China's yard overcapacity has escalated into a serious problem.
China Shipbuilding Economy Research Center said the number of small domestic shipyards falling out of the market were to accelerate and Chinese shipbuilding industries should overcome recent crisis by reducing yard capacity and shutting down some of small-sized shipyards.
Currently, China's top 20 shipyards booked 80% of overall orders contracted at 700 some domestic shipyards during the first ten months of 2012. Moreover, total newbuildings contracted were declined by around 33% against the same period of last year.
Amid global economic crisis, shipowners have become more cautious to invest in newbuildings and they are interested in cooperation with major shipyards with low risk and economic capacity, which threatens existence of small-and-medium sized shipyards.
Therefore, China may reenact Japanese shipyards in 1970-80s, when two thirds of local shipbuilders went out of business and only major seven shipyards survived with support from the government.