Sail­ing into choppy wa­ters

The yacht in­dus­try en­ters a more tem­pes­tu­ous time as the econ­omy slows down and cre­ates a strong head wind, Xie Yu re­ports from Sanya in­Hainan prov­ince

China Daily (Canada) - - BUSINESS -

Wealthy people in China are de­vel­op­ing a pas­sion for sail­ing, but the weak­en­ing macroe­con­omy com­bined with the ef­fects of the fru­gal­ity and anti-cor­rup­tion drive are cre­at­ing a head­wind that is pre­vent­ing the in­dus­try from pro­gress­ing fast.

A to­tal of 800 mil­lion yuan ($129 mil­lion) of or­der con­tracts were signed dur­ing last week’s China Ren­dezvous, an ex­hi­bi­tion fo­cused on a high­end yacht pro­mo­tion held in Sanya, in south­ern China’s is­land prov­ince ofHainan.

“The num­ber was a lit­tle down from the 1 bil­lion yuan or­der book in 2013. Ac­tu­ally, the or­der value has not changed dra­mat­i­cally in the past five years that we have held China Ren­dezvous,” said Lily Chen, an in­for­ma­tion of­fi­cer at the ex­hi­bi­tion.

Sanya Visun Royal Yacht Club, one of the na­tion’s big­gest yacht clubs, told China Daily that it has­morethan 700 mem­bers. About 95 per­cent are in­di­vid­u­als, while 5 per­cent are com­pany mem­bers.

“Mem­ber­ship re­cruit­ment ex­panded most quickly in 2010, when Hainan was picked by the na­tional author­ity as an ‘in­ter­na­tional tourist is­land’, and plateaued in the past two years be­cause of the slug­gish eco­nomic out­look,” the com­pany said in a state­ment.

Al­though the yacht busi­ness in China has not grown as rapidly as some in­dus­try in­sid­ers ex­pected, it still looks to be in good shape, in Sanya at least.

Of­fi­cial sta­tis­tics show Sanya as a des­ti­na­tion now at­tracts the high­est num­ber of people in China from the in­ter­na­tional yachting com­mu­nity. In early 2013, there were 219 berthing yachts of which 142 were reg­is­tered off­shore. The city now has more than 800 berths at three ma­ture mari­nas.

“More people are buy­ing yachts for per­sonal amuse­ment, while the per­cent­age of those pur­chas­ing ves­sels to con­duct busi­ness and im­prove re­la­tion­ships with gov­ern­ments is fall­ing, mainly be­cause of the drive by the cen­tral govern­ment to elim­i­nate cor­rup­tion and em­pha­size aus­ter­ity,” said a sales­per­son of a well-known in­ter­na­tional yacht brand.

A Shang­hai fi­nancier sur­named Qin or­dered a 25 mil­lion yuan Sundiro yacht dur­ing the Sanya ex­hi­bi­tion.

“I like yachting. It frees me from work pres­sure. I go yachting oc­ca­sion­ally ev­ery year, off Aus­tralia, the Mal­dives or Mau­ri­tius. It is more con­ve­nient if I own my yacht in China,” Qin said.

Mas­simo Perotti, pres­i­dent of Ital­ian yacht brand Sanlorenzo, said: “I have con­fi­dence in the China mar­ket. In terms of its ma­tu­rity and in­fra­struc­ture, Sanya maybe scores 50

46

54

6,000

780 (out of 100) but, in terms po­ten­tial, it is 100.”

Sanlorenzo was rated the sec­ond-largest yacht builder in 2014 based on its global or­der book, ac­cord­ing to US mag­a­zine Show­boat In­ter­na­tional. The com­pany made a ma­jor step for­ward in ex­plor­ing the Chi­nese mar­ket last year by set­ting up a joint ven­ture with China’s mo­tor­cy­cle man­u­fac­turer Sundiro Hold­ing Co Ltd. It aims to build yachts from 36 feet to 66 feet (about 10 to 20 me­ters) in­Hainan.

“I have de­vel­oped many new mar­kets in the past, in­clud­ing Mex­ico, Brazil and Ja­pan. All the new mar­kets start be­cause hav­ing a boat is a sta­tus sym­bol. People are buy­ing the big yacht to show their power and wealth,” Perotti said.

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There is also an­other pos­si­ble drive, found for ex­am­ple in Italy, where yachting is re­garded as a sports and life­style pas­time en­joyed by not only the rich but also the mass pub­lic, he added.

So far in China, the high cost means only the wealthy can en­joy it.

Visun Royal Yacht Club charges 168,000 yuanto 25.8 mil­lionyuanin­mem­ber­shipfees, which pro­vide mem­bers with a yacht berth, char­ter­ing, train­ing and a buy­ing ser­vice.

Perotti said he is still op­ti­mistic about the out­look for sales. His com­pany aims to sell 500 mil­lion eu­ros ($600 mil­lion) worth of boats in China in the next 10 years.

“Maybe it will still take a lit­tle time for the mar­ket to boom, but not long. And you have to be here be­fore it se­ri­ously takes off,” he said.

GDP grew in Sanya by 10 per­cent to 37.3 bil­lion yuan year-on-year in 2013, faster than the na­tional aver­age. In­vest­ment in the real es­tate sec­tor surged by 27 per­cent, hit­ting 30 bil­lion yuan. Lo­cal of­fi­cials said hous­ing va­cancy rates would ex­ceed 70 per­cent dur­ing the off-peak sea­son for tourism, so the city needs an­other growth en­gine.

Xia Shenge, di­rec­tor of a lo­cal eco­nomic de­vel­op­ment zone, said it will take time to see how much yachting will ben­e­fit Sanya’s econ­omy.

“Cur­rently, growth is mainly driven by the con­struc­tion of yacht mari­nas. But we need a whole in­dus­trial chain, in­clud­ing yacht man­u­fac­tur­ing, main­te­nance, in­sur­ance and train­ing to sup­port the econ­omy sus­tain­ably,” he said.

As for the fu­ture of the boat­ing in­dus­try, most lo­cal people could not care less.

“You have all sorts of means to profit from the sea if you live by it. Also, Sanya is the most fa­mous beach hol­i­day des­ti­na­tion in China. Any small busi­ness is enough to feed the fam­ily,” said 47-yearold Su Ming­dong, owner of a small car­leas­ing com­pany.

“The only prob­lem is hous­ing prices. They have risen too much. I sup­port the govern­ment de­vel­op­ing the yacht busi­ness,” he added. Con­tact the writer at xieyu@chi­nadaily.com.cn

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