By Laurie Burkitt
BEIJING--Carnival Corp. (CCL) is in talks with state-owned China
Merchants Group to form two joint ventures in China that will build
cruising ports and ships and expand the nascent industry in a
booming tourism market.
The two companies plan to form separate ventures, one focusing
on shipbuilding and the other on developing new ports and
destinations in and around China, Carnival said in a statement.
The companies will launch China's first domestic cruise brand
targeting the Chinese market, owning and operating their own cruise
ships, the statement said. It added that the ship venture would
explore sourcing new ships made in China.
The two expect to strike the deal in the next few months,
Carnival said.
Talks come as the cruise industry is heating up in China, where
the travel industry is booming and cruise companies are looking to
build a strong new market outside the U.S. and Europe.
Rivals like Royal Caribbean are also gearing up for expansion.
Royal Caribbean said last year that it would bring its newest ship
to China. Executives said in a recent interview that they are
overhauling ship entertainment and boosting marketing to attract
Chinese guests.
Carnival says it hopes to gain strength by joining with China
Merchants, which is a major conglomerate with businesses in
transportation, financial investments and property development.
Carnival says it already has a 55% to 60% share of the tiny but
fast-growing Chinese market, and executives expect it to grow to
about half the size of the U.S. market--the industry's largest--by
2020. About 700,000 Chinese took cruises last year, compared with
more than 10 million in the U.S., according to Carnival.
The company signed last year a memorandum of understanding with
China State Shipbuilding Corp. to convert one of its yards to build
cruise ships in partnership with Italy's Fincantieri SpA, one of
the world's biggest cruise-ship builders.
In 2011, Carnival was operating a single cruise ship in China,
but it is about to add a fourth cruiser to its China fleet, which
operates through its Costa Cruises and Princess Cruises lines.
Those ships--which once plied the U.S. West Coast, the Caribbean
and Northern Europe--now sail mostly between Shanghai and ports in
Japan and South Korea.
--Costas Paris in London contributed to this article.
Write to Laurie Burkitt at laurie.burkitt@wsj.com
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