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The shipyard, located in the Yangtze River Delta, was founded in 2006, and became the largest private shipbuilder in China, churning out giant valemaxes at its four large dry-docks, before a massive financial collapse forced it to cease operations in 2014.

Broking sources in China tell Splash that the yard’s former chief operating officer David Luan is now preparing to officially reopen the yard, to be known as SPS Shipyard, a reference to ShipParts.com, a business he created in 2015 after quitting Rongsheng.

SPS Shipyard will start to market cape and kamsarmax slots from next week with next available slots being from Q3 2025 onwards. Luan has yet to reply to questions sent by Splash earlier today.

Another once-leading privately-owned yard China Huarong Energy Company, previously and better known as China Rongsheng Heavy Industries, continues to struggle with debts and ongoing talks with its creditors. The shipbuilder with huge yard facilities is now literally a �ghost yard�, where operations have ceased as funds dried up.

Jiangsu Rongsheng Heavy Industries Group Co. used to employ more than 30,000 people in the eastern city of Rugao. Once China�s largest shipbuilder, by 2015 Rongsheng was on the verge of bankruptcy. Orders had dried up and banks are refusing credit. Questions have been raised about the shipyard�s business practices, including allegations of padded order books. And Rongsheng was apparently behind on repaying some of the 20.4 billion yuan in combined debt owed to 14 banks, three trusts and three leasing firms.

Rongsheng is on the ropes now that it had completed a multi-year order for so-called Valemax ships for the Brazilian iron ore mining giant Companhia Vale do Rio Doce. The last of these 16 bulk carriers, the Ore Ningbo, was delivered in January 2015. With a carrying capacity of up to 400,000 tons, Valemaxes are the world�s largest ore carriers. Vale hired Rongsheng to build the ships starting in 2008, and has tolerated the shipyard�s slow pace: The Ore Ningbo was delivered three years late. Rongsheng employees said the Ore Ningbo may have been the shipyard�s last product because no new ship orders are expected and all contracts for unfinished ships have either been canceled or are in jeopardy.

Founder and former chairman Zhang Zhirong started the company in 2005 with money made when he worked as a property developer in the 1990s. The new shipyard stunned the industry by clinching major vessel orders from the start, even at a time when most of the world�s shipyards were slumping. Rongsheng�s success attracted investors and banks to the company�s side, fueling its expansion.

The shipyard, a sprawling facility spread across one-third of Changqingsha Island in the middle of the Yangtze River, suffered from a lack of capacity and management problems. As a result, the company had trouble meeting its contract obligations, including delivery timetables. Rongsheng�s problems were tied to difficulties with delivering ships. Many of Rongsheng�s order cancellations were due to its own delivery delays.

After the global financial crisis of 2008, many ship owners could no longer afford paying in advance for new vessels. So builders such as Rongsheng started arranging up-front financing with Chinese banks that got projects off the ground.

Rongsheng built ships with a combined capacity of 8 million tons in 2010 and was preparing to begin filling US$ 3 billion in new orders the following year. But the company�s 2011 orders wound up totaling only US$ 1.8 billion. That same year, Rongsheng�s customers canceled contracts for 23 new vessels.

In 2012, Rongsheng received orders for only two ships. Layoffs ensued, with some 20,000 workers getting the axe. The company closed the year with a net loss of 573 million yuan, down from a 1.7 billion yuan net profit in 2011 and despite 1.27 billion yuan in government subsidies. The bleeding worsened in 2013, with 8.7 billion yuan in reported losses. Despite a recovery of the Chinese shipbuilding industry in 2014, Rongsheng saw no relief, as its clients canceled orders for 59 vessels that year.

Roxen Shipping, a company controlled by Chinese businessman Guan Xiong, reportedly stepped in to rescue some US$ 2 billion worth of ship contracts that were canceled by Rongsheng�s other customers. Without these orders, Rongsheng never would have maintained its status as the No. 1 shipbuilder in China from 2009 to 2013.

Rongsheng�s capital crunch worsened since February 2014, when the China Development Bank (CDB) demanded more collateral after the company failed to make a scheduled payment on a 710 million yuan loan. When Rongsheng refused, the CDB called the loan. Other banks that issued loans to the shipbuilder had taken similar steps.

Rongsheng�s weak financial position was highlighted by a third-quarter 2014 financial report in which the company posted a net loss of 2.4 billion yuan. It also reported 31.3 billion yuan in liabilities, including 7.6 billion yuan worth of outstanding short-term debt.

It would cost at least 5 billion yuan to restart operations at Rongsheng�s facility, plus they have a huge amount of debt. Buying Rongsheng would not be a good deal.

RUGAO, China/SINGAPORE (Reuters) - Deserted flats and boarded-up shops in the Yangtze river town of Changqingcun serve as a blunt reminder of the area"s reliance on China Rongsheng Heavy Industries Group, the country"s biggest private shipbuilder.A view of the Rongsheng Heavy Industries shipyard is seen in Nantong, Jiangsu province December 4, 2013. REUTERS/Aly Song

The shipbuilder this week predicted a substantial annual loss, just months after appealing to the government for financial help as it reeled from industry overcapacity and shrinking orders. Rongsheng lost an annual record 572.6 million yuan ($92 million) last year, and lost 1.3 billion yuan in the first half of this year.

While Beijing seems intent to promote a shift away from an investment-heavy model, with companies reliant on government cash injections, some analysts say Rongsheng is too big for China to let fail.

Local media reported in July that Rongsheng had laid off as many as 8,000 workers as demand slowed. Three years ago, the company had about 20,000 staff and contract employees. This week, the shipbuilder said an unspecified number of workers had been made redundant this year.

A purpose-built town near the shipyard’s main gate, with thousands of flats, supermarkets and restaurants, is largely deserted. Nine of every 10 shops are boarded up; the police station and hospital are locked.

“In this area we’re only really selling to workers from the shipyard. If they’re not here who do we sell to?” said one of the few remaining shopkeepers, surnamed Sui, playing a videogame at his work-wear store. “I know people with salaries held back and they can’t pay for things. I can’t continue if things stay the same.”

In the shadow of the shipyard gate, workers told Reuters the facility was still operating but morale was low, activity was slowing with the lack of new orders and some payments to workers had been delayed.

“Without new orders it’s hard to see how operations can continue,” said one worker wearing oil-spattered overalls and a Rongsheng hardhat, adding he was still waiting to be paid for September. He didn’t want to give his name as he feared he could lose his job.

“Morale in the office is quite low, since we don’t know what is the plan,” said a Rongsheng executive, who declined to be named as he is not authorized to speak to the media. “We have been getting orders but can’t seem to get construction loans from banks to build these projects.”

While Rongsheng has won just two orders this year, state-backed rival Shanghai Waigaoqiao Shipbuildinghas secured 50, according to shipbroker data. Singapore-listed Yangzijiang Shipbuildinghas won more than $1 billion in new orders and is moving into offshore jack-up rig construction, noted Jon Windham, head industrials analyst at Barclays in Hong Kong.

Frontline, a shipping company controlled by Norwegian business tycoon John Fredriksen, ordered two oil tankers from Rongsheng in 2010 for delivery earlier this year. It now expects to receive both of them in 2014, Frontline CEO Jens Martin Jensen told Reuters.

Greek shipowner DryShips Inchas also questioned whether other large tankers on order will be delivered. DryShips said Rongsheng is building 43 percent of the Suezmax vessels - tankers up to 200,000 deadweight tons - in the current global order book. That"s equivalent to 23 ships, according to Rongsheng data.

Speaking at a quarterly results briefing last month, DryShips Chief Financial Officer Ziad Nakhleh said Rongsheng was “a yard that, as we stated before, is facing difficulties and, as such, we believe there is a high probability they will not be delivered.” DryShips has four dry cargo vessels on order at the Chinese firm.

Rongsheng declined to comment on the Dryships order, citing client confidentiality. “For other orders on hand, our delivery plan is still ongoing,” a spokesman said.

At least two law firms in Shanghai and Singapore are acting for shipowners seeking compensation from Rongsheng for late or cancelled orders. “I’m now dealing with several cases against Rongsheng,” said Lawrence Chen, senior partner at law firm Wintell & Co in Shanghai.

Billionaire Zhang Zhirong, who founded Rongsheng in 2005 and is the shipyard"s biggest shareholder, last month announced plans to privatize Hong Kong-listed Glorious Property Holdingsin a HK$4.57 billion ($589.45 million) deal - a move analysts said could raise money to plug Rongsheng"s debts.

Meanwhile, Rongsheng’s shipyard woes have already pushed many people away from nearby centers, and others said they would have to go if things don’t pick up. Some said they hoped the local government might step in with financial support.

The Rugao government did not respond to requests for comment on whether it would lend financial or other support to Rongsheng. Annual reports show Rongsheng has received state subsidies in the past three years.

(Bloomberg) — China Rongsheng Heavy Industries Group Holdings Ltd., which hasn’t announced any 2012 ship orders, may find winning deals even harder as a company owned by its billionaire chairman faces an insider-trading probe.

Rongsheng, based in Shanghai, has tumbled 87 percent since a November 2010 initial public offering because of concerns about delivery delays and a global slump in ship orders caused by a glut of vessels. The shipbuilder, which operates facilities in Jiangsu and Anhui provinces, also said yesterday that first- half profit probably dropped “significantly” because of falling prices and slowing orders.

The demand slump has pushed new-ship prices to an eight- year low, according to shipbroker Clarkson Plc. Chinese shipyard orders plunged 49 percent in the first half.

The probe won’t affect day-to-day operations run by Chief Executive Officer Chen Qiang, as Chairman Zhang only has a non- executive role, Rongsheng said in a statement yesterday. Zhang wasn’t available for comment yesterday, according to Doris Chung, public relations manager at Glorious Property Holdings Ltd., a developer he controls.

Chen isn’t aware of Zhang’s personal business dealings and he has no plans to leave Rongsheng, he said yesterday by text message in reply to Bloomberg News questions. The CEO may help reassure potential customers as he is well-known among shipowners, said Lawrence Li, an analyst at UOB Kay Hian Holdings Ltd.

Zhang owns 46 percent of Rongsheng and 64 percent of Glorious Property, according to data compiled by Bloomberg. The developer dropped 1.7 percent to close at HK$1.16 in Hong Kong today after falling 11 percent yesterday. Zhang’s listed holdings are worth about $1.2 billion, according to data compiled by Bloomberg.

Zhang, who holds a Master’s of Business Administration degree from Asia Macau International Open University, started in building materials and construction subcontracting before getting into real estate. Construction of his first project, in Shanghai, began in 1996, according to Glorious Property’s IPO prospectus. He got into shipbuilding after discussing the idea with Chen at a Shanghai Young Entrepreneurs’ Association event in 2001, according to Rongsheng’s sale document. He formed the company that grew into Rongsheng three years later.

“People in his hometown think Zhang is a legend as he expanded two companies in different sectors so quickly,” said Ji Fenghua, chairman of Nantong Mingde Group, a shipyard located next to Rongsheng’s facility in Nantong city, Jiangsu province. The billionaire maintains a low profile, said Ji, who has never seen him at meetings organized by the local government.

Rongsheng raised HK$14 billion in its 2010 IPO, selling shares at HK$8 each. The company’s market value has fallen by about $6.1 billion to $1 billion, based on data compiled by Bloomberg.

Rongsheng, which also makes engines and excavators, had outstanding orders for 98 ships as of June 2012, according to Clarkson. It employed 7,046 people at the end of last year, according to its annual report. The shipbuilder has built a pipe-laying vessel for Cnooc and it has a strategic cooperation agreement with the energy company.

RUGAO, China—An anxious shipyard worker named Li and the deserted shops around him offer a glimpse of the tough choices that many of China"s most bloated industries present to Beijing.

The 46-year-old Mr. Li, who gave only his surname, said he works for China Rongsheng Heavy Industries Group Holdings Ltd. The company Friday said it is struggling to pay employees and suppliers and is in talks with its bankers for more credit. Rongsheng also is seeking financial help from the government and shareholders amid a prolonged industry slump.

During the year ended 31, December 2013 China Rongsheng, the largest non-state-owned shipbuilder in the PRC, reports that revenue of the Company was RmB1,343.6 million, a decrease of 83.1% from RmB7,956.3 million for the year ended 31 december 2012. Excerpts from the report follow:

China Rongsheng Heavy Industries Group Holdings Limited explain that In 2013, the unfavourable operating environment for ship owners persisted amid the unsatisfying performance of the global shipping market in spite of the tepid recovery from 2012. As a result, ship owners requested shipyards to postpone the delivery of new vessels.

In 2013, the overcapacity in the global shipping market was not curbed, with shipping enterprises stuck in the loss-making position, exacerbating the overcapacity in shipbuilding industry and leaving the prices for new vessels low. In response to the adverse market environment, Rongsheng adopted a defensive sales strategy and abandoned some extremely low price orders.

Rongsheng anticipates that the elimination of outdated overcapacity and lifted market entry barriers will result in an increase in market concentration and thus benefit leading large-scale shipbuilders in the long term. leveraging on the government policies. They say they will carry on implementation of established strategy of “Transformation and advancement” to further strengthen and expand the company for the long-term development.

China Rongsheng Heavy Industries Group Holdings Limited and its subsidiaries are a leading diversified large heavy industries group in China. Business segments include shipbuilding, offshore engineering, marine engine building and engineering machinery.

A large number of shipyards in China are suffering at the moment, as the global maritime industry has been hit hard by a drastic decline in new ship orders amid the ongoing economic crisis.

China Rongsheng Heavy Industries Group, one of the leading shipyards in China, warned of a net loss for 2012, due to a sharp decline in orders and new vessel prices, according to a company filing with the Hong Kong Stock Exchange on December 24.

The number of Rongsheng"s employees has dropped to around 10,000 from nearly 50,000 at the peak time for the industry several years ago, according to a report from Guangzhou-based 21st Century Business Herald on December 27, citing workers from Rongsheng.

Wu Jiawei, a 20-year-old electrician who works at a Rongsheng shipyard in Nantong, East China"s Jiangsu Province, said he is planning to leave his current position after the Spring Festival in February, after he gets the year-end bonus.

A PR employee at Rongsheng"s Shanghai headquarters, who declined to be named, admitted that some employees have left the firm amid the gloomy industry prospects.

He told the Global Times that the company"s number of employees was now stable. "The total number of employees at Rongsheng was 25,000 during the peak time several years ago, not 50,000 as reported, and at present Rongsheng still has a total of around 20,000 employees."

Lu Jian, a former co-worker of Wu"s at Rongsheng"s Nantong shipyard, told the Global Times that the reason he left the company in February 2012 was because he "basically had nothing to do every day."

Rongsheng received only two new orders in the first half of 2012, and the prices of the orders were substantially lower than before, according to the PR employee.

Rongsheng is not the only shipbuilding company to be hit by the industry downturn. Media reports have said that many privately owned small shipyards in Jiangsu and Zhejiang provinces have partly halted production amid the downturn.

Jiangsu-based Dongfang Shipyard, a privately owned company, has defaulted on employee salaries for half a year, and the total amount of unpaid salaries is more than 170 million yuan, according to a report by news portal 21cbh.com on December 18.

"It is likely that 50 percent of the smaller privately owned shipyards in China will go bankrupt or be acquired by larger firms during the current downturn," Zhou Liwei, an expert at the China Classification Society, a testing agency for industry standards, told the Global Times on December 28.

He also noted that ship buyers have started to push down prices amid the sluggish demand, and Rongsheng is responding by turning to marine engineering, such as producing equipment for offshore oil exploration.

Rongsheng Offshore & Marine, a subsidiary dedicated to the marine engineering business, was established in Singapore in October 2012, and it announced that it had already secured an order from a Singaporean client.

Other shipbuilding companies such as COSCO Shipyard Group and Jiangsu-based Mingde Heavy Industry also announced similar strategies over the past two years.

In the first 11 months of 2012, China"s 1,647 shipyards reported combined profits of 23.4 billion yuan, down 37 percent year-on-year, the latest data from the China Association of the National Shipbuilding Industry (CANSI) showed.

(Beijing) – Piles of rusty steel bars and old ship parts are virtually all that"s left of a sprawling shipyard in the eastern city of Rugao, where Jiangsu Rongsheng Heavy Industries Group Co. used to employ more than 30,000 people.

Once China"s largest shipbuilder, Rongsheng is on the verge of bankruptcy. Orders have dried up and banks are refusing credit. Questions have been raised about the shipyard"s business practices, including allegations of padded order books. And Rongsheng is apparently behind on repaying some of the 20.4 billion yuan in combined debt owed to 14 banks, three trusts and three leasing firms, sources told Caixin.

“The shipbuilding business is cyclical because it is affected by international trade and shipping demand,” said Sean Wang, CFO of China Rongsheng Heavy Industries Group, one of mainland China’s largest shipbuilders. His firm has been more successful than most, emerging as the largest non state-owned shipbuilding company in terms of total order book, measured by deadweight tonnage (DWT), in mainland China today.

China Rongsheng’s story spans its entry into shipbuilding six years ago, its expansion into heavy machinery and finally listing in Hong Kong last year. The Jiangsu-based heavy industry group has become China’s second largest shipbuilder after state-owned Guangzhou Shipyard International. “China Rongsheng is a product of the growth of China’s economy and it is the only country where we are able to become a major player in the heavy industry sector globally,” Wang explained.

In order to counter the shipbuilding business cycle, China Rongsheng also began focusing on its engineering machinery business line in 2010, which now plays an important role in the company’s growth. It started building small and mid-sized excavators for construction and mining, a segment that had a compound annual growth of more than 20% during the past ten years. Wang expects this rate to continue for at least the next five years. Moreover, the excavator market in China is highly fragmented and has no clear leader leaving plenty of scope for the ambitious firm. China Rongsheng’s engineering machinery business unit may still be small but it could rival its shipbuilding business in size in a few years time, said Wang.

For its engine manufacturing business, China Rongsheng works with two international diesel engine technology providers under a technology licensing agreement. For now, China Rongsheng only builds low and medium-speed diesel engines, but it is in the process of entering the high-speed diesel engine market for light and heavy trucks as well as the agricultural sector. Wang is also looking to move into the import substitute market for ship engines in China. “We want to capture China’s shipbuilding industry engine demand because many Chinese shipyards currently import engines from Korea and Japan,” he said.

Because most of China Rongsheng’s shipbuilding and offshore engineering business units are conducted in US dollars, listing in Hong Kong was a strategic decision by Wang to take advantage of the non-deliverable forward market — the scope of which is limited for a local Chinese company located in the mainland. “Today’s CFO needs to be a business decision maker as well as an accounting and finance professional,” he concluded.

Rongsheng return: Ex-Chinese shipbuilder Jiangsu Rongsheng Heavy Industries is apparently making a comeback. The Nantong-based yard was once China’s largest privately owned shipyard but the debt-laden yard exited the shipbuilding business in 2014 following the global financial crash. But this week it inked a letter of intent for 10 bulker newbuildings with Greek shipowner George Economou’s Cardiff Marine. Sources said that Rongsheng’s chief executive David Luan has been rehired to restart Rongsheng.