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Shanghai plans to spend $740 million on cruise ship park

SHANGHAI, July 26 (Reuters) - A Shanghai district government plans to spend about 5 billion yuan ($739.97 million) to develop a cruise ship industrial park to house foreign firms that it hopes will help build China's first luxury passenger vessels, a local official said.

China's government has earmarked cruise shipbuilding as a major objective in its "Made in China 2025" programme to upgrade its manufacturing and support jobs at its shipyards, as domestic demand for cruise trips increases 30 percent a year.

Firms who set up shop in the new zone could expect financing support from banks and recently established government funds, Lei Shuguang, director on the administrative committee of Shanghai Baoshan Industrial Zone, told Reuters on Wednesday.

In May, Baoshan district signed a letter of intent with China State Shipbuilding Corporation (CSSC), the country's largest shipbuilder, and Italy's Fincantieri to develop a hub to support a supply chain network for cruise shipbuilding.

This came after CSSC signed a $1.5 billion deal with Fincantieri and U.S. cruise operator Carnival to build China's first luxury cruise ships in a move that has rattled European shipyards that currently dominate the industry.

Lei said the government plans to build offices and factories in the 10 square kilometre site in the north of Shanghai, and is applying for it to be designated a zone where firms will receive favourable customs treatment.

"We expect that in the next 5-10 years we will invest about 5 billion yuan in this park," he said.

"The supplier network will decide whether (China's) cruise shipbuilding industry will succeed."

He added that Fincantieri had given them its catalogue of suppliers which they planned to reach out to in coming months.

Some European shipbuilders fear China could come to dominate the cruise ship market, much as it has done in cargo ships over recent decades. Still, learning how to build cruise ships will not be easy for the Chinese, given the complex web of suppliers needed to furnish items from luxury carpets to soundproofing, industry experts say. ($1 = 6.7570 Chinese yuan renminbi) (Reporting by Brenda Goh; Editing by Himani Sarkar)