrating various parts of the ship," Xiao says.

Nevertheless, the order may be a good example for Chinese yards to study, especially those who are looking to gain more international exposure, he says.

hewei@chinadaily.com.cn