For years Rongsheng Heavy Industries seemed a symbol of China’s extraordinary success in shipbuilding: only founded in 2005, it grew to become the largest shipbuilder in the world in terms of tonnage of orders on hand.
But now Rongsheng has become a cautionary tale, under the impact of China’s economic slowdown and tighter credit conditions. With Rmb25bn ($4.1bn) in gross debt at the end of last year, no new orders this year and a forecast loss in the first half, Rongsheng has been forcing its workers to take “holidays” and recently had to borrow money from its founder to stave off a cash crunch.
There is a growing consensus that a bailout is the only way the shipbuilder can stay afloat, and Rongsheng acknowledged last week that it was “actively seeking financial support from the government”. Rongsheng has Rmb15bn in loans that fall due this year.