Rough seas forecast for China's fast-growing cruise industry

Thu Aug 15, 2013 12:37am EDT
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By Brian Yap

HONG KONG (Reuters) - China has steamed into the cruise industry with new terminals - along with big plans for more facilities and a luxury ship - to bring more foreign tourists ashore and capitalize on domestic travelers wanting to sail the high seas.

But industry experts see trouble for the government-led initiative costing billions of dollars, including construction of lavish facilities that are losing money, lack of proper planning, high port fees for ships and inefficient cruise facilities with long delays to clear customs.

"The government, the local authorities, need to support the cruise lines in exercising international practice here," said Liu Zinan, the chairman in Shanghai of Florida-based cruise operator Royal Caribbean International.

Since cruise tourism was introduced in China less than 10 years ago, five terminals have been built at an estimated cost of more than 4.5 billion yuan ($735 million). Three are under construction and another six are in the pipeline.

The investment is paying dividends in terms of tourist numbers, with port calls by international cruise lines rising 8.8 percent last year to about 285, according to the China Cruise & Yacht Industry Association.

But a construction spree has torpedoed profits, said Zheng Wei-hang, the association's vice president.

"All five established cruise terminals have suffered losses mainly as a result of excessive investment by municipal authorities in building landmark structures that have yielded insufficient returns," he told Reuters.

The Chinese government made development of the cruise sector a priority in 2011 as part of a five-year economic plan.   Continued...

A man walks in front of a cruise ship docked in Shanghai Port International Cruise Terminal, opposite the Pudong financial area, in Shanghai August 11, 2013. REUTERS/Aly Song