According to the data of GDP per capita, the proportion of industrial output value to GDP and the proportion of employment in various industries, China has entered the middle stage of industrialization, and the obvious feature of the middle stage of industrialization is that the demand for heavy machinery has increased substantially, including construction machinery, machine tools, ships and metallurgical mining machinery. From the experience of Japanese and Korean manufacturing industry in the mid-term development of industrialization, the proportion of machinery manufacturing industry in the manufacturing industry will continue to increase. In the process of China's industrialization, we look forward to long-term investment opportunities in machinery industry.
We find that, despite the appreciation of the local currency and the continuous rise of labor costs, the development trends of the sub-sectors are different. The heavy machinery industry, such as construction machinery, metallurgical mining machinery, machine tools and shipbuilding industry, has maintained a sustained growth in revenue and profits. In terms of exports, the growth rate of the above-mentioned sub-sectors is far faster than the average growth rate of the industry. The rapid development of construction machinery, metallurgical mining machinery and machine tools first benefited from the strong domestic demand of Japan. Under the cultivation of the domestic demand market, the relevant enterprises gradually possessed the international market competitiveness, and relied on technological upgrading and improving labor productivity to overcome the difficulties of currency appreciation and rising labor costs. Shipbuilding industry benefited from the global shipbuilding industry from the west at that time. The shift from Europe to Japan. Generally speaking, the global shipbuilding industry is accelerating its transfer to China. Construction machinery benefits from the strong demand in the domestic market and the substantial growth of export business. Metallurgical mining machinery benefits from the demand for coal and steel in the process of industrialization. We are optimistic about the subdivisions of shipbuilding, construction machinery and metallurgical mining machinery in 2008, and we are more optimistic about the choice of enterprises. Enterprises with connotative growth and extension expansion capabilities.
Shipbuilding: China's Accelerated Rise
We believe that the global shipbuilding boom cycle is expected to last until 2011. Although the global economic growth rate will decline in 2008, according to the World Monetary Fund forecast, the global economic growth rate will remain at a high level of 4.8% in 2008. According to Clarkson's forecast, the growth rate of global ocean trade will remain at a high level. Therefore, we believe that the decline of global economic growth may affect new ship orders in 2008, but will not lead to global construction. The ship's boom cycle ended ahead of schedule. We believe that this shipbuilding boom cycle is expected to continue through the rotation of different types of ship boom cycles.
For the profits of shipbuilding enterprises in the next few years, we believe that even if the global shipbuilding boom cycle falls ahead of schedule, it will not affect the profitability of shipbuilding enterprises. From the point of view of new ship orders, the new ship orders of global shipbuilders have been scheduled for 2012. According to the handheld orders/completion volume in 2006, the current handheld orders of global shipyards are enough to support the production needs in the next four years. At the same time, the situation of full workload of global shipyards and tense docks leads to the rising cost of new ships. It is worth noting that the global shipyards will open in 2008. Starting production of new high-priced ship orders in 2006, the future shipbuilding enterprises can expect sustained profits.
We believe that the early end of the shipbuilding boom cycle will accelerate the rise of China's shipbuilding industry. By analyzing the process of Korea's shipbuilding industry catching up with Japan in the mid-1990s, we find that the advantage of labor cost and the support of the government are important factors for Korea's shipbuilding industry to win. At present, Chinese shipbuilding enterprises have obvious advantages in labor and steel cost compared with Japan and Korea, but there is a certain gap between them in terms of localization rate and production efficiency, but the state has increased investment in shipbuilding industry. We anticipate that the localization rate of shipyards will be greatly improved. From the point of view of some leading domestic shipbuilding enterprises, the dock cycle will reach 50 days, close to the level of 30-40 days in Japan and South Korea. Based on the experience of the rise of Korean shipbuilding industry, we believe that the rise of China's shipbuilding industry will be accelerated once the global shipbuilding boom cycle falls under the background of obvious cost advantages.
CHINESE
