Samsung Heavy Industries completes closure of Ningbo plant in China

[Courtesy of Samsung Heavy Industries]

Samsung Heavy Industries Co., one of South Korea’s three major shipbuilders, has completed the process of closing its Chinese production subsidiary in Ningbo.

The move comes as China’s cost competitiveness has weakened due to declining productivity and rising labor costs. The closure has reduced the number of Korean company’s local plants in China to one from three.

According to shipbuilding industry sources on Wednesday, the Korean shipbuilder liquidated Samsung Heavy Industries Ningbo Co. in Ningbo, Zhejiang Province, in the first half of this year. The assets owned by the entity, including land, were sold to the Chinese government.

Samsung Heavy Industries had previously announced its intention to close the plant in September 2021. Established in 1995, the plant supplied ship blocks to its Geoje shipyard for 26 years, but its manufacturing efficiency worsened due to aged facilities amid the shipbuilding downturn.

Samsung Heavy Industries accelerated its withdrawal from China in the second half of last year. Initially, the company had three production bases in China. The company completed the sale of its 100 percent stake in one of them, Rongcheng Gaya Heavy Industries Co., late last year.

Samsung Heavy had acquired this plant in 2008 for the production of ship components, but it has been incurring losses since 2014.

Samsung Heavy’s only production plant in China, Samsung Heavy Industries Rongcheng Co. in Shandong Province, is also expected to undergo a liquidation process. The ship parts processing company has been losing money for three consecutive years since 2020.