BY STAS MARGARONIS, AMERICAN JOURNAL OF TRANSPORTATION Chinese shipbuilders, such as COSCO Corp, are challenging Korea and Singapore in their traditional stronghold of offshore oil rig building and have managed to secure 20% of the $72 billion world market. Clarkson Research reports that Chinese shipbuilders lead Korean yards in the new construction of bulk carriers, but Korean builders retain leads in the construction of tankers, container ships and gas carriers. News reports say that China will shut down a number of smaller, inefficient shipyards and focus the nation’s shipbuilding energies onto a small number of big shipbuilders such as Rongsheng Heavy Industries. A MARINE LOG report says China’s secret weapon in defeating Korea and others may be the power of its government-backed financial institutions to support its shipbuilders: “The country’s financial institutions, sometimes working in cooperation with foreign banks, have successfully financed ships ordered in China for both Greek and German owners among a number of others…..this could yet prove to be the strongest card in the Chinese hand.” Support for this assessment came from Andreas Sohmen Pao, CEO of BW Group, a leading tanker owner, who noted that “fleet nationalism, such as the Chinese government carrying more oil on Chinese ships …is promoting state-owned fleets” Pao, the grandson of Hong Kong shipowner Y.K. Pao, worries that government-backed financing increasingly challenges the system of commercial financing utilized by entrepreneurial shipowners. Speaking at the June Marine Money conference in New York, Pao said the challenge from China come at a difficult time for tanker operators, because the United States is importing less oil due to U.S. domestic shale oil development, decreasing the need for imported oil and the tankers that transport that oil. This adds to the twin problems of over capacity of ships and declining global demand. Also speaking at the Marine Money conference was a representative of Statoil, the Norwegian oil exploration giant. Helge Hove Haldorsen, Statoil Vice-President for Strategy Development & Production, North America told conferees: *Fossil fuels will still be “king in 2030”. *The world is not running out of oil, but running out of easy oil sources to develop *Thus, 80% of new oil generation will come from offshore drilling platforms. *250 floating production units will be needed by 2020 *250 new oil rigs will need to be built by 2020 A study of the Korean shipbuilding industry argues that Korean builders are facing a crisis. This is partly due to the economic decline after 2008 and partly due to increased competition from Chinese shipbuilders. The result has been a sharp drop in shipbuilding orders that are unlikely to be made up any time soon, because there is an over supply of new ships on the world market. The author, Duck Hee Won, argues that Korean builders must move into new markets, so as to maximize their advantage in sophisticated maritime construction. Unless Korean builders move decisively, he warns, the current decline in orders will reduce revenues and profits making a change-over increasingly difficult. Competing with ChinaOne Korean builder that is fighting back is Daewoo Shipbuilding & Marine Engineering (DSME) according to Lee Sang Kyu, a DSME public relations officer based in Seoul. Lee told the AJOT during a June visit to Korea that the Korean builder can meet the challenge from Chinese shipbuilders and is also moving into upgrading its products: “The Chinese shipbuilding industry is growing fast based on its low wage level, strong domestic market, and solid government support policy. But they also have some limitations: low technical skills, lack of skilled workers, lack of experience and know-how especially in the offshore construction part. Started in 1973 at Okpo Bay, on Geoje Island on the southern edge of the Korean Peninsula, the DSME shipbuilding complex was completed in 1981. The facility spans 4.3 square mi