China's Expanding Shipyards Threaten Korea

China's shipbuilders plan to double production capacity by 2010 is threatening to cut profits at Hyundai Heavy Industries, the world's biggest builder, and other South Korean yards. Chinese shipyards are undercutting competitors in Korea and Japan as they bid to increase market share. Beijing based China State Shipbuilding Corporation's new shipyard on Changxing Island near Shanghai, which starts constructing oil tankers next year, will overtake Korea's Hyundai Heavy as the world's biggest when it's completed in 2015.

The rise of China's shipbuilding industry may cause today's near-record prices for vessels to fall as Changxing and other yards compete with Korean and Japanese rivals for business. China's shipbuilders will double capacity in the next five years, according to the Beijing-based China Shipbuilding Economy Research Center. Korean yards currently dominate the market for liquefied natural gas carriers, the most expensive and technically complicated type of cargo vessels. China State Shipbuilding will complete the country's first LNG ship this year.