China Merchants Shekou has pushed ahead on its joint venture with luxury line Viking to operate cruise services in China despite business challenges from the Covid-19 pandemic.
In a joint statement issued on Thursday, the two companies said they had sealed a formal agreement to establish a cruise line to serve the Chinese domestic market.
“We see great market prospects as there is a market vacuum for high-end cruise services in the country,” China Merchants Shekou chairman Xu Yongjun said.
The venture, which will begin operating next year, also aims to become the world’s first cruise line with a fleet of China-flagged cruiseships.
The 930-passenger Viking Sun (built 2017) will be the first ship operated by the venture. It will be reflagged from Norway to China.
“Our ships will [be] of Nordic design and have Chinese-speaking crew of Chinese nationals,” Viking chairman Torstein Hagen, one of the richest men in Norway, said.
China Merchants Shekou, which is part of state conglomerate China Merchants Group, manages the parent group’s real estate assets.
The Shenzhen-listed company has plans to operate cruise terminals in several Chinese coastal cities, including Shenzhen, Xiamen, Shanghai and Zhanjiang.
China had been a rapidly expanding cruise market for much of the past decade, but the Covid-19 outbreak has forced cruise lines to suspend their services in the country since the first quarter.
“The pandemic’s impact on the cruise industry will be temporary,” Xu said. “The long-term prospects for this business remain optimistic.”
The announcement came after Viking and China Merchants Shekou signed a memorandum of understanding in 2018 to form a joint venture that serves the Chinese cruise market.
The MoU suggested that China Merchants Group's yard subsidiaries would design and build cruiseships for the venture.
TradeWinds has approached Viking for more details on the venture.
Founded by Hagen in 1997, privately owned Viking operates a fleet of more than 70 cruiseships and focuses on the small- and midsize segments.
The company has taken a big hit this year primarily due the coronavirus crisis, and Hagen’s fortune has dropped NOK 40bn ($4.43bn) to NOK 20bn, according to Kapital magazine.
The Viking-China Merchants Shekou tie-up came after Carnival, China State Shipbuilding Corp (CSSC) and Fincantieri formed a joint venture in 2017 for the Chinese market.
CSSC Carnival Cruise has placed a $1.5bn newbuilding order for two 4,250-passenger vessels at Shanghai Waigaoqiao Shipbuilding, which is an offshoot of state-owned CSSC.
