logo
#

Latest news with #HHI

Why is China losing its shipbuilding dominance: Trump or global slowdown?
Why is China losing its shipbuilding dominance: Trump or global slowdown?

Business Standard

time7 days ago

  • Business
  • Business Standard

Why is China losing its shipbuilding dominance: Trump or global slowdown?

The longstanding dominance of China in the global shipbuilding industry has weakened sharply in the first half of 2025. Latest industry data, as cited by the South China Morning Post, shows that Chinese shipyards — which traditionally account for the largest share of new ship orders globally — have recorded a steep fall in new business this year. According to Clarksons Research, new ship orders for Chinese shipyards plunged 68 per cent year-on-year to 26.3 million deadweight tonnes (dwt) in the first six months of 2025. This marks one of the steepest declines in recent years. In contrast, South Korea — world's second-largest shipbuilding nation — saw a relatively modest drop of 7 per cent over the same period, receiving new orders totalling 14.2 million dwt, the report said. Who is replacing China's shipbuilding dominance? Although South Korea also experienced a drop in orders, it narrowed the gap to China in relative terms. China's share of global new ship orders in the first half of 2025 fell from 75 per cent to 56 per cent year-on-year. South Korea's share rose from 14 per cent to 30 per cent over the same period. Although China still remains the largest volume player, this represents a substantial rebalancing of the global shipbuilding market. Experts included in the report suggested that Korean and Japanese shipyards have benefited from shipowners' decisions to build boats outside of China based on increased geopolitical tension. South Korea's major players, including Hyundai Heavy Industries (HHI) and Hanwha Ocean, have also increased their presence in the US market. Both companies have been bidding for contracts related to the maintenance and overhaul of US Navy vessels since 2024. In April this year, HHI signed an agreement to share technology and cooperate with Huntington Ingalls Industries, the largest military shipbuilder in the US. Are Trump's tariffs hurting Chinese shipyards? The report pointed to a combination of factors behind China's falling market share. One of the clearest drivers has been the series of measures by the Donald Trump-led US administration targeting China's shipbuilding sector. In April this year, the US imposed steep fees on ships owned, operated or built by Chinese companies entering American ports. Additional tariffs on Chinese-made equipment used in shipbuilding, including ship-to-shore cranes, have further strained Chinese shipyards' competitiveness. While these restrictions have met with resistance from industry groups, market data suggests they are beginning to have an effect. Beyond ship construction, Chinese shipyards are also losing ground in repair and maintenance services. Data shows China's share of repair work for very large crude carriers (VLCCs) fell from an average of 70 per cent between 2021 and 2024 to around 50 per cent in the first half of 2025. Is weakening global demand affecting Chinese shipbuilding? The US restrictions alone do not fully explain the shift. Analysts cited by South China Morning Post note that a cyclical decline in global shipbuilding demand is also impacting Chinese yards disproportionately. During the demand boom between 2021 and 2024, excess orders typically spilled over from capacity-limited Korean and Japanese yards to China's more flexible shipbuilders. However, with global new orders slowing in 2025, that spillover effect has diminished. Shipowners reportedly prefer Korean or Japanese-built vessels as they fetch higher resale values on the second-hand market, further compounding the downturn for Chinese shipyards. Despite the current slump, larger Chinese shipyards are expected to remain resilient. However, the outlook is less certain for smaller, private yards with weaker order books.

India Inc's profit boom has a name: It's called the Herfindahl Index
India Inc's profit boom has a name: It's called the Herfindahl Index

Business Standard

time7 days ago

  • Business
  • Business Standard

India Inc's profit boom has a name: It's called the Herfindahl Index

India's top companies are posting record profits. But beneath the surface of this post-pandemic boom lies a structural shift that's going unnoticed by most. It's not just operational efficiency or global tailwinds driving earnings — it's consolidation. And the most telling evidence of this power shift comes from a single number: the Herfindahl-Hirschman Index (HHI). What is the Herfindahl-Hirschman Index (HHI)? The Herfindahl-Hirschman Index, or HHI, is a widely used measure of market concentration. In simple terms, this is a way to quantify how competitive (or monopolistic) an industry is. Albert O Hirschman developed an early version of the index in the 1940s, which was later refined and popularised by Orris C Herfindahl. The tool is now commonly used by antitrust regulators, including the US Department of Justice and the Federal Trade Commission, to assess whether a market has become too dominated by a few large players. How does the HHI work? The HHI measures market concentration by squaring the market share of each firm in a sector and summing the result. The higher the score, the more control is concentrated in the hands of fewer players. The score break-up is: Score below 1,500 indicates a competitive market. Score between 1,500 and 2,500 is moderately concentrated. Score above 2,500 means the market is highly concentrated, often raising red flags for regulators. The maximum score is 10,000, which occurs when a single firm controls 100 per cent of the market (a pure monopoly). Conclusion: The more concentrated the market, the higher the HHI, and the greater the pricing power firms typically hold. Why does this index matter? A rising HHI suggests fewer firms are controlling more of the market. When one or two firms dominate, they can set prices, influence supply chains, and shape consumer options, often at the expense of competition and innovation. What's happening in India? In FY25, the average HHI across eight major Indian sectors jumped to 2,532, crossing into the 'highly concentrated' zone for the first time in over a decade. That's up from 1,980 in FY15 and 2,167 in FY20. It's not just a statistic — it's a story of India Inc's growing pricing power, shrinking competition, and rising profit margins. Which industries have the highest HHI in India? Sectors such as telecom, steel, aviation, and cement now show HHI levels at or near historic highs. In five of the eight sectors studied, including telecom, paints, steel, and two-wheelers, market concentration has reached thresholds considered 'high' by the index. Only paints and two-wheelers have seen a modest decline in concentration over the past decade. This shift has big implications. As competition fades, dominant players gain the power to raise prices and protect margins. From FY20 to FY25, while net sales for India Inc grew at a compound annual growth rate (CAGR) of 12.7 per cent, profits surged much faster: profit before tax grew at 25 per cent, and after tax at 25.7 per cent. Even in the last two years, as revenue growth slowed to 7.6 per cent, profits grew 19 per cent annually. Motilal Oswal analysts project that companies in their coverage universe will post 5 per cent sales growth, but 12 per cent Ebitda growth and 14 per cent net profit growth in FY26. Where does India Inc's power come from? As previously reported by Business Standard, the rising HHI scores are not accidental. A combination of regulatory reforms and economic shocks has steadily tilted the playing field toward bigger players, who are generally better equipped to survive and even benefit from major economic and policy challenges. That consolidation is now reflected in the numbers. For example, in aviation, just three carriers control the bulk of domestic capacity. In telecom, only two private players dominate the subscriber share. In steel and cement, a few conglomerates have gained ground through acquisitions and capacity expansion. What does it mean for Indian consumers? This leads to situations where consumers are grappling with higher prices but limited choices. This is because, as firms find themselves in concentrated markets, they can push through price increases without fear of losing market share, a phenomenon already seen with domestic flight ticket prices. In a few recent cases, the aviation ministry had to step in to control airfares. But what happens in markets that go unnoticed? This trend also explains the widening gap between profit and revenue growth, a phenomenon largely observed in FY25 and expected to persist in FY26. The bottom line is India's corporate landscape is changing. Market share is consolidating, competition is thinning, and profits are climbing. While this may look like a success story for Indian industries on the surface, the Herfindahl Index is a reminder that concentrated power can distort markets, limit consumer choice, and eventually invite regulatory scrutiny.

Why is China losing its shipbuilding dominance? Trump or global slowdown?
Why is China losing its shipbuilding dominance? Trump or global slowdown?

Business Standard

time7 days ago

  • Business
  • Business Standard

Why is China losing its shipbuilding dominance? Trump or global slowdown?

The longstanding dominance of China in the global shipbuilding industry has weakened sharply in the first half of 2025. Latest industry data, as cited by the South China Morning Post, shows that Chinese shipyards — which traditionally account for the largest share of new ship orders globally — have recorded a steep fall in new business this year. According to Clarksons Research, new ship orders for Chinese shipyards plunged 68 per cent year-on-year to 26.3 million deadweight tonnes (dwt) in the first six months of 2025. This marks one of the steepest declines in recent years. In contrast, South Korea — world's second-largest shipbuilding nation — saw a relatively modest drop of 7 per cent over the same period, receiving new orders totalling 14.2 million dwt, the report said. Who is replacing China's shipbuilding dominance? Although South Korea also experienced a drop in orders, it narrowed the gap to China in relative terms. China's share of global new ship orders in the first half of 2025 fell from 75 per cent to 56 per cent year-on-year. South Korea's share rose from 14 per cent to 30 per cent over the same period. Although China still remains the largest volume player, this represents a substantial rebalancing of the global shipbuilding market. Experts included in the report suggested that Korean and Japanese shipyards have benefited from shipowners' decisions to build boats outside of China based on increased geopolitical tension. South Korea's major players, including Hyundai Heavy Industries (HHI) and Hanwha Ocean, have also increased their presence in the US market. Both companies have been bidding for contracts related to the maintenance and overhaul of US Navy vessels since 2024. In April this year, HHI signed an agreement to share technology and cooperate with Huntington Ingalls Industries, the largest military shipbuilder in the US. Are Trump's tariffs hurting Chinese shipyards? The report pointed to a combination of factors behind China's falling market share. One of the clearest drivers has been the series of measures by the Donald Trump-led US administration targeting China's shipbuilding sector. In April this year, the US imposed steep fees on ships owned, operated or built by Chinese companies entering American ports. Additional tariffs on Chinese-made equipment used in shipbuilding, including ship-to-shore cranes, have further strained Chinese shipyards' competitiveness. While these restrictions have met with resistance from industry groups, market data suggests they are beginning to have an effect. Beyond ship construction, Chinese shipyards are also losing ground in repair and maintenance services. Data shows China's share of repair work for very large crude carriers (VLCCs) fell from an average of 70 per cent between 2021 and 2024 to around 50 per cent in the first half of 2025. Is weakening global demand affecting Chinese shipbuilding? The US restrictions alone do not fully explain the shift. Analysts cited by South China Morning Post note that a cyclical decline in global shipbuilding demand is also impacting Chinese yards disproportionately. During the demand boom between 2021 and 2024, excess orders typically spilled over from capacity-limited Korean and Japanese yards to China's more flexible shipbuilders. However, with global new orders slowing in 2025, that spillover effect has diminished. Shipowners reportedly prefer Korean or Japanese-built vessels as they fetch higher resale values on the second-hand market, further compounding the downturn for Chinese shipyards. Despite the current slump, larger Chinese shipyards are expected to remain resilient. However, the outlook is less certain for smaller, private yards with weaker order books. What lies ahead for global shipbuilding? Chinese-built vessels still comprise 23 per cent of the total global fleet currently in service, Clarksons' data shows. But with US restrictions intensifying and South Korea deepening shipbuilding cooperation with Washington, industry analysts suggest that China's shipyards may face prolonged pressure.

Corporate margins, earnings soar as mkt concentration rises across sectors
Corporate margins, earnings soar as mkt concentration rises across sectors

Business Standard

time16-07-2025

  • Business
  • Business Standard

Corporate margins, earnings soar as mkt concentration rises across sectors

The market concentration as measured by Herfindahl-Hirschman Index (HHI) was higher in six out of eight sectors in FY25 compared to that in FY15 and FY20 premium Mumbai Listen to This Article Corporate India has exhibited strong pricing power in recent years, resulting in a steady rise in profit margins across many sectors despite fluctuations in raw material and energy prices, and a persistent slowdown in revenue growth. The margin expansion has been most pronounced in the post-pandemic period. This improvement in corporate margins has coincided with a steady rise in market concentration in key domestic sectors, as larger players have captured greater market share, either through mergers and acquisitions or through organic growth. Market concentration, as measured by the Herfindahl-Hirschman Index (HHI), was higher in six of eight sectors in FY25

Philippine naval upgrade more spectacle than strategy
Philippine naval upgrade more spectacle than strategy

AllAfrica

time17-06-2025

  • Politics
  • AllAfrica

Philippine naval upgrade more spectacle than strategy

As tensions rise with China in the South China Sea, the Philippines may be advancing a naval modernization strategy centered more on signaling and alignment than actual deterrence. This month, USNI News reported that the Philippine Navy (PN) launched its first Rajah Solayman-class offshore patrol vessel (OPV) in Ulsan, South Korea, marking a significant step in its maritime modernization. Named after a 16th-century Filipino hero, BRP Rajah Solayman (PS20) is the first of six ships procured from South Korea's Hyundai Heavy Industries (HHI) under a 2022 contract aimed at reinforcing the country's overstretched fleet. Initially designed as a 1,500-ton vessel, the OPV was later expanded to 2,400 tons under HHI's HDP-2200+ design, which enhanced its range and endurance for extended patrols. Armed with an Oto Melara 76-millimeter main gun and Aselsan SMASH 30-millimeter remote-controlled weapon systems, the ship is built for maritime security operations amid increasing tensions in the South China Sea. Philippine military officials have emphasized that the six-vessel program will replace aging patrol assets, supplement forces in critical maritime areas and enhance the country's sovereignty defense posture. The ship's 5,500 nautical mile range and 30-day endurance ensure prolonged operational capability. While production is slated to conclude by 2028, South Korea is already positioning itself for further defense contracts in the 2030s, including potential frigate and corvette programs under the Philippines' next phase of military modernization. Yet, beneath these moves is a crucial strategic question: Are they aimed at real deterrence, or are they crafted more for show, particularly to China? In line with the Philippines' de facto 'assertive transparency' strategy to name and shame China's assertive actions in the South China Sea and galvanize international support for its cause, Manila requires high-profile, high-visibility assets, such as frigates, OPVs, and light combat aircraft, to effectively respond to China's gray zone challenges. However, the survivability of such assets in the event of escalating tensions with China may be questionable. As seen in Taiwan's case, high-visibility platforms, such as surface warships and fighter jets, are vulnerable to rapid destruction in a Chinese first strike, prompting substantial investment in asymmetric warfare assets, including submarines. But with Philippine submarine procurement still in the early planning phase, the Brahmos missile system has become the centerpiece of the country's asymmetric deterrent posture. However, as Ashley Tellis notes in a July 2024 article for The Print, without supporting Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance (C4ISR) infrastructure for dynamic targeting, these missiles will remain largely symbolic. Tellis says those deficiencies mean the missiles will be useful only against fixed, nearby targets, such as the contested Scarborough Shoal, and are not credible tools for flexible or long-range deterrence. Furthermore, China could easily repair or replace damaged or destroyed warships, given its massive shipbuilding capabilities. Underscoring this capability, a 2025 US Congressional Research Service (CRS) report states that China's shipbuilding capacity is 230 times that of the US. If the Philippines truly recognized the urgency of building asymmetric capabilities, it might be willing to make more difficult defense trade-offs. For example, Felix Chang mentions in a November 2019 Foreign Policy Research Institute (FPRI) article that Vietnam, a similarly challenged maritime neighbor, acquired six Kilo-class submarines from Russia in 2009 at a cost of US$2 billion, equivalent to half its defense budget. While Vietnam's proximity to China and history of conflict justify such investment, the Philippines has not demonstrated the same urgency or strategic commitment to undersea deterrence. Yet, such stealth investments appear to be mismatched with the Philippines' budget constraints and its current emphasis on diplomatic visibility through multilateral defense engagement. In line with this, the Philippines has been signing military access agreements with 'like-minded' countries, such as Japan, Australia and New Zealand, with the possible goal of maintaining a high tempo of high-publicity multinational naval exercises in the South China Sea. 'We have noted a marked decrease in the illegal and coercive actions of the PLA each time there is a multilateral or bilateral maritime cooperative activity… No PLA Navy, Coast Guard, or maritime militia noted within proximity,' says Philippine Navy spokesperson Admiral Roy Trinidad, as quoted by Defense Post in a February 2025 article. Still, when push comes to shove in the South China Sea, it is unclear whether the Philippines' 'alternative' defense partners will come to its aid. Even the US, its most capable and only treaty partner, has more than once prioritized its broader strategic interests over Philippine concerns during past incidents with China. At the political level, multinational naval exercises may also serve as part of Philippine President Ferdinand Marcos Jr's broader effort to claim legitimacy among wealthy liberal democracies, thereby securing economic assistance and political support despite the historical controversies associated with the Marcos dynasty. Moreover, since the US has indefinitely stationed the Typhon and NMESIS missile systems in the Philippines, nominally for training purposes, it provides Marcos Jr with a strategic buffer that reinforces his domestic position. Typhon is armed with Tomahawk cruise missiles that can reach mainland China from the Philippines, while NMESIS is an anti-ship system that could hit Chinese warships transiting the Bashi Channel. The 2022 US National Defense Strategy prioritizes Taiwan and the broader Indo-Pacific region, while accepting a higher risk in theaters such as Europe. This focus gives Marcos Jr room to rely on US support to enhance his security credentials and consolidate domestic legitimacy. According to a February 2025 Social Weather Station (SWS) survey, 78% of Philippine respondents support political candidates who assert sovereign rights against China's aggressive actions in the South China Sea. With such strong public sentiment, Marcos Jr could frame his administration as resolute on sovereignty, even with limited military muscle. However, the Philippines does not face any existential threat on the level of Taiwan, Ukraine, Israel and South Korea, as no country since World War II has threatened its destruction. The country's primary threats are internal, including poverty, political instability, insurgency and terrorism. While China has been a troublesome neighbor for the Philippines, it does not seek the destruction of the Philippine state, making China more of a challenge to be managed than a threat to be dealt with. Even if Philippine policymakers understand that nuance, and Marcos Jr courts Chinese investment while under rising economic pressure, his previous hardline stance and the Philippines' longstanding dependency on US politico-military ties may prevent anything substantial from happening in the near term. But as long as Philippine defense planning is shaped by external validation rather than internal resolve, its military buildup risks remaining more symbolic than strategic.

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store