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Bound for the

YANGTSE RIVER Delta

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

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[ AFRICA | AMERICAS | ASIA | EU ROPE | OCEANIA ]

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

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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]

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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 cuisine of Shanghai, just two hours drive away. The name mitten comes from its furry claws although gourmets prize the crabs roe even more highly. Each tiny creature fetches hundreds of yuans in Hongkong and foreign markets. Crabs from Taihu wear a special marker on their pincers. They have such a high reputation that crabs from other areas are sometimes falsely labelled. On the shores of Lake Taihu, in the city of Wuxi, Wrtsil makes thrusters. Orders will be 10-20 percent higher next year than this, predicts Hermas Ye, Managing Director of Wrtsil Propulsion (Wuxi) Co., Ltd. The Wuxi thruster factory is one of thirteen places in China where Wrtsil products are made, but it is the only one that is wholly owned by Wrtsil. 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, empties into the sea. Twenty percent of Chinas GDP is produced 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, Managing Director of Wrtsil Qiyao Diesel Co., Ltd. at his office in Shanghai.

ITS

Steamed crab from famous Lake Taihu. [Right]

The Bank of Finlands 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

Diners in Shanghais chic new Xintiandi leisure district. [Left]

In Wuxi, September and October are the best months for eating in the open air. Some of the top restaurants are in Lake Taihus Yuantouzhu, meaning 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. Its all knives and forks. Hermas Yes 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 percent but Ye expects it to increase next year. One way he is boosting the order book is by getting the factory team actively involved in marketing and sales of technical matters, delivery and price. When the sales team sets off to a customers shipyard, they can take a product engineer with them. In this way they can give an immediate response to the customers questions about technical and delivery issues. Hermas Ye doesnt deny that the Chinese like haggling about price, but they are also very quality-conscious. It is as true of thrusters as mitten crabs. A buyer at a Chinese shipyard appreciates high quality and demands it. Our philosophy at Wrtsil is that our name is the guarantee of quality. The country of origin has no significance. It was six years ago that Wrtsils thruster production in the Netherlands was transferred to Wuxi. This year about half of the factorys 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

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Qindaos famous pagoda on a small island in the bay. [Above]

CHINA
Shanghai
r iv e r Ya n g t z e
The Yangtze River flows 6380 km from its source in Qinghai Province to the East China Sea at Shanghai. [Above]

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 cant serve shipyards competitively simply by exporting production to the region. Of Wrtsils factories in China, three are partly-owned joint ventures. Nine partners produce Wrtsil 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

town is Zhoushan, one of Chinas main shipbuilding centres, to the south of Shanghai.
JOINT ENTERPRISE OPENS DOORS

Everyone who has visited Shanghai recalls the shimmering Oriental Pearl Tower and the busy Bund Embankment along the Huangpu River. Two newly weds, radiant with happiness, want their photograph 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 worlds 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 boating is still rare in China. Wrtsil has strongly increased its maritime industry operations in China in the past ten years. Jaakko Eskola, Group Vice President for Wrtsil Ship Power, says that the worlds leading supplier of ship power and propulsion systems has to have a local presence. Of the worlds shipbuilding capacity, 95 percent is in China, South Korea, Japan and Singapore.

One of Chinas 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 bottle shows the citys 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, Qingdaos 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 Wrtsil 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 Linshan 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, Wrtsil is the worlds second largest producer of two-stroke marine engines. CSIC is involved in Wrtsils third joint enterprise in China. Wrtsil Qiyao Diesel Company Ltd (Shanghai) based in Lingang is half-owned by Wrtsil. 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, Wrtsil 20 and Wrtsil Auxpac 20 and 26. The numbers refer to the cylinder diameter in centimetres.

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

The Oriental Pearl towers over Chinas nancial and commercial hub in Pudong, Shanghai. [Right]

Mitten crabs, the local delicacy. [Below]

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

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

O ur engine models have been designed in Finland and Italy and are top of their class in reliability and economic performance. Our products have Wrtsils 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 cylinders mounted in a straight line along the crankcase. The minimum is four and the maximum is nine. Lingang means Close to the Port. The nearby port in question is Shanghais Waigaoqiao, the worlds largest container port.
CHINAS RISE AS A SHIPOWNER

Among the worlds producers of marine engines, Wrtsil 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 Wrtsils business. Four of the companys 170 service points around the globe are in China, where service accounts for about a half of the companys turnover. Jaakko Eskola sees promising prospects in service because the Chinese are increasingly interested in owning ships in addition 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. Its another customer relationship that needs to be nurtured. In auxiliary engines, Wrtsil is managing to sign a service agreement for about half of the engines it sells. The other buyers generally have no service agreement at all, but maintain the engines themselves and buy spare parts from Wrtsil when necessary.
BIG PROSPECTS FOR SMALL POWER PLANTS

Li Jians face glows as she walks along Nanjing Road, one of the busiest shopping streets in Shanghai. She comes from Anhui

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Co-owner opens new doors

Joint enterprises with Chinese partners had been an effective way for Wrtsil to get a foothold in local markets. In marine engines, it has been the only route available, because they are classied as strategic products. Chinese law does not permit a foreign company to be the sole owner of a factory manufacturing main marine engines or large auxiliaries of Wrtsil in China. The rst joint enterprise of Wrtsil in China is a propeller factory in Zhenjiang, established with the southern state shipbuilding company CSSC. Wrtsil owns 55% of the company. CSSC is one of Chinas largest shipbuilders, so our partner is also an important customer of the joint enterprise, says Jaakko Eskola, Group Vice President for Wrtsil Ship Power.

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

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

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reliable electricity has been given the highest priority in chinas economc juggernaut.

Bright lights on the Nanjing Road, one of Shanghais busiest shopping streets.

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china favours large generating units but future may bring change.

province in Chinas 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 Peoples 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 Chinas 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 coalfired 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 Hermas Ye in Wuxi. To eliminate them China needs a distributed generating network and government policies can be expected to evolve in this direction. It will be an opportunity for Wrtsil. So far, Wrtsil 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, Chinas growing use of new energy forms, such as wind and solar power, will serve to increase the need for Wrtsils 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 capacity 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 Wrtsils position if a Chinese market for power plants develops. Within a couple of years, production of the Wrtsil

32 family is due to begin in Nantong. It will be manufactured by a joint enterprise. Wrtsils 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 Wrtsil 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 manufactured by Wrtsil. The power station unit will be installed in the vessel in three modules. It consists of two Wrtsil 50DF dual-fuel engines per module, in total six engines, that together will generate nearly 100 MWe. The fuel flexibility that Wrtsils dual-fuel technology 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 Wrtsil 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.

Power lines straddle Pudong, Shanghai. [Right] Growing use of wind and solar power increases the need for Wrtsil solutions. [Below]

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