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Japan, dethroned as the world’s biggest shipbuilding nation over the past decade, is promoting mergers among domestic shipyards to help compete with China and South Korea.

The Maritime Bureau, which oversees the industry, is surveying firms to help find potential combinations, Director General Norifumi Idee said Thursday in an interview in Tokyo. He declined to name any possible tieups.

“Japanese yards need to invest in research and development,” he said. “By merging operations, it will be easier to do that.”

Japanese yards need to grow in size and develop new technologies as they have lost market share to larger rivals overseas, he said. China has become the world’s biggest shipbuilding nation, a title previously held for decades by Japan, on the back of government investment and low wages.

The stronger yen has also prompted merger talks among Japanese shipbuilders, as the currency makes their vessels more expensive. Most Japanese-made ships are sold in dollars. JFE Holdings Inc., the nation’s second-largest steelmaker, and IHI Corp. are holding talks on combining their shipbuilding operations. The deal could be expanded to include other yards, Shinjiro Mishima, head of JFE’s shipyard unit, said in March.

Japanese shipyards had a backlog of 71.3 million deadweight tons of orders as of May 1, compared with 143.4 million for South Korea and 184.7 million for China, shipbroker Clarkson PLC said.

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