Boston, MA 10/16/2014 (wallstreetpr) – It is the turn of Carnival Corporation (NYSE:CCL) to take advantage of the available opportunities in Chinese cruise industry. By the end of the year 2020, the transport ministry in China predicts that the cruise industry grow to witness 4.5 million passengers. Therefore, it felt the need to have a joint venture in China like most of the American companies do rather than entering independently.
It was due to the political climate and business conditions that most of the companies preferred to align with a domestic company or the State-owned company in China.
Joint Venture
Carnival Corporation (NYSE:CCL) was probing the potentiality of a ship-building joint venture in China, and it found a suitable partner in Chinese State-owned company, China State Shipbuilding Corporation, besides Fincantieri from Italy. It said that the joint venture would allow building of the first world-class cruise ship in China.
Traditionally, cruise operators preferred to have the most advanced ships for the markets of the U.S. and Europe and send older ships to the developing countries. However, given the size of the market and surging growth, no one can afford to ignore China. It was the second largest economy in the world. Therefore, Carnival Corporation (NYSE:CCL) cannot treat the market as before.
Carnival’s Growth Projection
In 2012, Asian cruise market witnessed a total of 1.3 million passengers based on the Asian Cruise Association data. The Association predicted last year that it would nearly triple to 3.8 million passengers by the year 2020. It included 1.6 million from China.
The projection was in contrast to the transport ministry of China, which estimates 4.5 million passengers in the same period. If China was highly optimistic, Carnival projected a still more optimistic picture. Carnival Corporation (NYSE:CCL) sees the potential to grow to seven million passengers in the same period. Alternatively, it expects China to be fifth in the global market as far as the cruise industry was concerned.
Carnival Corporation (NYSE:CCL) indicated that China wanted to transform itself in to a big cruise market in the world. It included infrastructure investments apart from establishing a strong cruise presence locally.
