China's Biggest Shipyard Bankrupt - Bad management produces a Bad Result

by fulltimestudent 4 Replies latest social current

  • fulltimestudent
    fulltimestudent

    Link: http://www.atimes.com/atimes/China_Business/CBIZ-01-120315.html

    and

    http://english.caixin.com/2015-03-11/100790192.html

    Caixin (a sort of business journal) reports (two days ago) that-

    China's Biggest Shipyard Is Now a Ghost Ship

    Once China's largest shipbuilder, Rongsheng is on the verge of bankruptcy. Orders have dried up and banks are refusing credit. Questions have been raised about the shipyard's business practices, including allegations of padded order books. And Rongsheng is apparently behind on repaying some of the 20.4 billion yuan in combined debt owed to 14 banks, three trusts and three leasing firms, sources told Caixin.
    The few hundred shipyard workers left – survivors of what's now a three-year downsizing – are wondering whether they'll ever see their overdue paychecks. Those with an uncertain future include a worker who cuts steel from abandoned ships into pieces that can be sold for scrap. "We haven't been paid since November," the worker said.
    Rongsheng is on the ropes now that it has completed a multi-year order for so-called Valemax ships for the Brazilian iron ore mining giant Companhia Vale do Rio Doce. The last of these 16 bulk carriers, the Ore Ningbo, was delivered in January.
  • fulltimestudent
    fulltimestudent

    So went wrong?

    As the failure of the group is analysed, the problems are described as:

    Rongsheng's demise began in 2011, six years after Zhang started the company with money made when he worked as a property developer in the 1990s. The new shipyard stunned the industry by clinching major vessel orders from the start, even at a time when most of the world's shipyards were slumping.
    Rongsheng's success attracted investors and banks to the company's side, fueling its expansion.
    In retrospect, said a Rongsheng executive, the company went too far. Financial reports for the years 2008 to 2011 show Rongsheng planned to spend between 1.5 billion yuan and 5.4 billion yuan annually on fixed-asset investments.

    and

    Moreover, sources close to the company said Rongsheng tried to look stronger than it was by exaggerating its records with fake orders.

    All signs, I'm sure, that the "market" works much the same in China as it does in the west.

  • Nathan Natas
    Nathan Natas

    "The Market" is life in the real world. Communism, like Theocracies it tries to replace, is a DREAM that relies on the impossible. These phantasies appeal only to those too weak to face life as it is; "Millions Now Living Will Dine on Sky Cake!"

    I take joy in seeing the collapse of these schemes and the fortunes of capitalists-in-name-only who run to China to exploit the cheap labor. Bugger them sideways!

    https://www.youtube.com/watch?v=55h1FO8V_3w

  • fulltimestudent
    fulltimestudent
    Nathan Natas: "The Market" is life in the real world. Communism, like Theocracies it tries to replace, is a DREAM that relies on the impossible. These phantasies appeal only to those too weak to face life as it is; "Millions Now Living Will Dine on Sky Cake!"

    Well, I agree that Communism is a dream, and the reality is that it does not work. For me, communism (at it's purest level) founders on the rocks of human nature. I am referring to the inherent laziness of so many people who may do their best to avoid real work.

    And, you do not have to work for a state-owned organisation to be like that. Anyone of us who have worked in a large group of workers will be familiar with this problem. Large companies, whether privately owned, or state-owned are particularly vulnerable to this problem, that's why large private enterprise organisations have periodic purges (lay-offs) to try to rid themselves of these obnoxious pests. I once knew the manager of a large state-owned company here in Sydney, Australia. Through their union (which is not to argue that unions are bad things) the workers had organised so they did not have to produce more than an agreed production level. Once they reached that level, the workers essentially stopped working productively. Of course, they could not leave the premises, but they may as well have

    I once knew the manager of a large state-owned company here in Sydney, Australia. Through their union (which is not to argue that unions are bad things) the workers had organised so they did not have to produce more than an agreed production level. Once they reached that level, the workers essentially stopped working productively. Of course, they could not leave the premises, but they may as well have left, because at that point no more product was made. It will not surprise you, that that factory is no longer in business. But how the workers winged when the government finally acted and closed the doors and started buying the goods once made in Sydney in Asia. It is not always the boss, Nathan, that is the person at fault.

    At a different level, a German migrant to Australia I knew, on his first day of work in his new country (a dockyard), worked as he had in Germany. At the end of the day, in the changing rooms, an Aussie worker said to him, "Had a good day, mate? Oh! I noticed you working hard ... You know what, it's not very safe working like that! You really must slow down, or you might have a fatal accident."

    But this is a complex problem - and I can only speculate on possible solutions.

    N.N.: These phantasies appeal only to those too weak to face life as it is; "Millions Now Living Will Dine on Sky Cake!"

    I often wondered how work would be organised in the Jesus/Yahweh paradise? My solutions depended on 'magic' too. Jesus would 'train' us, by 'moulding' our personalities until we all became, 'model workers' as the communists called the hard workers who became examples to emulate!

    But since Jesus is dead and shows no sign of a return, I guess I've abandoned that possibility.

    N.N.: I take joy in seeing the collapse of these schemes and the fortunes of capitalists-in-name-only who run to China to exploit the cheap labor. Bugger them sideways!

    But in China, not all CPC members believed in communist theory. The evidence is that the CPC defeated Chiang Kaishek's KMT (more correctly GMD, for Guomendang) because the Chinese population in general was disillusioned with the GMD, and a broad popular front, including six other (smaller) political parties formed that appealed to the masses and enable the CPC to win power. Capital was difficult to get in the beginning of the new PRC, mostly because of American sanctions. I suggest that shortage of capital was the reason for the push for a centrally organised economy in the China of those days. But the failure of that program and then the death of Mao, and the CPC's appointment of Deng XiaoPing, the non-believers in central planning took control. The government owned factories were organised into state-owned enterprises so that the economy could continue, while private enterprise was encouraged. Private ownership has progressed until now when state owned enterprises are in a minority situation, contributing much less that 50% of GDP. The central government has stated that they will eventually be sold off.

    So I'm not quite sure what your beef is about that situation?






  • fulltimestudent
    fulltimestudent

    The bankruptcy of any company (in any country) has an affect on the workers formerly employed. It's a flow-on effect, that affects the much smaller businesses that once serviced the workers.

    Reuters takes a look at the flow-on effects in the company town that once served the employees of Rongsheng.

    This report, written back in 2013, shows how meven then, the company's mismanagement affected the town that served the workers.

    (Reuters) - Deserted flats and boarded-up shops in the Yangtze river town of Changqingcun serve as a blunt reminder of the area's reliance on China Rongsheng Heavy Industries Group, the country's biggest private shipbuilder.
    Like Rongsheng's shipyards, the area is struggling to survive.

    Workers ride a motorcycle past closed restaurants at the Rongsheng community in Nantong, Jiangsu province December 4, 2013. REUTERS-Aly Song

    Workers ride a motorcycle past closed restaurants at the Rongsheng community in Nantong, Jiangsu province December 4, 2013. CREDIT: REUTERS/ALY SONG

    A worker rides a motorcycle on an empty street at the Rongsheng community in Nantong, Jiangsu province December 4, 2013. REUTERS-Aly Song

    A worker rides a motorcycle on an empty street at the Rongsheng community in Nantong, Jiangsu province December 4, 2013. CREDIT: REUTERS/ALY SONG

    A worker rides a bicycle inside of the Rongsheng Heavy Industries shipyard in Nantong, Jiangsu province December 4, 2013. REUTERS-Aly Song

    A worker rides a bicycle inside of the Rongsheng Heavy Industries shipyard in Nantong, Jiangsu province December 4, 2013.
    CREDIT: REUTERS/ALy

    We may not sympathise with the mis-management of the company, but we can appreciate that, whatever his motives (or, judgement - considering that international ship-building industry has been in a downturn.) th owner too has lost the fortune he accumulated from his profits in a previous enterprise. No doubt he's tucked bits away here and there, but most of his money will be gone in this collapse.

    Link: http://uk.reuters.com/article/2013/12/06/uk-china-shipbuilding-rongsheng-town-idUKBRE9B507C20131206

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