JINGJIANG is proud to point out that it faces the Yangtze River from three directions near where Asia's longest waterway meets the ocean, and that geography explains a lot about the city's development, first as a fishing port and now as a shipbuilding and marine services center.

Today Jingjiang is one of China's biggest shipbuilders and the world's biggest manufacturer of anchors and offshore mooring chains.

About 4 percent of the world's ships and 13 percent of China's ships start life in this Jiangsu province city, which runs 52 kilometers along the delta coastline.

Among the local shipbuilding giants are New Century, New Yangzijiang and Jiangsu East Heavy Industry. This year, Jingjiang will turn out an estimated 10 million tons of ships.

But the shipbuilding industry globally and in China is on the skids as world trade drops, demand shrinks and cargo capacity begins to idle.

"We're casting our sights out further by developing offshore marine services," said Tao Anxiang, president and founder of Asian Star Anchor Chain, also known as AsAc.

Already, the company exports 60 percent of its annual output of more than 300,000 tons of anchor and mooring chains. It now ranks first in the world in that segment, with a 65 percent market share.

"Where there are ships, there are AsAc chains," Tao said proudly.

The 54-year-old Jingjiang-native has watched sweeping economic changes transform his hometown in a rags-to-riches story that mirrors his own life.

Make a start

In 1981, he and a handful of other blacksmiths worked out of a dilapidated old village house, making boat chains.

"There were no facilities available, and this was the only place we could find that was free," he recalled.

In 1994, riding the coattails of China's economic reforms and opening-up policies, Tao got his first bank loan. He used the 7 million yuan (US$1.1million) to start his first production line.

"The domestic market was quite limited at the time, and we were forced to seek overseas markets," Tao said.

In 1996, he boarded on the plane to Singapore, an Asian marine industry hub. He flew alone because he couldn't afford more than one round-trip ticket. He was nervous. It was his first trip abroad.

When he landed in Singapore, he felt lost. Not knowing quite where to start, he turned to the Yellow Pages in his hotel room and dialed the numbers of every company related to shipbuilding, asking if they needed anchor chains.

"It was a humbling experience," Tao said. "I faxed dozens of my company's brochures out but got only three replies."

But one was all he needed to make a start. One of the companies placed a US$800,000 order.

"It's hard to describe how exhilarated I felt," he said. "I think my sincerity came across and they decided to give me the chance."

AsAc went from strength to strength. In the late 1990s, when Jingjiang was transforming itself into a major shipbuilding center, the company was poised to take advantage of the opportunities presented.

Shipbuilding has long been a highly competitive industry. For a long time, European, Korean and Japanese shipbuilders dominated the world. In China, the city of Dalian in northeastern China, Shanghai's Waigaoqiao Port and Chongming Island, and Zhejiang Province are all major shipyard competitors.

"To build what these other places don't build is the way out for Jingjiang," said He Qiu, deputy director of the Jingjiang Commission of Economy and Informatization.

Jingjiang has focused on the construction of ships of less than 100,000 tons, such as engineering-services ships and smaller container carriers.

Since the 2008 global economic crisis, a pall has hung over China's shipbuilding industry.

Conditions worsened as the debt crisis in Europe and a slow recovery in the US shrink global trade. Ship orders are drying up in a market coping with overcapacity.

It normally takes three to four years to build a large seagoing vessel. Industry officials are predicting lean times ahead, possibly until 2014.

New orders in the Chinese shipbuilding industry in the first two months of this year plunged 15 percent, and profits at 57 of the nation's biggest shipyard fell 26 percent on average. A third of all shipyards were operating in the red last year, according to the China Association of National Shipbuilding Industry. Some are closing down.

Industry downturn

"The global economy had led international trade to shrink dramatically, which has led to a downturn in the shipping industry," said He. "Shipbuilding is thus affected greatly."

He said overtonnage, overcapacity and over-investment in the Chinese shipbuilding industry even before the economic crisis have exacerbated the situation.

"China's production capacity can meet the entire world demand," He added, "but orders are no more than 40 percent."

Jingjiang's yards are facing tough time. Mergers and acquisitions among shipbuilders are likely, and the industry is grappling to adjust its strategies to the new realities of world trade.

New Century closed some of its production lines to cut costs and is shifting its focus to more advanced technology, higher value ships.

New Yangzijiang has lowered and allowed buyers more latitude on payment and delivery deadlines. The shipyard is also trying to develop ships that travel faster on less fuel.

"No one knows when this downturn will end," He said. "It may take at least three to five years."

Marine services companies like AsAc are feeling the pinch.

"I have started to see a decreasing demand for ship anchors and chains," Tao said.

In the past, AsAc derived about 80 percent of its income from anchors and chains, but that ratio is dropping, he said.

However, Tao is undaunted and has weathered downturns before. He began shifting his focus to marine engineering in 2004, investing 30 million yuan to set up a research team to develop offshore mooring chains.

In 2008, when the global financial crisis struck, he stopped his anchor production line and began upgrading the technology at his factory.

"We speeded up development of offshore mooring chains because we thought the future there looked brighter," he said. "We were affected by the crisis, but not as much as you might expect because marine services as a segment has been stronger."

Tao remains convinced that the company's future is out in the deep sea.

In 2009, AsAc won the bid to supply chains to HYSY 981, China National Offshore Oil Corp's first deepwater, semi-submersible drilling rig in the South China Sea.

In May, Cnooc drilled its first well from a platform equipped with the AsAc's R5-84mm mooring chain, which keeps the rig anchored.

"My biggest dream now is to become a leading supplier to global marine engineering in five to eight years," Tao said.

Shanghai Daily: What have you achieved during the past decade?

Tao: We've grown to become the world's largest anchor and mooring chains manufacturer. We completed an industrial transformation that took us into the deep marine.

SD: What's the biggest mistake most businesses in your sector make in looking at the future?

Tao: I think it was a little late for us to go into marine engineering, but I should say we were still wise to do it when we did.

SD: What would you most like to see in China's development planning?

Tao: I'm glad to see marine engineering has been listed in China's 12th Five-Year Plan. The country is going to invest 250 billion yuan to 300 billion yuan in the industry, which will yield a huge opportunity for AsAc. This is exactly what I want to see, and it is happening now.

SD: What's your biggest concern?

Tao: Tough competition. Shipbuilding is not as strong as several years ago. But, as for the future of the marine engineering, I'm quite optimistic.