By Wu Qiaoxi | 2025-09-10

A key Chinese industrial sector is coming under pressure from Asian competition.

For the past eight years, China has led the global shipbuilding industry, but that dominance now faces unprecedented challenges.

South Korea and Japan are catching up and reshaping the industry with a national security focus.

Clarksons Research reported that from January to July, global new ship orders totaled 23.26 million compensated gross tons (CGTs), or 788 ships. Chinese shipyards received 13.03 million CGTs (463 ships), a 56% share -- down 59% from a year earlier, though still ranking first worldwide.

South Korea followed with 5.24 million CGTs (123 ships), a 23% share and a 37% decline year on year.

Various US policies and a market shift toward "de-China" diversification are causing the sharp drop in China's orders, say analysts.

That decline "is largely attributed to concerns among shipowners worldwide over US measures targeting China's shipbuilding industry and their subsequent efforts to adapt," Han Ning, general manager of the Singapore branch of the ship bidding platform SHIPBID, told the South China Morning Post in July.

"The United States will begin charging fees on Chinese-owned, -operated, and -built vessels arriving in US ports starting October 14," Steptoe.com reported in July.

Washington "is proposing tariffs of up to 100% on Chinese-made cranes and other cargo-handling equipment," the Wall Street Journal reported, also in July.

South Korea surges

Meanwhile, South Korea is accelerating overseas cooperation, pledging $150 billion to work with the United States to strengthen US shipbuilding.

It is competing for maintenance, repair and overhaul (MRO) contracts for US Navy ships. In August, HD Hyundai Heavy Industries (Hyundai) won an MRO contract for the USNS Alan Shepard, while Hanwha Ocean secured contracts for the USNS Wally Schirra, USNS Yukon and USNS Charles Drew.

Hanwha separately announced in late August it would invest $5 billion in its US yard, aiming to expand output to 20 ships annually, according to Reuters.

Hyundai has partnered with US artificial intelligence and defense firm Palantir to develop a "Future of Shipyard" that integrates robotics and artificial intelligence, expected to boost productivity by more than 30%, Chosun Ilbo reported in August.

Hyundai joined with Korea Development Bank and US investment firm Cerberus to create a multibillion-dollar fund for maritime logistics, advanced marine technology and allied shipbuilding capacity.

In July, Hyundai signed a memorandum of understanding with India's state-owned Cochin Shipyard Limited, and it has already established a joint shipyard in Saudi Arabia.

Samsung meanwhile reached a deal with US-based Vigor Marine Group in August to cooperate on US Navy vessel repair, shipyard modernization and joint construction.

Japan makes gains

Japan is catching up too, signing a $6.5 billion warship contract with Australia in August. Beginning in 2029, Mitsubishi Heavy Industries will build three upgraded Mogami-class frigates for the Australian navy, with another eight to be built in Australia.

The cooperation plan "makes it harder for China to play Japan and Australia off against each other and sends a concerted signal to Beijing that both countries are willing to make their quasi-alliance a functioning reality," Australian defense strategy analyst Euan Graham told Reuters in August.

Japan's shipbuilding share has dropped from almost 50% in the 1990s to about 10% today.

In response, the Japanese government and ruling Liberal Democratic Party (LDP) are promoting the creation of a "national shipyard," in which the state would build or acquire facilities and then hand them to private operators.

In June, Imabari Shipbuilding announced the acquisition of a 60% stake in Japan Marine United Corporation, creating the world's fourth-largest shipbuilder.

"To become a price leader who has the power to control pricing, we must at least achieve a 20% global market share by 2030," said Yukito Higaki, president of Imabari Shipbuilding and chairman of the Shipbuilders' Association of Japan.

The Japanese government has designated shipbuilding a strategic industry and plans to finalize its policy plan this fall. It will set up a public-private fund of 1 trillion JPY (about $6.7 billion) to support domestic shipyards and modernize facilities.

"Losing shipbuilding would threaten Japan's maritime logistics, economy and national security," the LDP's economic security task force said in June, according to Chosun Ilbo.