[Digital Times, Yang Ji-yoon] Restructuring of the shipbuilding and shipping industry has been transformed into a so called `blockage` among the state-run bank management companies. There is concern that Hyundai Merchant Marine recently imported large-sized tankers (VLCCs) and 11,000 TEUs (one TEU for one 6-meter container) from Daewoo Shipbuilding & Marine Engineering and Hanjin Heavy Industries, respectively and there is concern on this matter.

According to the shipbuilding and shipping industry on September 10, Hyundai Merchant Marine agreed to acquire two 11,000TEU container vessels at about KRW 182 billion from Hanjin Heavy Industries Co., Ltd. on August 31, followed by five new VLCCs worth KRW 470.3 billion in Daewoo Shipbuilding Ordered. The total amount invested by Hyundai Merchant Marine in order to be bigger is KRW 650 billion.

The contract seems to have solved some of the chances for the shipbuilding and shipping industry that Korean shipping companies have given jobs to domestic shipyards in four years since 2013. Hyundai Heavy Industries, Daewoo Shipbuilding & Marine Engineering, Samsung Heavy Industries, etc., have been struggling with the so-called `Big 3` due to drought in 2015 and sluggish orders from shipping companies.

Meanwhile, Japan and China chose to save both the shipbuilding industry and the shipping industry with their own orders. China Cosco, the world`s sixth-largest shipping company in the shipping industry, took fourth place in the merger with China Shipping (CSCL) and took the Hong Kong OOCL this year, making it the third-largest in the world.

The Japanese shipping company Big 3 also has a competitive edge by integrating its container shipping business. China is trying to reduce its ability to build offshore plants, while some privately-owned shipyards are trying to cut down on manpower in the case of the shipbuilding sector. Mitsubishi Heavy Industries and Imabari Shipbuilding and Marine Engineering Co., Ltd. (Mitsubishi Heavy Industries, Both countries have the common point of promoting not only a virtuous cycle system but also a strong constitution improvement.

Korea, on the other hand, appears to have built a link between cosmopolitanism and shipbuilding. However, it is a common evaluation both within and outside the government that the fact is that it is nothing more than a ‘community of destiny’, which is supported by the money of the Korea Development Bank. Hyundai Merchant Marine and Daewoo Shipbuilding are given the largest share by the Korea Development Bank, and Hanjin Heavy Industries and Construction (KDB) has been under joint management agreement with the creditors of Korea Development Bank since last year. It is experts’ analysis that Hyundai Merchant Marine is considering the ship of Hanjin Heavy Industries, which was canceled in India instead of the container shipbuilding order.

In the same vein, Daewoo Shipbuilding, which has been neglected in overseas bidding due to its financial soundness, has already secured shipbuilding orders before the debt ratio shrinks. This is the reason why there is concern that the restructuring of the industrial sector will only lead to an extension of the life of the government without improving the fundamental constitution of the insolvent company.

Some argue that the KDB, which is the backbone of restructuring, is neglecting its responsibilities as a national bank.

A government representative said, "It is ironic that the `muddling three people` who depend on national banks are regarded as best practices in the case of shipbuilding and maritime industry." If the Hyundai Merchant Marine again suffers a liquidity crisis, "We have to be clear about the fact that each company is forced to re-inject government funds if its financial condition deteriorates and we have to manage the risks of the three companies thoroughly."

By Yang Ji Yun galileo@


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