The newly-formed Shanghai Shipyard & Chengxi Shipyard Co Ltd (SSCS) aims to maintain its No 1 ranking in China's ship-repairing market and it is planning to aggressively position itself as a strong player in the domestic shipbuilding industry, according to Thursday's China Daily.

Company officials unveiled these goals following SSCS's launch on June 30, the result of a multi-billion-yuan restructuring that involved two key subsidiaries of the China State Shipbuilding Corp (CSSC), one of the country's largest shipbuilding firms.

SSCS was formed through the merger between Shanghai Shipyard, one of China's oldest shipmaking companies, and Chengxi Shipyard, located in Jiangyin of East China's Jiangsu Province, a rapidly growing player in the line-up of CSSC.

CSSC meanwhile commands several other formidable players in the domestic shipbuilding industry, including Jiangnan Shipyard (Group) Co Ltd, Hudong-Zhonghua Shipbuilding (Group) Co Ltd, Shanghai Waigaoqiao Shipbuilding Co Ltd and Guangzhou Shipyard International Co Ltd.

The cross-region restructuring, reportedly the first of its kind nationwide, combined a total of 7 billion yuan (US$846 million) worth of assets between the two companies.

The new company also boasts a total land area of 3 million square metres and a water frontage of five kilometres to accommodate massive ship building and repairing facilities.

The ship-repairing business is expected to be key to the success of the new company, largely because of the two companies' strengths in the area.

In 2003, Shanghai Shipyard reported a revenue volume of 240 million yuan (US$29 million) in its ship repairing operation, which gave it a No 8 ranking in the industry nationwide; Chengxi did even better as it chalked up revenue of nearly 570 million yuan (US$68.9 million), making it rank No 4 among its peers.

While Shanghai Shipyard anticipates its revenue in the ship repairing business to top to 400 million yuan (US$48 million) this year, the Chengxi side expects the figure to hit some 800 million yuan (US$96 million), and a majority of the two shipyards' business comes from overseas clients.

"We are now No 1 in the domestic ship repairing industry after the restructuring, and what we hope is to retain that position for a long time," Qian Wenzhu, publicity official of SSCS, told China Daily.

It's a natural choice for SSCS to focus on the ship repairing business, given its current gross profit margin is as high as 20 per cent. The shipbuilding business' margin on the other hand is around 6 per cent due to a recent price hike of raw materials needed, said Qian.

(China Daily)