Privately owned Zhoushan Changhong International Shipbuilding has purchased bankrupt former rival Zhejiang Ouhua Shipbuilding for CNY 958m ($136m) in a deal driven by local government.
Figures from the successful court sale were reported on Tuesday on Chinese online auction platform Taobao.
Deep-pocketed buyer Changhong is said to have done the deal with no bank financing.
Both yards are located in China's Zhoushan archipelago, off Ningbo in Zhejiang province south of Shanghai.
The buyer is owned in a joint venture by New Changjiang Group and state-owned container manufacturer CIMC. The former partner has holdings in a broad range of industrial and commercial areas.
Ouhua collapsed in May 2018 with an orderbook of uncompleted ships underway, leaving several owners in the lurch, including multipurpose (MPP) and heavylift owner Spliethoff and containership owners Reederei Nord, Arkas Line and Zodiac Maritime.
At the time of its collapse, sources close to the yard blamed its financial troubles on shipowners who had placed speculative orders based on low prices, then walked away.
Important revival
Shipbuilding sources said the revival of Ouhua is very important to the local Zhoushan Island economy, and Changhong has made its investment more for the sake of good government relations than with a view to specific commercial projects for the extra shipbuilding capacity it will acquire.
“Changhong is maybe the last healthy private shipyard in Zhejiang, and the local government was really needing them to help with Ouhua,” a Chinese shipbuilding source said. “When you have such a huge investment as New Changjiang Group has in Zhoushan, you really have to listen to the local government.”
Before its bankruptcy last year, Ouhua had a track record as a builder of containerships up to 5,400 teu, MPP vessels and bulkers up to kamsarmax size. It had a place on the former White List of financially and technically sound yards approved by Beijing's Ministry of Communications.
Changhong is best known for smaller containerships and ultramax bulkers but has also been credited with two VLOCs for a Chinese shipowner.
Humble beginnings
New Changjiang Group is one of two enterprises of Jiangsu province famous within China for their humble origins in village agricultural cooperatives.
The other is the more famous Huaxi village. Both started as investment projects by rural Communist Party committee secretaries during the early period of China’s reform and opening-up policy, and have turned their comrades into wealthy joint owners of large industrial and commercial portfolios.
Within the shipping industry, New Changjiang Group's holdings include bulker owner New Yangtze Navigation and Jiangyin Changjiang Shipbreaking Yard.
Officials at Changhong and New Changjiang Group could not immediately be reached for comment.
