麦肯锡中远ProposalBuilding the worlds leading ship文档格式.docx

1、COSCO Ship Repair GroupProposal, version 1July, 2001The disclaimer appears in the footer. This text will not print.Memorandum toMr. Shi ChongMr. Li DongmeiCOSCO ship repair groupThank you for the discussion we had on the challenges and opportunities facing COSCO Ship Repair Group. Mckinsey & Company

2、 would be delighted to help you define the growth strategy that would build COSCO ship repair group into the global leader.Mckinsey & Company is the leading management consulting firm in the world. We have deep expertise in helping companies develop successful growth strategies throughout the world.

3、 We also are the undisputed leader in management consulting in China, with unrivalled depth of senior resources and multiyear proven impact of helping Chinese companies transform.We work with Chinese leaders, such as CIMC, or also Legend, China Merchants. Finally we have a deep understanding of the

4、shipping and ship building industry, including serving global leaders such as P&O and Daewoo. Thus we understand your customers, competitors and key factors for success.This proposal is divided into six sections:1） Context and objectives2） Deliverables of our collaboration3） Proposed project approac

5、h4） Working arrangements5） Financial arrangement6） Mckinsey qualificationsThis memorandum, the attached horizontal exhibits, the financial contract and the confidentiality agreement form together the formal paperwork that will govern our collaboration.Obviously, this proposal is based only on a shor

6、t interaction with you. We would be delighted to revise or amend it after we have reviewed it together. 1. CONTEXT AND OBJECTIVESCOSCO Ship Repair strong starting baseIn the course of its overall restructuring, COSCO Group has integrated its different shipyards into an integrated “COSCO shipyard gro

7、up” focused on ship repair. The COSCO Shipyard Group （CSG） has a strong position in China, where it is a leader in ship repair with 15% market share. It also has strong engineering capabilities that can be leveraged for further growth.It covers strategic geographic positions in China （Dalian, Nanton

8、g, Guangzhou）, close to the largest shipping traffic centers of China. These core businesses are facing different starting situations and challenges :Nantong, a joint venture with Hong Kong, is very successful, with 45 Mio RMB profit on 450 mio RMB turnover, and has strong capabilities in ship repai

9、r and major overhauls for bulk, oil and cargo ships. At the same time, it has very limited potential for growth due to capacity and geographic limitation.Dalian, again a JV with Hong Kong, is also doing well, with a leading position（300 mio RMB turnover and currently no profit） in North China for dr

10、y bulk and cargo ship region. Its potential for increased capacity is large. However, skills are not as developed as in Nantong. You are exploring a JV with Singapore to increase growth.Guangzhou, , is the smallest yard. It currently generates about 150 mio RMB revenues . It clearly is small versus

11、the potential in South China.In addition to this strong starting position, CSG believes that being the leader in China, it has substantial structural advantages it could leverage: China has a low labor cost base and shipping in and out of China should further grow, thus increasing the revenue of shi

12、p repair （Exhibit 1）. Challenges aheadHowever, at the same time, CSG is facing many challenges:Currently, the business is mostly focused on low value added labor intensive activities, which could be threatened in the future by lower cost countries such as Vietnam, or Pakistan. In addition, CSG is ne

13、ither organized, nor has the skills yet to move to more value added activities such as system overhauls , or machine rebuilds.Overcapacity in the Chinese shipbuilding and ship repair industry is huge, with over 1000 yards competing for the same low value jobs. Even being the leader, CSG is still rel

14、atively small and needs to define whether it should shape the industry restructuring.The industry is highly capital intensive and earns only low return on capital. CSG needs to figure out how to maximize return on capital to reach world leaders levelsCSG is already doing the large majority of its re

15、venue with foreign ships. However, it is still a small player, on a worldwide basis. While attractive at first glance, it is not clear where and how can value be created from being a world player.CSG has only been recently formed. At this moment, the different shipyards are still operating as independent entities, with their separate P&L. CSG needs to define what the integrated strategy should be and the organization to deliver this strategy.You have high aspiration to grow CSG to a world player. At the same time, you need to address these challen