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Reading: Busan’s ‘Collaborative Sales Network’ Facilitates Overseas Orders for Small and Medium-Sized Shipbuilders
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Breeze In Busan > News > Busan news > Busan’s ‘Collaborative Sales Network’ Facilitates Overseas Orders for Small and Medium-Sized Shipbuilders
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Busan’s ‘Collaborative Sales Network’ Facilitates Overseas Orders for Small and Medium-Sized Shipbuilders

The Ministry of Trade, Industry and Energy and the city of Busan plan to choose and sell customized ships based on the construction performance of local small and medium-sized shipyards.

Maru Kim
Last updated: 2023/02/27 at 11:43 AM
Maru Kim 4 Min Read
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Busan City has announced that it has supported the domestic construction of two small and medium-sized ships over the past two years as part of the ‘Small Ship Export Assistance Program.’ The initiative, which aims to revitalize the small and medium-sized shipbuilding industry, has generated sales worth KRW 17.2 billion for ship design and equipment companies.

The ‘Small Ship Export Assistance Program’ is a joint effort by the Korea Shipbuilding and Marine Equipment Research Institute(KOMERI), the Busan Shipbuilding Industry Cooperative, and the Busan Offshore & Shipbuilding Industry Association, supported by the Ministry of Trade, Industry and Energy and the city of Busan with KRW 800 million (including KRW 500 million in government funding) annually.

The project uses a sales platform known as the ‘Collaborative Sales Network‘ to enhance the competitiveness of small and medium-sized domestic shipyards that lack the overseas sales capabilities of shipowners. It facilitates the entire process of ordering ships, from discovering newbuilding projects to sales design, equipment procurement, and signing order contracts. Through partnerships with major overseas ship brokers such as Clarksons (UK), KONTIKI (UK), and JFW Holdings (Singapore), the project provides information on newbuilding projects for small and medium-sized ships. Currently, 22 newbuilding projects for small and medium-sized ships are underway with shipowners in Southeast Asia, the US, and Europe.

The domestic shipbuilding industry, which is a vital contributor to South Korea’s economy, accounts for 7% of the country’s exports and employment, as well as 4% of manufacturing. Despite its importance, 96% of shipbuilding companies in the country are small and medium-sized shipyards. Unlike larger shipyards, small and medium-sized ones have been struggling to recover orders since 2019 due to factors such as the COVID-19 pandemic and a sharp decline in newbuilding orders for domestic coastal vessels. As a result, the industry ecosystem is in a precarious situation, and it is crucial to target overseas markets and secure work to overcome this crisis. In particular, for overseas orders, shipowner sales, sales design, and the derivation of ship prices through securing equipment quotations must be systematically conducted. However, the domestic small and medium-sized shipbuilding industry, which is primarily focused on domestic demand, has faced significant difficulties in developing overseas markets due to a lack of sales networks and necessary resources.

The Ministry of Trade, Industry and Energy and the city of Busan have intervened to provide support, and as of this year, they plan to choose and sell customized ships based on the construction performance of local small and medium-sized shipyards. The project also seeks to develop digital sales design technology that can be used on the collaborative sales network.

Dr. Park Jae-hyun, the project leader and director of the Korea Shipbuilding and Marine Equipment Research Institute, stressed the need for continuous support for small and medium-sized shipbuilders, design, and equipment companies to ensure the sustainability of the shipbuilding industry ecosystem. He also stated, “We are verifying the effectiveness of the self-developed Collaborative Sales Network through the achievement of signed orders, and we will work to become an excellent alternative to shipowner sales for small and medium-sized shipyards.”

A Busan City official stated, “The achievement of receiving overseas ship orders through the support project is significant, as it allows small and medium-sized ship design, engineering, and equipment companies in Busan to secure work and achieve mutual benefits.” The official also mentioned that they will continue to work with related research institutes and companies to expand the project’s success.

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Maru Kim February 27, 2023
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