Carnival building two Vista-class ships in China

Buhdy Bok (left), president of Costa Group Asia, and Carnival Corp. CEO Arnold Donald at the China Cruise and Yacht Industry Association conference, after Donald announced an agreement to build ships in China. Photo Credit: Arnie Weissmann

Carnival Corp. has signed a memorandum of understanding to build two Vista-class cruise ships in China intended for use by a Chinese cruise brand.

The ships have been discussed in general terms as part of an earlier disclosure of a shipbuilding joint venture between Carnival, China State Shipbuilding Corp. and Italian firm Fincantieri.

The agreement was announced at the 11th annual China Cruise Shipping and International Cruise Expo in Tianjin, China.

The memorandum specifies that the first of the two ships would be delivered in 2022. There is also an option to build two more Vista-class ships. The first Vista-class ship, the Carnival Vista, entered service last May.

Carnival said that the agreement is “non-binding.” If the ships are built, it would be a groundbreaking development, marking the first time that sophisticated cruise ships are built in China for the Chinese domestic market.

A Carnival joint venture in China would operate the new ships as part of plans to launch the first multi-ship domestic cruise brand in China.

If the joint venture is finalized, in all likelihood older ships from Carnival Corp. brands would sail for the new brand in advance of the 2022 new build, said Roger Frizzell, chief communications officer for Carnival Corp.

Other partners in the operating joint venture include China State Shipbuilding Corp. and the China Investment Capital Corp.

“Being able to offer cruises on China-built cruise ships represents a new opportunity for us to generate excitement and demand for cruising amongst a broader segment of the Chinese vacation market,” said Alan Buckelew, Carnival Corp.’s global chief operations officer.

Separately, Carnival and its Chinese partners announced that the Chinese central government has granted approval for the cruise joint venture to incorporate in Hong Kong.

Carnival to create Chinese brand in joint venture

Carnival Corp. said it is moving forward with plans to form a joint venture with China State Shipbuilding Corp. that would operate a new domestic brand in China.

In an announcement timed to the visit of the Chinese premier to London, Carnival announced that China Investment Corp. will also be a partner in the venture. 

The partners formalized the venture at a signing ceremony held today at the Mansion House in London with British Prime Minister David Cameron and Chinese President Xi Jinping in attendance.

"This cruising joint venture is a significant step forward for the cruise industry in China and a tremendous opportunity for us to work together with [China State Shipbuilding Corp. and China Investment Corp.] to grow awareness, interest and demand for cruise vacations amongest domestic Chinese travelers," said Alan Buckelew, global chief operations officer for Carnival Corp. & plc.

In announcing the venture, Carnival and its partners did not name it or say when its first ship is expected to be ready for sailing. The announcement described the new brand as "the first world-class, multi-ship domestic cruise brand in the Chinese market."

The parties said the addition of China Investment Corp. to the venture was a sign of China's "commitment to developing a strong domestic cruise presence and growing demand for cruising as a key driver of the expanding Chinese tourism market."

One of the largest sovereign wealth management funds in the world, China Investment Corp. has $740 billion of assets under management, Carnival said

Carnival Corp. in preliminary deal with Chinese group

Carnival Corp. signed a memorandum of understanding with China Merchants Group (CMG) to pursue a possible domestic Chinese cruise line and to develop cruise ports.

Carnival said it formalized a strategic partnership with CMG at a signing event at the Hilton Shenzhen Shekou.

CMG is already developing a flagship port called Prince Bay Cruise Terminal in Shekou. Carnival said the partners would work to have cruise ships sail from this flagship port, while also developing other cruise destinations across China and northern Asia.

In addition, Carnival and CMG will explore a joint venture that would own and operate its own cruise ships as part of the first domestic Chinese cruise line targeted to the Chinese market. The joint venture would explore the possibility of sourcing new ships that are designed and built in China, along with the possibility of acquiring existing cruise ships.

Carnival last year signed a separate memo with China State Shipbuilding Corp (CSSC). to design and build a cruise ship in China in partnership with Fincantieri. That memo also contemplated the exploration of other possible joint venture opportunities with CSSC, including the potential to form a domestic cruise company, port development, talent development and training as well as supply chain and logistics.

It isn’t clear how that agreement would be affected by the one announced with CMG.

“The MOU we signed today signifies a great opportunity to take the next step in the future of Chinese cruising, while addressing some key needs for both the cruise industry and its passengers in China,” said Alan Buckelew, COO of Carnival Corp.

CMG, China’s oldest state enterprise founded in 1872, focuses on transportation, infrastructure, financial services and real estate development.

Carnival moves toward shipbuilding in China

By Tom Stieghorst

Carnival Corp. said it signed a memorandum of understanding that could lead to a cruise ship being built in China.

The memo is an agreement between Carnival Corp. and the China State Shipbuilding Corp. (CSSC) to explore the formation of a joint venture.

The goal of the venture would be to construct a modern cruise ship in China together.

China State Shipbuilding Corp. is the largest shipbuilder in China, according to a Carnival Corp. announcement.

The Italian shipbuilder Fincantieri could partner in the joint venture should it be formed, Carnival Corp. said.

There is no firm agreement to build yet, nor is it clear who would own or operate any ship that results from the joint effort.

Carnival Corp. said the venture is "aimed at accelerating the development and growth of the Chinese cruise industry."

The agreement was made official at an Oct. 14 signing ceremony at the ninth China Cruise Shipping and International Cruise Expo in Tianjin.

"This really is a breakthrough day for all of us at Carnival as well as our friends at the CSSC," Carnival Corp. CEO Arnold Donald said.

Carnival Corp. said its contribution to the venture would be to use its design and shipbuilding expertise to create the "vision, definition and overall specifications" for the China-built cruise ship.

The memorandum also includes the exploration of other possible joint venture opportunities with CSSC including the potential to form a domestic cruise company, port development, talent development and training as well as supply chain and logistics, Carnival Corp. said.

No major cruise line has ever built a ship in China, although a few have been built in Japan.

A Chinese Ministry of Transport forecast estimates there will be 4.5 million cruise passengers sourced in China by 2020.

Two Carnival Corp. brands, Costa Cruises and Princess Cruises, are already selling cruises in China. Carnival said it will have 220 port calls from five brands in China in 2014.