Shipbuilders Seek
Win-Win Strategy

By Lee Byung-ho, executive vice chairman
of the Korea Shipbuilders'Association (KOSHIPA)

There is a reason why the Korean shipbuilding industry deserves global attention today. It is not simply because the industry has become world-class, but the core reason can be found rather in that it is creating an entirely new source of competitive power, "Blue Ocean,"through win-win cooperation among related business communities, such as marine equipment, steel and shipping industries.
The cooperation with small and medium marine equipment suppliers starts with the recognition that without high-quality equipment and machinery, ships which have competitive advantage cannot be built. Strengthening cooperation with marine equipment makers is directly linked to the reinforcement of shipyards'quality and performance.
Shipyards and marine equipment producers, therefore, have a complementary relationship, sharing both profit and loss. Based on the recognition that business success depends on each other's performance, the two business communities agreed in May to cooperate with each other to maximize synergy effects.
The agreement encompasses matters related to the development of high value-added core equipment and materials like LNG carrier parts; financial support through the creation of purchasing investment funds; establishment of B2B networks including exchange of e-drawings; broadening technological cooperation; joint overseas marketing, etc. Also follow-up measures are underway to establish a common logistics center for ship equipment and machinery in the Noksan Industrial Complex in Busan in the form of a joint investment.
At the end of May 2005, domestic shipbuilders and steel mills agreed to cooperate on the steel issue. CEOs of the two business communities shared the view that reinforcement of bilateral cooperation is vital to cope actively with the ever-changing internal and external market environment in pursuit of common benefit and prosperity.
Based on this common understanding, they reached a consensus to cooperate to 1) share common views on medium & long-term vision on shipbuilding and demand forecast for steel plates, 2) stabilize the supply and demand balance for steel plates, 3) reinforce capability to respond to the increasing demand for high-class steel plates, 4) carry out joint research and development activities and evaluate supply and demand situation.
A significant synergy effect is expected from this agreement based on the fact that it was concluded between two domestic business communities at the pinnacle of global competitiveness in their respective industries.
Shipbuilders'active efforts to achieve a win-win cooperation are expected to have a strong impact on all related industries. The ship equipment and machinery industry, where small and medium industries are key players, will grow into an excellent cluster that determines the quality competitiveness of all shipyards around the world. The domestic steel industry will achieve momentum for another takeoff as global steel makers by securing long-term stable operation. The domestic shipping industry will be the largest beneficiary of the world-best shipbuilding technology as well. Consequently, owing to the positive cooperation and complementary roles of the Korean shipbuilding industry, which has risen to the world's leading position, related industries will also be upgraded one level, resulting in success for all industries concerned.
Earlier, in a report to OECD, Rutgers University Professor John H. Dunning defined one of the characteristics of the new trend in today's capitalism as "alliance capitalism"from the viewpoint of competitive strategy. To survive an era of unlimited competition, alliances and cooperation among related enterprises are continuously expanding. What's more, even directly competing enterprises are not hesitating to conclude alliances and cooperation. The win-win cooperation strategy adopted by the Korean shipbuilding industry is a key element of a global competitive strategy -- the right direction as viewed from the mega-trend of "expansion of alliances and cooperation."Furthermore, Korean shipbuilders'initiatives for win-win cooperation include not only domestic partners but also foreign counterparts as well. Worldwide cooperation is expected to generate considerable benefits to the whole global community with the supply of safer, efficient and environment-friendly ships at reasonable prices. The dream of well-being and prosperity for all can be realized through the promotion of cooperation and coordination of all the people and entities involved with shipbuilding around the world. nw