Wärtsilä and China State Shipbuilding Corporation (CSSC) have signed an agreement to establish a joint venture for manufacturing medium and large bore medium speed diesel and dual-fuel engines. The CSSC Wärtsilä Engine (Shanghai) Co. Ltd factory will be located at Lingang, Shanghai and is expected to have its first engine ready for delivery by the end of 2015. The company will in particular target the growing offshore and LNG markets, as well as the market for very large container vessels. The Wärtsilä share of the joint venture is 49 per cent and the size of Wärtsilä's equity investment is approximately EUR 12 million.
The new joint venture company, CSSC Wärtsilä Engine (Shanghai) Co. Ltd, together with two other already existing Wärtsilä joint ventures for medium speed engine production, will now be able to offer the most complete portfolio of Wärtsilä branded medium speed engines in China. It will also be the first China-based company able to manufacture locally large bore medium speed diesel and dual-fuel engines. By being able to produce and deliver locally, the new joint venture will provide CSSC Group and other Chinese yards with closer access to the Wärtsilä range of engines with the benefits of faster delivery times and competitive pricing.
When in full production, the company will manufacture Wärtsilä 26 engines in V-configuration, Wärtsilä 32 main and auxiliary engines, Wärtsilä 46 engines and the Wärtsilä 34DF and Wärtsilä 46DF dual-fuel engines. With LNG becoming increasingly popular as a marine fuel and dual-fuel capability being of increasing importance for both economic and environmental reasons, Wärtsilä's industry leading dual-fuel offering is a major consideration for Chinese yards.
"This agreement marks an historic moment for our two companies, and it opens the door to exciting new opportunities. China is today the largest shipbuilding nation on earth, and CSSC is the largest shipbuilding company in China. Wärtsilä offers the marine industry's broadest scope of products, solutions and services, and through this joint venture our two companies can deliver leading edge engine technology that can improve efficiencies and lower operating costs for owners and operators everywhere," says Jaakko Eskola, Senior Executive Vice President & President, Ship Power, Wärtsilä Corporation.
"This investment demonstrates Wärtsilä's commitment to supply competitive engine products to its customers in China. Furthermore, it is fully aligned with the central government of China's 12th Five-Year Plan to significantly increase environmental efficiency and the locally produced content of marine equipment," adds James Han, President of Wärtsilä China.
"It is a great honour to sign this joint venture agreement with Wärtsilä. Wärtsilä is the leading innovator and the technology leader in developing economic and environmentally sustainable solutions. We look forward to a bright future together," says Wu Qiang, Vice President, CSSC.
CSSC is one of the largest shipbuilding groups in the world, with ten yards in China accounting for approximately 25 per cent of the country's newbuild capacity. In 2004 Wärtsilä set up its first joint venture with the CSSC Group when establishing Wartsila CME Zhenjiang Propeller Co Ltd for propeller production.
Wärtsilä in China
Wärtsilä has been present in China for more than 20 years, through its fully owned subsidiary and long-term licensing agreements. To serve the world's largest shipbuilding region, Wärtsilä has established joint ventures for propeller, auxiliary engines and mid-size medium-speed engine production with strong Chinese industrial groups and a joint venture for automation services. Wärtsilä also manufactures thrusters at its fully owned company facilities, while low-speed engines are produced by eight licensees and by a joint venture company. The acquisitions of Cedervall in 2011 and Hamworthy in 2012 have further strengthened Wärtsilä's leading position in global markets, notably in marine services and offshore, marine gas applications, as well as environmental solutions.
In the marine market, the leading Chinese ship owners and shipyards are Wärtsilä's customers. Wärtsilä Services provides service and maintenance for its customers from eight locations in China, the largest of which is in Shanghai. In the energy markets, Wärtsilä has delivered power plants producing a total of 3500 MW of electricity to customers in China. Including Wärtsilä joint venture companies, there are currently more than 2000 Wärtsilä employees working in China.