South Korea’s shipbuilders are bracing for a new era of fiercer competition from China after the two biggest Beijing-backed shipbuilding groups announced plans to merge, reported the Financial Times.

The consolidation of China State Shipbuilding Corp. and China Shipbuilding Industry Corp., agreed last month, will create a behemoth to rival Hyundai Heavy Industries, the world’s biggest shipbuilder by orders.

Ka Sam-hyun, chief executive of Hyundai Heavy Industries, said that the new Chinese group would be a more competitive rival, with “synergies” that will drive better technological development and lower costs. “We must be better than the Chinese yards in [engineering] techniques and quality. We must try to raise and improve our quality, our technology and better workmanship,” Ka told the Financial Times in Seoul.

China’s enormous shipbuilding industry — and its access to cheap labor, steel and state subsidies — has challenged the South Korean giants for well over a decade. Defaults and restructuring by Rongsheng Heavy Industries in 2014 came to symbolize the troubles of the Chinese industry as global shipping markets soured. Reluctant to see indebted shipbuilders go under, Beijing began promoting mergers among them.