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Home > Investor Relations > Company Information > Chairman's Statement

2012 was a challenging year for China Rongsheng and its peers in the global shipbuilding industry. Inherited from the weakness in 2011, the global economy failed to rebound in 2012. The international shipping industry continued to be under pressure and placed an even greater strain on shipping rates. Meanwhile, financial institutions became cautious on financing ship owners’ new shipbuilding orders, which heavily affected the demand for new vessels. The global shipbuilding industry has hit the trough of the cycle and the new shipbuilding orders during the year plunged to the lowest level in the past decade. Shipbuilders around the world faced a number of challenges including sharp decreases in new orders and orders on hand, plummeting new vessel prices and unfavorable payment terms for new orders. Small-to-medium-sized shipbuilders, in particular, fell into dire straits.

Nevertheless, we firmly believe that opportunities are born from challenges. Maritime rights have become a heated political and economic topic in recent months. The Chinese government, greatly concerned about the shipbuilding industry, introduced a series of documents designed to support the shipbuilders and strategically listed the high-end offshore engineering equipment manufacturing as one of the key emerging industries. We adhere to the “Transformation and Advancement” strategy to weather the challenging shipbuilding industry. We are actively promoting our high-end equipment manufacturing business and transforming ourselves into an integrated heavy industry conglomerate that effectively serves clients in the energy industry. One of the top priorities in our working plan for 2012 was to proactively explore new opportunities in the offshore engineering equipment market.

On the back of the high global energy prices and the increasing consumption of natural gas, investments in offshore oil and gas exploration and exploitation continued to increase, as well as the demand for offshore engineering equipment. It is well known that the offshore engineering equipment manufacturing industry demands a high level of technological involvement, which therefore requires large amount of investments and makes it very difficult for new entrants. We have already begun our offshore engineering business in 2007, and completed the construction of a deepwater pipe-laying crane vessel (“DPV”) and conducted in-depth research and development for various offshore engineering products in the past five years.

As a part of our important strategy to meet the threshold requirements for entering into the offshore engineering industry, Rongsheng Offshore & Marine (“RSOM”) was established in Singapore in 2012. Being the cornerstone of our offshore engineering segment, RSOM primarily focuses on research and development, marketing, and project engineering, procurement and construction (“EPC”), while its sales team endeavors to capture a larger share of the international offshore engineering market. The professional team led by Mr. Don Lee has already secured our first international EPC order for the construction of a deepwater tender barge and two jack-up rig EPC contracts, and is perfectly positioned to secure more orders in the future. We are looking forward to securing more comprehensive offshore engineering orders in the future, such as jack-up drilling platforms, semi-submersible drilling rigs, tender barges, Floating Production Storage and Offloading Units (“FPSO”) and Floating Storage and Re-gasification Units. Leveraging on the superior industry know-hows and the experienced talents in Singapore, together with our No. 4 drydock specialized in offshore engineering product manufacturing, comparative cost advantages and scale benefits in our shipyard in China, we are confident that RSOM can make further breakthroughs for China Rongsheng and become a significant player in the global offshore engineering market.

While holding the largest shipbuilding orders on hand as a single shipyard in China, we were also striving to enhance our production efficiency and execution, and were rewarded for our efforts. Our shipbuilding delivery in 2012 increased by 49.7% year-on-year to another record high level of 3.9 million deadweight tonnage (“DWT”), including six VLOCs and our first containership. In order to comply with the new requirements on fuel saving and emission reduction set by the International Maritime Organization (“IMO”), we strengthened the development in highly efficient and fuel saving products, improved technological capabilities, optimized product structure, launched high-end eco-friendly products to promote the upgrade of our vessels.

Driven by the robust offshore engineering market in recent years, the demand for electricity generators required in offshore engineering has grown at a phenomenal pace. Meanwhile, due to the Chinese government’s rising concern over carbon emissions and the change of China’s energy structure, natural gas consumption is set to rise in the future. It will herald the inevitable trend towards upgrading marine engines that are powered by oil to those powered by gas. To seize this new market opportunity, we invited an international expert, Mr. Urs Huwiler, to lead our marine engine building segment in 2013. We plan to enrich our product offerings, from low speed marine diesel engines to a more diversified product portfolio including offshore engineering electricity generators. We are also working closely with licensors to develop our dual-fuel marine engines and LNG marine engines.

2012 was not only a crucial year for the transformation and advancement of our business, but it also allowed us to head into a new direction for corporate management. We sincerely believe that a strong vision must be found and a sustainable management model must be established for our future development. We listened carefully to the valuable comments made by investors and customers, adjusted our business directions in appropriate timing and aimed for breakthroughs. We also formulated clear and practical goals for each segment and staff member in view of the current market situation. Our professional management team will leverage on their flexible and forward-looking management mindsets, along with a constantly improving corporate governance system, to progressively develop ourselves into a well-known and sustainable brand.

It is with full trust from the Board of Directors that I was appointed as the Chairman of the Board, and it is with great honor and a deep sense of responsibility that I accept the position in this challenging time. In 2012, we laid the foundations of our “Transformation and Advancement” strategy and I will spare no effort with my colleagues to weather the challenges ahead, seize the opportunities and bring about a bright future for China Rongsheng in 2013. I would like to take this opportunity to thank our former Chairman Mr. Zhang Zhi Rong, former Vice Chairman Mr. Zhang De Huang, former Executive Director Mr. Deng Hui, and the former President of Rong An Power Machinery Mr. Zou Zhi Ming, for their valuable contributions to the Company. I would also like to welcome Mr. Xia Da Wei for joining the Group as an Independent Non-executive Director. Finally, I would like to express my sincere gratitude to our excellent management team and all our staff for their hard work and cooperation, and to all our shareholders for their patience and support.
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