reportage

TEXT JUHA-PEKKA KERVINEN PHOTOS VELHOT PHOTOGRAPHY/JACKSON LOWE, CORBIS/SKOY

YANGTSEDelta

Bound for the

RIVER

reportage

16 Twentyfour7. 4.11

[ AFRICA | AMERICAS | ASIA | EUROPE | OCEANIA ]

Xiling is the longest of the famed Three Gorges on the Yangtze River.Five thousand kilometres down-stream lies the delta and the world’s largest concentration of shipyards.

reportage

4.11 Twentyfour7. 17

China has built its shipyards where the Yangtse

meets the sea. 20 percent of its GDP comes from delta

cities like Shanghai and Wuxi.

Father and daughter watch the sun set by the Huangpu River in Shanghai, opposite the Bund.[Right]

reportage


reportage


Steamed crabfrom famousLake Taihu.[Right]

Diners inShanghai’schic newXintiandileisuredistrict.[Left]

IT’S crab season at Lake Taihu, famed for its

beauty throughout China. All around

the year, people flock to Taihu to admire its panorama

of peaks and peninsulas but in September they mostly

come for the shellfish.

The mitten crab is a great culinary delicacy in the cui-

sine of Shanghai, just two hours’ drive away. The name

mitten comes from its furry claws although gourmets

prize the crab’s roe even more highly.

Each tiny creature fetches hundreds of yuans in Hong-

kong and foreign markets. Crabs from Taihu wear a spe-

cial marker on their pincers. They have such a high rep-

utation that crabs from other areas are sometimes falsely

labelled.

On the shores of Lake Taihu, in the city of Wuxi, Wärt-

silä makes thrusters. Orders will be 10-20 percent higher

next year than this, predicts Hermas Ye, Managing Direc-

tor of Wärtsilä Propulsion (Wuxi) Co., Ltd.

The Wuxi thruster factory is one of thirteen places in

China where Wärtsilä products are made, but it is the only

one that is wholly owned by Wärtsilä.

Thrusters are transverse bow propellers, used to

manoeuvre ships in port. Lined up in rows in the Wuxi

factory yard are steel gearboxes and bronze propellers,

waiting for the assembly line. The smaller propellers have

a diameter of just over a metre; the larger ones are more

than twice the size.

This part of China is where the Yangtse River, the third

longest in the world after the Amazon and the Nile, emp-

ties into the sea. Twenty percent of China’s GDP is pro-

duced in cities like Shanghai and Wuxi in the Yangtse

River Delta.

“In the media, China has been overshadowed by the

debt crises of Europe and the United States. Politicians

and investors seem to have forgotten that the economy

here shows little sign of flagging,” says Stefan Wiik, Man-

aging Director of Wärtsilä Qiyao Diesel Co., Ltd. at his

office in Shanghai.

The Bank of Finland’s Institute for Economies

in Transition predicts that the Chinese economy

will expand 9% this year. And it will reach almost

the same growth figures in 2012 and 2013, BOFIT

believes.

PRICE FASCINATES, QUALITY COUNTS

In Wuxi, September and October are the best

months for eating in the open air. Some of the top

restaurants are in Lake Taihu’s Yuantouzhu, mean-

ing Turtlehead Isle. It is so named because it looks

like a turtle raising its head out of the water.

Western cutlery seems to have caught on here. In

many of the shoreline restaurants, no one is using

chopsticks. It’s all knives and forks.

Hermas Ye’s factory at Wuxi produces more

thrusters than anywhere else in China. So far its

share of the market, in its class, is just under 10 per-

cent but Ye expects it to increase next year. One way

he is boosting the order book is by getting the fac-

tory team actively involved in marketing and sales

of technical matters, delivery and price.

“When the sales team sets off to a customer’s ship-

yard, they can take a product engineer with them.

In this way they can give an immediate response to

the customer’s questions about technical and deliv-

ery issues.”

Hermas Ye doesn’t deny that the Chinese like hag-

gling about price, but they are also very quality-con-

scious. It is as true of thrusters as mitten crabs.

“A buyer at a Chinese shipyard appreciates high

quality and demands it. Our philosophy at Wärt-

silä is that our name is the guarantee of quality. The

country of origin has no significance.”

It was six years ago that Wärtsilä’s thruster pro-

duction in the Netherlands was transferred to Wuxi.

This year about half of the factory’s capacity is being

utilised so it is well placed to meet growing demand.

Hermas Ye has had a close relationship with the

world of shipyards since his childhood. His home

CHINAShanghai

Yangtze river


reportage

town is Zhoushan, one of China’s main shipbuilding centres, to

the south of Shanghai.

JOINT ENTERPRISE OPENS DOORS

Everyone who has visited Shanghai recalls the shimmering Ori-

ental Pearl Tower and the busy Bund Embankment along the

Huangpu River.

Two newly weds, radiant with happiness, want their photo-

graph taken against the stone balustrade of the Bund. The bride

has rolled up the white train of her silk wedding gown and is

clutching it in her lap. The practical world is already intruding

on the magic of the day.

The white gown glows against the backdrop of the tv tower

and the dark shadows of freighters sailing along the Huangpu

through Shanghai.

The constant stream of shipping on the river gives no hint that

China is the world’s leading shipbuilder. The typical vessel is an

ancient wooden barque, powered by diesel, belching smoke and

loaded to the gunwales with bricks or sand.

In fact, Shanghai has an advanced maritime industry but

occasional visitors are unlikely to see it. Chongming, at the

mouth of the Yangtze River, is where the largest shipyards are.

For the last couple of years the great island has been linked to

Shanghai by an expressway of bridges and tunnels.

Another recent innovation is the marinas that have been built

in Shanghai for luxury private yachts. Western-style leisure boat-

ing is still rare in China.

Wärtsilä has strongly increased its maritime industry opera-

tions in China in the past ten years. Jaakko Eskola, Group Vice

President for Wärtsilä Ship Power, says that the world’s leading

supplier of ship power and propulsion systems has to have a

local presence. Of the world’s shipbuilding capacity, 95 percent

is in China, South Korea, Japan and Singapore.

“The decision to insert ourselves into the Chinese market has

been extremely successful. A European base would not have

been enough. A manufacturer of maritime industry products

can’t serve shipyards competitively simply by exporting pro-

duction to the region.”

Of Wärtsilä’s factories in China, three are partly-owned joint

ventures. Nine partners produce Wärtsilä two-stroke low-speed

engines under licence in their own factories.

The largest two-stroke engines have pistons with a diameter

of 96 cm and generate more than 100,000 horsepower.

GETTING CLOSE TO THE PORT

One of China’s best-known brands is Tsingtao beer, founded by

German settlers and brewed in the city of Qingdao – Tsingtao is

the old spelling of Qingdao. The label on the neck of every bot-

tle shows the city’s famous round pagoda.

Qingdao is a pleasantly green place, popular among visitors

because of its comfortable temperature. It is 10 degrees cooler

than Shanghai, which lies more than 500 km to the south. The

famous pagoda is situated on a small island, connected to the

town centre by a pier. In a few idyllic minutes one can walk there

from the mainland.

Like Oriental Pearl Tower in Shanghai, Qingdao’s pagoda is

a popular backdrop for wedding photographs. Now the bride

is dressed in bright red. In this area, white is always worn by

the groom.

Qingdao has the only factory for Wärtsilä two-stroke engines

that is partly owned by the company itself. The same engines are

made by 18 other companies around the world under licence.

The main shareholder of Qingdao Qiyao Wartsila MHI Lin-

shan Marine Diesel Co., Ltd. is the China Shipping Industry

Corporation (CSIC). State-owned CSIC is the largest shipbuilder

in the country, with seven yards.

“The proposal to set up a joint venture to make the engines

came from the Chinese side,” Jaakko Eskola says. “This is where

we want to test our two-stroke strategy, because manufacturing

in other places is based on licensing.”

Mitsubishi of Japan is another shareholder in the Qingdao

-based company.

With 15 percent of the world market, Wärtsilä is the world’s

second largest producer of two-stroke marine engines.

CSIC is involved in Wärtsilä’s third joint enterprise in China.

Wärtsilä Qiyao Diesel Company Ltd (Shanghai) based in Lin-

gang is half-owned by Wärtsilä. The other shareholder is the

Shanghai Marine Diesel Research Institute (SMDERI), which

is part of CSIC.

The factory at Lingang makes four-stroke auxiliary engines

for freight ships. There are three series, Wärtsilä 20 and Wärt-

silä Auxpac 20 and 26. The numbers refer to the cylinder diam-

eter in centimetres.

Qindao’s famous pagoda on a small island in the bay.[Above]

The Yangtze River flows 6380 km from its source in Qinghai Province to the East China Sea at Shanghai.[Above]

South Lingyan Road, on Line 6 of the Shanghai metro. Get off here for meat, eggs, vegetables and embroidery in Sanlin Market.

Mitten crabs, thelocal delicacy.[Below]

The Oriental Pearl towers over China’s financial and commercial hub in Pudong, Shanghai.[Right]

europe and the united states may have their debt crises but china’s economy shows little sign of flagging.

reportage


Wuxi is known for its Grand Canal and, among shipbuilders, Wärtsilä thrusters.[Left]


reportage

“Our engine

models have been

designed in Finland

and Italy and are top

of their class in relia-

bility and economic performance. Our products have Wärtsilä’s

lowest warranty costs,” says Stefan Wiik, Managing Director of

the Lingang factory.

The customer can choose engine power between 520 and

2850 kWe. The output is determined by the number of cylin-

ders mounted in a straight line along the crankcase. The mini-

mum is four and the maximum is nine.

Lingang means “Close to the Port”. The nearby port in ques-

tion is Shanghai’s Waigaoqiao, the world’s largest container port.

CHINA’S RISE AS A SHIPOWNER

Among the world’s producers of marine engines, Wärtsilä is

the only one to offer long-term maintenance agreements for its

products. If the customer wishes, it will look after the engines

throughout their working life.

Maintenance is a very important part of Wärtsilä’s business.

Four of the company’s 170 service points around the globe are

in China, where service accounts for about a half of the com-

pany’s turnover.

Jaakko Eskola sees promising prospects in service because

the Chinese are increasingly interested in owning ships in addi-

tion to building them.

“In the past few years the government and private investors

have increased their holdings in shipping companies. China may

develop into an extremely important country in this respect,

too.”

An engine manufacturer sells its products to a shipyard but a

service agreement is made with the shipowner. It’s another cus-

tomer relationship that needs to be nurtured.

In auxiliary engines, Wärtsilä is managing to sign a service

agreement for about half of the engines it sells. The other buy-

ers generally have no service agreement at all, but maintain the

engines themselves and buy spare parts from Wärtsilä when

necessary.

BIG PROSPECTS FOR SMALL POWER PLANTS

Li Jian’s face glows as she walks along Nanjing Road, one of the

busiest shopping streets in Shanghai. She comes from Anhui

Fitter Li Wei works at Wärtsilä Qiyao Diesel Factory in Lingang.[Above]

Propulsion units at the Wärtsilä factory in Wuxi.[Right]

Co-owner opens new doorsJoint enterprises with Chinese partners had been an effective way for Wärtsilä to get a foothold in local markets. In marine engines, it has been the only route available, because they are classi-fied as strategic products.

Chinese law does not permit a for-eign company to be the sole owner of a factory manufacturing main marine engines or large auxiliaries of Wärtsilä in China.

The first joint enterprise of Wärtsilä in China is a propeller factory in Zhen-jiang, established with the southern state shipbuilding company CSSC. Wärtsilä owns 55% of the company.

“CSSC is one of China’s largest ship-builders, so our partner is also an important customer of the joint enter-prise,” says Jaakko Eskola, Group Vice President for Wärtsilä Ship Power.

reportage


Bright lights on the Nanjing Road, one of Shanghai’s busiest shopping streets.

reportage


reliable electricity has been given the highest priority in china’s economc juggernaut.

reportage


china favours large generating units but future may bring change.

Growing use of wind and solar power increases the need for Wärtsilä solutions.[Below]

Power lines straddle Pudong, Shanghai.[Right]


reportage

province in China’s interior, 400 km away, and has never

seen bright advertising displays before.

Every day thousands of people like Li arrive in the big

city from dull and dusty country villages to marvel at the

People’s Park, Nanjing Road and the Bund. They must be

amazed at how extravagant Shanghai is with its electricity,

compared to the primitive supply they have back home.

Shanghai has not suffered a blackout for years, even in

a hurricane. A reliable electrical supply has been given the

highest priority in China’s economic juggernaut.

Things are different in the vast interior. Power cuts are

common and the voltage often fluctuates. The tv picture

flutters and fades.

Until now Chinese energy policies have favoured large

generating units. The electricity comes from large coal-

fired steam turbine plants, hydropower stations and

nuclear plants. But before long, China will also need

smaller backup generating units.

“Power cuts are still a part of everyday life in many small

cities and the countryside during summertime” says Her-

mas Ye in Wuxi. “To eliminate them China needs a distrib-

uted generating network and government policies can be

expected to evolve in this direction. It will be an oppor-

tunity for Wärtsilä.”

So far, Wärtsilä Power Plants have done little business

in China. There is a sales office in Shanghai but it has

sold plants only to Chinese-financed diesel power plant

projects abroad. Now the prospects for domestic sales are

picking up.

Moreover, China’s growing use of new energy forms,

such as wind and solar power, will serve to increase the

need for Wärtsilä’s solutions. Wind power needs flexible

balancing capacity for periods of calm. Solar power needs

it for night-time.

China has built more wind power generating capac-

ity than any other country but this has not so far been

reflected in the order books of companies selling power

plants. One explanation may be that many of the wind

turbines have not yet been connected to the power grid.

An investment currently under way will improve Wärt-

silä’s position if a Chinese market for power plants devel-

ops. Within a couple of years, production of the Wärtsilä

32 family is due to begin in Nantong. It will be manufac-

tured by a joint enterprise. Wärtsilä’s share is 49%. The

other shares are held by the city of Nantong and a group

of private Chinese investors.

OFFSHORE PROCESSING OF HYDROCARBONS

A new field for Wärtsilä Ship Power is in solutions

for floating production storage and offloading vessels

(FPSO). One FPSO, codenamed P-63, is being built at a

Chinese dockyard for an oil field off Brazil.

The P-63 produces all the electricity the Papa-Terra oil

field needs in power modules developed and manufac-

tured by Wärtsilä.

The power station unit will be installed in the vessel in

three modules. It consists of two Wärtsilä 50DF dual-fuel

engines per module, in total six engines, that together will

generate nearly 100 MWe.

The fuel flexibility that Wärtsilä’s dual-fuel techno-

logy gives the customer is a major advantage compared

to other existing technologies. It is a major competitive

advantage for the P-63 FPSO vessel as the availability of

gas is unpredictable over the lifetime.

“The P-63 could even lead to a technology shift and

open up for a new range of applications for Wärtsilä in

the oil and gas industry,” says Jaakko Eskola. “Until now

the business has been dominated by gas turbine plants.”

China offers countless openings for innovations in the

energy and marine industries. The country wants to create

a green image on many fronts.

reportage


reportage

Documents

reportage china

wuxi thruster factory

city of wuxi

wuxi factory yard

wrtsil products

east china sea

famous lake taihu

huangpu river