MARINE

ENGINEERING
of
CIMC Raffles
L07 GROUP8
121020259 俞子宁
122090602 颉乐丛
122090362 刘卓勋
121020049 方静然
1 2 2 0 2 0 3 5 6 V I C TO RI A B R I T N E Y K A I R U PA N
Marine Engineering Industry
Revenue of China's marine engineering equip-
ment manufacturing industry from 2018 to 2023
900 808
800 740
700 618
600
500 440
400 360 369
300
200
100
0
2018 2019 2020 2021 2022 2023E

Revenue ： RMB100mn

Industry analysis Company analysis Problem Identifications Alternatives Strategy

CIMC Raffles Overview History
Corporate Structure Company Overview 1977 Establishment of Yantai
shipyard
CIMC Group 8 Industry sectors Offshore Engineering
Offshore Transportation • Five engineering centers-YANTAI, 2013 CIMC Raffles becomes a
Airport Module
Facilities (Marine Vehicles Building
Shanghai, Shenzhen, fully owned subsidiary
engineering) Goteborg(Sweden), BREVIK (NORWAY)
under CIMC group
Energy& Chemical Containers Logistics Finance
Construction 2017 CIMC Raffles delivers the
world’s most advanced deep
• Total area 1,500,000 ㎡
• 20,000 Tons gantry crane
water semi-submersible
• -18M deep wharf drilling rig, “Bluewhale 1”
CIMC • Max manpower: 18,000 workers
Group
Products and Services
• Drilling rig, Production unit & Modular,
Special Vessels, Marine tourism, Ocean
Aquaculture/Fish Farming, Repair &
Conversion …

Construction of the first 2022.4

• A 100% subsidiary company of
offshore wind turbine
CIMC Group
installation vessel of CIMC
Raffles “3060” series began
Industry analysis Company analysis Problem Identifications Alternatives Strategy
 PEST Analysis
P
• Environmental Regulations

S W O T
• Employee Rights Protection
POLITICAL System

E
ECONOMIC
• Economic Growth
STRENGTHS WEAKNESSES OPPORTUNITIES THREATS

• Technologies • Dependence • Increased • Economic

on the price demand of Crisis
• Clean energy period of oil energy in China
S
SOCIAL
• Environmental Management
System
development and gas
industry • Expansion to
• Strong
Competiti
• Owned by the other fields ons
Government • Labor costs
in recession • Government

T
• Advanced Technologies • High standard period capital support
• Intellectual Property Rights certifications
TECHNOLOGY

Industry analysis Company analysis Problem Identifications Alternatives Strategy

Problem Identifications Other
10%
s
Breaches
of Contract 60% Net Loss
(Deficit)
Blue Wale II
Par value of whole platform:
589 million dollars
NOV drilling system 20% 10%
(imported) costs 282 million
dollars

High Labor
High Cost There would be fewer customers during
Equipment During
the recession, but CIMC Raffles still
needs to pay its employees’ wages. This
Cost Recession could lead to a larger net loss.

Industry analysis Company analysis Problem Identifications Alternatives Strategy

Alternatives-Breaches of Contract
1-Market Prediction 2- Payment Pattern 3-Rent the Unsold
• Predicting oil/gas market trends • advance PMT final PMT • Transform “sell” to “rent”
• Evaluating buyers’ default risk • Require heavier penalty for • Make use of the products that fail
e.g. reputation grading breaking the contract to be delivered

Pros: Pros: Pros:

• Plan ahead of time • Promote contract effectiveness • Profit from rental income
• Increase delivery rate • Lower depreciation and maintenance • Open to more business chance
expenses
Cons: Cons: Cons:
• Hard to forecast the market situation • Higher advance payments may draw • Rent price << Sales price
in 3-5 years buyers away • Face fierce competition in the rental
• Hard to measure default risk market

Industry analysis Company analysis Problem Identifications Alternatives Strategy

best
• Comparisons between within the industry
• Shorten the contract period to be more flexible
• More options ->can choose by customers
• Increase the rate period by period
• Discounts for over 80% advanced payment->appeal the customers
table
Implementation-Change payment pattern
Five milestones of payment:
1. contract signing 3. keep laying 4. launching 5. delivery

Year 1 Year 2 Year 3 Year 4 Year 5

2. steel cutting
Likelihood of breaching
the contract
2.5% 2.5% 2.5% 2.5% 90% Relatively high

10%10% 20% 20% 40% Medium

20% 20% 20% 20% 20% Relatively low

Industry analysis Company analysis Problem Identifications Alternatives Strategy

Strategy Supplement-Equipment Cost
Maintenance and innovation International business cooperation
 Evaluate the maintenance fee and depreciation  Facilitate the flow of funds
fee
 Increase usage frequency
 Product new equipment
 Communication of production and
 Take advantage of the network management experience
(other industry)  Sale of CIMC’s technology and equipment

Heavy assets industry Light assets industry

 Depreciation & Amortization  Sales & Management

Industry analysis Company analysis Problem Identifications Alternatives Strategy

Strategy Supplement-Labor Cost
Rotation training
 Job transformation
 Cooperation between departments
 cooperation with other company
 Leadership/teamwork Change the employment framework
 Cut down the number of Administrations/managers
 Guarantee the streamlining of non-technical departments
Careful recruitment process
 Do close beta before the formal recruitment
 Guarantee the effectiveness of recruitment

Industry analysis Company analysis Problem Identifications Alternatives Strategy

THANK YOU