Five Things You Missed About Cruising #2

Made In China

The Asian market is considered central to long-term growth in the cruise industry.  Though much of the emphasis has been on movement of ships and construction of ports in recent years, the industry has been slowly shifting ships and learning how to operate in Asia nearly 20 years now.  Each line has maneuvered to curry favor with passengers and governments alike.  Now Carnival Cruise Lines has taken the step of partnering through their long-time ship builder Fincantieri to construct new ships in Shanghai which will then be used in the Asian markets.  

It is standard practice in China for manufacturing and other international companies to partner with a locally controlled counterpart.  In this way China builds expertise and guards against concerns of external influence.  The cruise industry has largely avoided having to partner extensively given that its ships visit ports and are transient in much the same way airlines are.  However the Chinese government has expressed a desire to develop a native cruise industry and a first step in that direction must be learning how to build such ships.  Accordingly the move by Carnival and Fincantieri represents a move to forge strong ties with the Chinese government.
In this case the partnership begins with Fincantieri partnering with the China State Shipbuilding Corp. (CSSC,) which services the countries usual mandate to have local ownership while Carnival provides a guarantee of a buyer for the ships produced.  The only thing missing is a credible Chinese cruise line to operate its own ships after CSSC learns the finer points of the process.  However with the promise to operate the ships in the Asian market you can fairly describe Carnival as a proxy for the usual locally control entity.  The arrangement surely gives Carnival a political edge over it's rivals in Asia as well.

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