China Shipbuilding looking beyond submarines

State-run China Shipbuilding Corp (CSBC) now looks like an underdog in its bid to build part of the eight diesel-electric submarines that the US has promised to get for Taiwan.

But CSBC chairman Hsu Chiang (徐強), responding to a recent inquiry from the Taipei Times, said building submarines is not the company's only objective.

"CSBC can build both merchant ships and warships, which is quite unique in the world. We have enough resources to attract leading international defense companies like Lockheed Martin and Raytheon to form a partnership with us," Hsu said.

"The partnership would give us a chance to have a share in the market of weapon systems for submarines. That would be a profitable business," he said.

"In the future, we will still take orders for merchant ships. But we will keep 30 percent of our business for the building of military vessels," he said.

"It is a matter of investment return. A 170,000-tonne merchant ship costs only NT$1.5 billion, while a 4,000-tonne Chengkung-class frigate costs more than four times that. The profit margin between the two is obvious to see."

Despite CSBC's heavy lobbying of the government to get a piece of the submarine deal, Hsu's vision for the company clearly involves more than the production of submarines.

But it is not clear whether Hsu will stick around long enough to make the vision come true.

Ex-CSBC engineer Chen Hsiao-ming (陳曉明), a retired naval officer, said his former colleagues at the CSBC told him that Hsu was alone in his fight for the company.

"The CSBC is a state-run company. But it does not necessarily get all the support it needs from the government.

Although the government has declared support for the CSBC's bid to build parts of some of the eight submarines, Hsu does not feel its presence," Chen said.

Chen, who had been the deputy manager for the building of seven Chengkung-class frigates for the navy, said Hsu does bring some hope to the company, which would not need to be saved were it not for interference from the navy.

"Most of the CSBC's former chairmen were from the navy. It also accepted a lot of retired personnel from the navy. I was of the navy, too. But I must admit that a lot of the people from the navy did more harm than good to CSBC," Chen said.

"Now the CSBC has almost gotten rid of control by the navy. It could run normally like a company. It still has the potential to become a great company," he said.

Hsu is a scholar with no connections to the military.