DIVERSIFYING THE PRODUCT MIX: THE MOVE UPMARKET IN SHIPS

While Chinese yards had long built a variety of ships, the impact of the global shipbuilding recession on CSSC's product mix for export was unmistakable. As the market for basic ships deteriorated during the mid-1980s, especially the demand for bulk carriers, China quickly came to export mostly advanced ships. (Following convention, this study classifies advanced ships as all vessels except bulk carriers and basic tankers.) Indeed, the share of advanced ships among China's exports increased from 56 percent to 85 percent from the first half to the second half of the 1980s. While impressive in its own right, this jump actually understates the shift upmarket from basic ship types since the “advanced ships” exported by CSSC from 1980 to 1984 were, in fact, lower-end multipurpose and multipurpose-container ships. Although categorized here as advanced ships for the sake of analytical consistency, these relatively unsophisticated vessels artificially inflated the share of advanced ships in China's product mix during the first half of the decade.

By contrast, the advanced ship category for the second half of the decade included a growing range of truly high-end vessels. Indeed, it was from 1985 to 1989 that China first began to build ultramodern containerships and partial containerships, including a number of refrigerated carriers. Among this last group, the real milestone for Chinese shipbuilding came in April 1987 when Hapag-Lloyd, the German shipping giant, awarded CSSC a much coveted contract for the Berlin Express, a 32,800-deadweight-ton refrigerated containership.