Zhenhua Heavy Industries teams up with Russia's largest shipbuilding group

2017-03-25 09:00

Zhenhua Heavy Industries (stock) is entering the Russian market and will cooperate with Russia's largest shipbuilding group, United Shipbuilding Corporation, in shipbuilding and shipbuilding supporting equipment production.

The United Shipbuilding Corporation stated that on March 22, the company signed a memorandum of understanding on cooperation and joint action with Shanghai Zhenhua Heavy Industries (Group) Co., Ltd. Both parties agreed to establish a working group and develop a roadmap for the implementation of the memorandum.

Reports indicate that the USC and Shanghai Zhenhua Heavy Industries intend to localize the production of Zhenhua Heavy Industries' modern shipbuilding supporting equipment in Russia. This equipment will be used in the construction of floating cranes, pipe and cable laying vessels, dredgers, ultra-large cargo ships, and auxiliary vessels for drilling platforms.

Established in 2007, the United Shipbuilding Corporation (USC) integrates approximately 70% of Russia's domestic shipbuilding industry, encompassing 100% state-owned enterprises. It is Russia's largest shipbuilding group, with 33 shipbuilding design and construction shipyards. The newly established headquarters consists of 9 construction bureaus and 3 regional shipbuilding centers. The Western Shipbuilding Center comprises 7 companies; the Northwestern Shipbuilding Center, 5 companies; and the Far Eastern Shipbuilding Center, 10 companies. These include both military and civilian shipyards.

In subsequent years, through collaborations with foreign companies (including Daewoo Shipbuilding and Marine Engineering and Yantai Raffles), the USC established two large shipyards in the Far East—Zvezda DSME and Vostok-Raffles. In September 2016, Hyundai Heavy Industries and the USC Far East Ship Repair Center (a USC holding company) formed a joint venture focusing on ship design and shipbuilding project management.

It is understood that Zhenhua Heavy Industries had previously prepared to enter the Russian market. In November 2015, Zhenhua Heavy Industries' Russian subsidiary was officially registered. Russia possesses a strong industrial base and robust research capabilities, with abundant research achievements in metal materials, welding technology, and wear-resistant and corrosion-resistant fields. However, its overall infrastructure construction is weak, presenting significant market potential for Zhenhua Heavy Industries in port machinery equipment and offshore engineering vessels.

This cooperation with the United Shipbuilding Corporation lays a solid foundation for Zhenhua Heavy Industries to further expand into the Russian and CIS markets.

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