40-Year CSTC Immersed with Trials, Hardships and Glory

Zha Ying

CSSC China Shipbuilding Trading Co., Ltd.(CSTC) has made an irreplaceable and great contribution to the promotion of Chinese ships going to the world since established 40 years ago. In the development process of PRC's shipbuilding industry, CSTC has witnessed the three stages of “rise of the shipbuilding industry, birth of a major shipbuilding country, and moving toward a shipbuilding power” after the reform and opening up. The three stages are a grand odyssey for China's shipbuilding industry to enter the international market and participate in the fierce international competition. In each stage, CSTC is “sharing good and bad times” with the industry.

Going through a series of profound changes of the shipbuilding industry “from closed to open, from traditional to modern, from weak to strong” and, CSTC has blazed a trail of selfreliance, self-improvement, selfconfidence featuring “self-reliance, hard struggle”, the continuous improvement of its scale of operation, service capability, brand influence and international outlook serves as a footnote to the arduous journey.

Earn a place in the international market

Under the strong leadership of the CPC Central Committee and the incentives of the reform and openingup policy, through 40-year selfless and strenuous struggle of generations of ship traders, CSTC has faithfully implemented the strategic deployment of the CSSC Leading Party Group, forged ahead in the international ship market, developed scale of military trade business and civilian business, and eventually snatched a place in the international market.

In December 1980, C hi na Shipbuilding Industry Co (the predecessor of CSTC) signed a contract to export 24 naval vessels to Egypt, achieving the zero breakthrough for China's ship military trade.

On August 13,1982, with the approval of the higher authorities, China Shipbuilding Industry Co was renamed China Shipbuilding Trading Co., Ltd. (CSTC). Over the past four decades, CSTC military trade business has made major headway, realized transition from singular equipment export to systematic, serialized export in established system and long-term cooperation, from product export to capacity export including technology transfer and joint construction, from export equipment to the whole process guarantee and whole life cycle service. The product system constantly improving, the market structure continuously optimizing, international influence keeping increasing, CSTC has experienced a solid steady development process from a small beginning to a mighty force, from single to multiple. As a result, product quality, performance and services have won the recognition of the world.

In the domain of civil vessels, since its establishment, CSTC has signed 3,878 vessels, with a total of 329.3 million DWT and USD190.2 billion. Export varieties have developed from general bulk carriers and oil tankers to very large container ships (VLCS), LNG carriers and other high-tech ships, from the zero breakthrough of different ship types to batch order receiving of various types of ships. Export destinations have expanded from South Asia to more than 150 countries and regions including developed countries such as Europe and the United States.

The achievements of CSTC civilian ships going to the international market can also be observed from the data evolution of percentage of China's shipbuilding output in the world. Data show that China's shipbuilding production accounted for 0.8% in the world in 1982, ranking 17th in the world, rising to 5%-6% around 1987, and ranking third in the world in a row. It reached 1.75 million DWT in 1995, and its world market share still accounted for about 5%, second only to Japan and South Korea.

In the first decade of the 21st century, China's shipbuilding industry ushered in a leapfrog development. During the 2002-2005 period, China's completed shipbuilding volume increased from 4 million DWT to 10 million DWT, the figure exceeded the total of European countries in 2006, exceeded 30 million DWT in 2008, surpassing Japan for first time. It hit 67.57 million DWT in 2010, surpassing South Korea in all respects and ranking top in the world.

The leapfrog improvement of the total shipbuilding volume is an indirect embodiment of the shipbuilding industry competitiveness in the international market. From the data fold growth, one can see the rapid change of ship exports. Until today, 90% of the industry's annual shipbuilding output is export ships.

How can one make out the important role of CSTC in China's ship export, then?

According to available data, before 2000, two-thirds of China's total ship exports were completed by CSTC. CSTC ranked 11th among China's top 200 export enterprises in 2000.

In recent years, with the continuous consolidation of the position as a big shipbuilding country, CSSC new orders accounted for nearly half of the world total. In the half, the annual new orders accounted for about 40% on the average. In the 40%, based on the whole industry chain resource advantages of R&D, design, construction and services, in collaboration with the CSSC operation team, CSTC received about 85% of newbuilding orders. The data is sufficient to demonstrate the main channel responsibility shouldered by CSTC in the CSSC shipbuilding and offshore engineering operation main platform.

In terms of technology introduction, CSTC has also made great progress in the past 40 years, and carried out a number of international technical cooperation, which has strongly promoted the improvement of the performance of ships built by Chinese shipbuilding enterprises. In the past decades, through a large number of military ship and civilian ship exports, via equipment import and technology introduction, Chinese shipbuilding enterprises and research institutes have considerably improved their technical level.

Thoroughly tempered in the international storm

Relying on the CSSC shipbuilding and offshore engineering operation main platform, through 40-year arduous marketing hardships, accumulation and precipitation, CSTC has been deeply involved in the global newbuilding market, accumulated and enriched core competitiveness of business experience as well as information processing and resource integration of shipbuilding and offshore engineering operation, established business network and service system covering main regions of the world ship trade, boasting a professional contingent after years of tough test of the international ship market.

“One must first understand the market if they are to open up the market.”CSTC operation team has continuously improved their professional grasp ability in the market ups and downs, business negotiation ability in facilitating order taking, organization and coordination ability in the integration of resources, solving financing or technical problems, scheme integration ability in the organizing ship owners, shipyards and research and design institutes, resulting from several generations of relay.

Take business negotiations as an example. For CSTC, the most difficult and core problem in the negotiation lies in price. “In the export negotiations for military and civilian ships, each negotiation takes a long time, which requires courage, skills, professional ability and endurance as well as abundant financial experience, as the focus of the negotiations is the installment payment progress, guarantee and payment terms in addition to the transaction volume and,” a senior ship trader recalled.

In the past 40 years, how to win orders with the best conditions in the strong and competitive market has always tested the wisdom and courage of CSTC traders. In the fierce competition, ship owners are inclined to come up with increasingly high requirements, and the contract negotiations become more and more difficult. A ship trader who has long been negotiating once said: “The reality of the world shipbuilding tells us that it is one thing to have shipbuilding capacity, and whether we can get orders is another.”

What’s to be done when the market perches high? What if ship prices fall and the risk of shipowners abandoning ship increases? Some shipowners have high requirements for ship construction, and the conditions they set are harsh or too picky. Some shipowners even have good design ability themselves, and still constantly demand to modify the drawings after signing the contract. Such being the case, it requires traders to have comprehensive capabilities, including shipbuilding professional knowledge, foreign trade knowledge, business negotiation knowledge, legal knowledge, and high sensitivity to market changes and the ability to predict the future development as well.

It is known to the industry that the shipbuilding industry has cyclical development and wave-like rise rules. In the past 40 years, CSTC has experienced high market and difficult trough on several occasions. In the rapidly changing and turbulent international market, the service ability of the CSTC operation team has been thoroughly tempered in one competition after another, and has withstood the test in the wind and waves again and again. Therefore, ship traders are well aware that the higher position the market is on, the soberer one should remain, and we cannot wait and rely on anything in the trough period. “Only through hard work can there be a way out.”

Shaping CSSC brand

On November 8, 2021, the world's eyes were focused on a new type of Pakistani frigate, the largest tonnage and most technically advanced surface combat ship that China has exported so far. Before the ship was delivered, China had also exported frigates, light frigates, maritime patrol boats and comprehensive supply ships, ships currently under construction include dock landing ships.

The sealing of contracts for frigates and comprehensive supply ships exported to Thailand and patrol boats to Pakistan all went through international fierce competition. “They are the signs of our real entry into the world military trade market,” a senior military trader recalled. In the past 40 years, through a long and large number of hard work and project transactions, China's ship military trade developed from quantity to quality, resulting in the establishment of the CSSC brand in the main traditional market.

In 2015, Egyptian President Abdel Fattah al-Sisi, Prime Minister Ali Mahraib and the country's Defense Minister, Navy Commander and other military and political senior officials attended the completion and business opening ceremony of the Alexander Shipyard renovation project, and witnessed the high-quality delivery of the Alexander Shipyard renovation project contracted by CSTC. In the user country, such highlevel dignitaries have witnessed the CSTC project signing or delivery ceremony on many occasions, and the CSSC brand quality, performance and services represented by CSTC have repeatedly been highly recognized. CSTC traders have a special complex for the maintenance of the brand.

At the site of domestic and foreign turnkey contracting projects, the project manager responsible for the implementation of CSTC acts as a mobile “coordination center”, where the problems are gathered and the difficulties are resolved. Especially in overseas cooperation projects, when technical problems are encountered, when the project production progress is slow, when customers come up with new requirements for equipment, or when the COVID-19 risks should be prevented, they are the usual source of consultation in the special period of epidemic prevention and control.

When working overseas or during the cooperation with foreign partners, the first consideration is always the motherland behind them and the CSSC brand image. “In the military trade work, foreign affairs are not trivial.” In our service concept, every detail of the daily work of the military trade business will be reflected in the future. If done well, one can get bonus points; if not done well, it means deduction difficult to change. This impression of the deduction often needs a long repair or is even irreparable.

Ship traders are bound to maintain the brand, and have their own unique spirit. They will not retreat in case of a danger, not hesitate in difficulty, sometimes a terrorist attack brushes past, sometimes they have to sacrifice themselves to guarantee in a dangerous test, sometimes they have to stick to hard conditions ... The spirit means not being afraid of hardships or difficulties, no hear of strong, assiduous study, hard work, seizing the opportunity, courage and ambition, enterprising innovation and selfless dedication, not elevated by success, nor disturbed by failure, not only striving for the current success, but also focusing on the future expansion, both adhering to the principle and flexibility, diligent and tireless professionalism.

At the world famous defense exhibition and the international famous maritime exhibition, a group of ship traders representing CSSC are promoting the CSSC brand to the world. On June 6, 2022, during the Greece International Maritime Exhibition (Posidonia 2022), a touching story impressed CSTC delegates.

Mr.Jorge Proios runs a ship repair business in Argentina, mainly engaged in ship repair and replenishment. In 2004, Mr.Jorge Proios brought his two young kids to the Greek Maritime Exhibition and took a picture at the CSSC booth. In 2022, Mr.Jorge Proios and his two adult children went to Posidonia 2022. Seeing the familiar CSSC logo, the family could not conceal their excitement when recalling the picture taken 18 years ago. In the same position, at the same CSSC booth, the happiness of the family was frozen again.

According to Mr.Jorge Proios, they have been to China many times as required materials, spare parts, outfitting parts and other items are mainly imported from China. They are full of praise for Made in China and sincerely admire CSSC's development achievements over the years. They agreed that when they have grandchildren, they will definitely come to the CSSC booth once again, “Take photos again, so that the ‘ship' friendship between the Chinese and Argentina people will continue.”

Through 40-year opening wider to the outside world, CSTC has greatly improved brand influence representing CSSC, and CSSC brand is becoming more and more resounding in the international market. Under the background of dual circulation of domestic and international economy, CSTC has served “Chinese ships made in China, domestic goods transported by Chinese ships”, realized cooperation with large domestic energy and shipping enterprises. In the circulation of international economy, CSTC has received increasing orders from international famous liner companies, shipping giants including CMA CGM, Mediterranean Shipping and Maersk and energy companies including Qatar Petroleum and ABU Dhabi International Oil Company are all important partners of CSTC.

Today, CSTC has developed into an open and pioneering enterprise, and will continue to play the guiding role of the CSSC brand in the domestic and international markets.

Integrated development opens a new chapter of internationalization

At the beginning of 2020, when the COVID-19 epidemic began to spread around the world, the world pressed the pause button, and the prospect of the international ship market was unclear, CSTC ushered in the task of restructuring and integration. The drastic changes in the international situation and the impact of the epidemic caused an extremely complicated external environment, which therefore added more uncertainty to the development of the international business of CSTC.

“Can’t bring in or get out” used to be a difficulty for international operation during the epidemic. Plans were canceled for the shipowner’s visit to negotiate the project, efficiency of the discussion declined, issues of the project under construction required discussion, marine equipment could not be delivered in time, the epidemic gave rise to delay of the ship delivery, and the market development became difficult...

Confronting the complicated internal and external situations, to ensure continuous realization of high-quality and stable development became an important mission of the CSTC Party Committee. A sound completion, transition and development required indestructible courage and responsibility.

At the end of 2020, after the completion of the new organizational structure establishment, Li Hongtao, CSTC party secretary and chairman, gave a special Party lecture to all middle-level cadres for the company on the theme: No fantasy, no empty show, promote sustained high quality development with solid undertaking, calling on the broad masses of Party members and cadres to enhance historical sense of responsibility, down-to-earth, pragmatic undertaking, provide solid support for realizing the new requirements and new positioning by CSSC for CSTC.

There would be no action breakthrough without mental icebreaking. Since the reorganization and integration, the CSTC Party Committee has resolutely implemented the decisions and deployments of the CPC Central Committee, the State-owned Assets Supervision and Administration Commission of the State Council and the CSSC Leading Party Group. The CSTC Party Committee gave full play to the role of “Guiding the direction, managing the overall situation and promoting implementation”, and actively served the national strategy. Centering on the “two platforms and one main force” as positioned by China State Shipbuilding Corporation, CSTC focused on their main responsibilities and main businesses, made every endeavor to overcome the impact of the epidemic, and steadily promoted the restructuring and integration. Guided by the High-Quality Development Program and the 14th Five-Year Plan, the direction is clear for three business unit -- military trade business, shipbuilding and offshore engineering business and application business, the modern enterprise system is sound and perfect, the international layout is newly unfolded, human resource management is exercised in an integrated fashion, equity investment is smoothened in a comprehensive and effective way, positive results are achieved in financial control, rules and regulations are “established, modified, abolished and retained” on schedule, the primary responsibility for comprehensively governing the Party with strict discipline is firmly implemented, the anti-graft trilogy “dare not, cannot and do not want to be corrupt” is boosted as an organic whole, the office system is in seamless connection...

Under the leadership of the CSTC Party Committee, solid progress has been made in promoting integrated development. In accordance with the modern enterprise system, the CSTC governance system has been built in a comprehensive and solid fashion, the governance capacity building has been consolidated and strengthened, and the corporate brand image is a brand-new presentation.

In terms of main duty and main business, based on three business units -- military trade, shipbuilding and offshore engineering and application, CSTC has firmly built the overall consciousness of a board of chess of operation and development with CSSC, paid main attention to key markets and key projects, promoted breakthrough in the project under negotiation, grasped execution progress and quality of the project at hand, tamped the main operating platform for the shipbuilding and offshore engineering market, collaborated in boosting application business to grapple with international market challenges, fully revitalized CSTC design, construction, marine equipment supply and service resources, and improved the level of internationalization from products, channels and operation modes.

Meanwhile, in close combination with the business development reality and development advantages, CSTC merged overlapping overseas agencies, and strengthened the dispatched forces in key markets, forming a new situation in which the overseas forces cover major markets including Asia, Africa and Europe.

Through 400-year development, restructuring and integration has been incorporated into the long history of CSTC undertakings, opening a new chapter in the international development of CSTC, and the relay baton is being held in the hands of the current CSTC traders.

Look to the future

On July 22, 2022, the company leaders and all middle-level cadres attended the half-year economic operation analysis meeting and the high-quality development strategy outline and the 14th Five-Year Plan seminar in two conference rooms via the Beijing-Shanghai video link.

At the seminar, Li Hongtao comprehensively introduced the future development plan of CSTC. The highquality development plan is divided into the stages of 5-year integrated development, 10-year coordinated development and 10-year spanning development. By 2045, it will fully build a world-class military-civilian integrated trade platform. The 14th Five-Year Plan goals focus on the current development proposition, namely consolidating “three businesses”, and strengthening “four systems” of market, products, services and lean management, significantly optimizing the business structure, improving the quality of development, sharpening international competitiveness, enhancing the comprehensive strength and capability to resist risks, and striving to enter the domestic first echelon for comprehensive competitiveness of military trade.

The meeting is a routine one in the nearly 100 chronological work sessions since the CSTC inauguration, aimed at studying the situation and deploying tasks. It is another unusual meeting, as the future medium-and long-term plan of CSTC is conveyed from this venue to every middle-level cadre. The scheduled implementation of the future plan will fall on the shoulders of the participants.

Ships are an international product. The realization of any stage goal needs to face the international market and participate in international competition. The mid- and long-term development plan briefing clearly pointed out: “Making solid progress in international development is the fundamental and only way to achieve high-quality development of CSTC. Its qualified personnel that matters.”

At present, the rapidly changing complicated international situation, combined with the normalcy of the epidemic, has brought some uncertainties to the new journey of CSTC participation in international competition. The imbalance and disequilibrium of business sector development, the urgency of building compound international talent team, the adaptability of the operation and management efficiency and the development needs, and the requirement for tamping the foundation of the grassroots service capacity, solutions to the problems are a must for taking the new journey in the new era.

Admittedly, an era has its own development proposition. International market development is just like sailing against the current, not to advance means to fall back. Amidst market development difficulties, CSTC traders dedicated to “forge ahead, work hard, take the bull by the horns, selfless dedication”, representatives abroad hold ground, each project team goes retrograde, with no fear of the pandemic, makes the move one after another, goes out, Algeria, Egypt, Saudi Arabia, Trinidad and Tobago and southeast Asian countries and regions have witnessed CSTC people endeavour and selfless dedication.

When the world pressed the pause button due to the epidemic outbreak, CSTC trade business did not stagnate, the traders did not stop, rather they strictly implemented the epidemic prevention and control work while overcoming the overseas epidemic impact, developed market, scrambled for orders, always adhered to focusing on business development under the normalcy of the pandemic without relaxation, subjecting the outbreak impact to a minimum. In 2021 alone, CSTC traders spent 5,000 days overseas, performing tasks; “cloud negotiation, cloud signing and cloud delivery” accumulated more than 100 times, and the business objectives were achieved as schedule.

Looking back on the past 40 years, one can always draw spirit and strength from history. In the past 40 years, what has changed is strength, ability and influence, while what has not changed is direction, faith and spirit. Once CSTC traders seized the opportunity in the momentum can enhance the confidence at the present, once climbing over obstacles in bucking the trend can result in going all out for the present.

In the past 40 years, under the strong leadership of the CPC Central Committee and the correct guidance of the reform and opening-up policy, the great achievements made in the development of CSTC have written a brilliant chapter in the history of China's shipbuilding industry development. As a triumphant journey of hard struggle and pioneering, it flashes gorgeous brilliance of reform and opening up, embodies CSSC people’s lofty ambition of building an industrial power and ocean power, shows wisdom, courage and strength of CSTC traders with glorious tradition seizing the opportunity to meet the challenge, bold in contributing to building a world shipbuilding power.

Looking to the future for the new journey and new mission, CSTC traders will strive to strengthen “two platforms, one main force”, lead Chinese ships towards the world with an open mind. Shouldering new responsibility in the new era, CSTC traders will salute the forthcoming triumphant convening of the CPC 20th Congress with distinction, committed to build a world first-class ship trading enterprise with confident faith.