South Korea's shipbuilding industry recorded the largest number of orders for new ships in eight years in 2021, ranking first in the world in terms of high value-added ships and green energy ships. South Korea ranks among the top in the world shipbuilding market not only because of years of technology and talent accumulation, but also because the South Korean government attaches great importance to the shipbuilding industry.

The Korean shipbuilding industry recorded the largest number of new ship orders in eight years in 2021. Although it ranks second behind China in terms of total orders, it ranks first in terms of high value-added ships and green energy ships. The Ministry of Trade, Industry and Energy (MOCIE) said that the Korean shipbuilding industry has come out of the downturn and is enjoying a leap forward development.

South Korea booked 17.44 million revised gross tonnage (CGT) orders for new ships in 2021, the highest level since 2013, according to data released by the Industry Ministry earlier this month. South Korean orders for new ships rose 112% last year compared with 2020; Orders also increased 82 percent in 2019, before the COVID-19 pandemic.

According to the data, South Korea's shipbuilding industry has been strengthening its international competitiveness, with its order share in the global market rising from 31.2 percent in 2019 and 34.1 percent in 2020 to 37.1 percent last year, showing a steady increase year by year. In particular, high value-added ships and green energy ships were the leading ships in Korea with new orders of 12.52 million tons and 10.88 million tons, accounting for 72 percent and 62 percent, respectively.

Last year, Korea accounted for 65 percent of the 302 new high-value-added ships ordered by the world with 191. Among high value-added ships, South Korea won 89.3 percent of orders for liquefied natural gas carriers of more than 174 cubic kilometers. Korea also accounted for 88 percent of new VLCC orders. In the global green ship market, South Korea's share of orders increased from 57.4 percent in 2019 to 62.2 percent in 2020 and 63.6 percent last year.

South Korea ranks among the top in the world shipbuilding market not only because of years of technology and talent accumulation, but also because the South Korean government attaches great importance to the shipbuilding industry.

Last year, the Korean government jointly announced the "K-Shipbuilding Boom Strategy" at Geoje Shipyard of Samsung Heavy Industries, which aims to become the world's largest shipbuilding power by increasing the market share of green energy ships to 75 percent and unmanned ships to 50 percent. It also proposes to train 8,000 production and technical personnel in the shipbuilding industry within two years to cope with the brain drain caused by the epidemic.

In order to promote the employment of skilled workers, the government has decided to promote the employment experience of South Gyeongsang Province in ulsan, Busan and Mokpo, where many shipbuilders are located. The central and local governments will subsidize training costs, labor costs and insurance premiums, respectively. Companies that rehire former employees will be given 300,000 won to 500,000 won per month for up to eight months. Companies that hire new employees will also be given subsidies.

In January this year, the Korean government has stepped up its support for the shipbuilding industry. The Ministry of Commerce, Industry and Industry announced a plan to develop green energy ships by 2022 and decided to invest 95.6 billion won in three areas: securing world-leading technologies for future green energy ships, building experimental infrastructure for the promotion of new technologies, and promoting the verification of ships.

An official at the ministry of Industry, Industry and Commerce said that the trend of environment-friendly and intelligent shipbuilding industry is inevitable, and that the expansion of the market will be an opportunity for the Korean shipbuilding industry to take another leap forward as Korea has certain advantages in the green energy ship market. The government will continue to provide policy support to help the industry maintain its leading position in the world.

However, the stellar performance and government coddle cannot fully mask the industry's problems, with rising order volumes and falling profit margins. Some South Korean media even summed up the phenomenon with the phrase "bright on the outside, poor in reality".

The problem lies in the lagging performance of the shipbuilding industry. It takes one to three years from receiving an order to building a ship, and the latest orders will be reflected in the performance in batches according to the progress of future projects. The current profit decline is due to the impact of the previous COVID-19 outbreak, orders at low prices.

Industry insiders predict that it will be difficult for the Korean shipbuilding industry to significantly improve its performance as it will remain profitable until the end of this year. Things will pick up by 2023, while sales and operating profits are not expected to grow rapidly until 2024.