Shi Jing

China’s yachting in­dus­try is boom­ing on the back of rapidly ris­ing do­mes­tic de­mand, as re­ports from Shang­hai

China Daily (Canada) - - BUSINESS -

Un­like the time when China’s yacht in­dus­try was still emerg­ing and largely de­pen­dent on over­seas brands, 2014 has seen more do­mes­tic brands catch­ing up with world lead­ers in the field.

A 22-me­ter boat from Shang­hai Choisi Yacht sold for 17 mil­lion yuan ($2.7 mil­lion) and Shen­zhen­based Speedo Ma­rine, which has taken part in the China (Shang­hai) In­ter­na­tional Boat Show for 10 years, sold three boats dur­ing the show for a to­tal of 8 mil­lion yuan.

Xi­a­men Blue Ocean Yachts De­vel­op­ment re­ceived en­quiries from three deal­ers and 10 cus­tomers in the wake of the in­dus­try trend­set­ter dur­ing the boat show that ended on April 13.

Es­tab­lished in 2005, Ori­en­tal Recre­ational Prod­ucts (Shang­hai) has also par­tic­i­pated in the Shang­hai boat show for 10 years.

The com­pany ex­hib­ited three boats at this year’s show, and sold two of them. It also re­ceived dozens of or­ders of in­tent and more than 300 en­quiries.

Ac­cord­ing to in­dus­try stud­ies, the yachting in­dus­try grows rapidly when per capita GDP reaches $5,000, and China has al­ready reached this thresh­old — and in some places even achieved per capita GDP of $10,000.

Wang Zhiyue, chair­man of Ori­en­tal Recre­ational Prod­ucts, said he is sure the coun­try’s in­dus­try will reach a time of rapid growth within the next decade.

Of course, over­seas com­pa­nies are loath to lose their share of the boom­ing Chi­nese mar­ket, so they also ex­hib­ited their prod­ucts at the boat show, which is usu­ally the first step­ping stone to en­ter­ing the Chi­nese mar­ket.

Five com­pa­nies, led by busi­ness pro­mo­tion agency New Zealand Trade and En­ter­prise, joined the boat show as a group this year.

John Cochrane, NZTE trade com­mis­sioner in Guangzhou, said the com­pa­nies want to in­tro­duce world-class prod­ucts and ser­vices en masse to Chi­nese con­sumers, and reap the re­wards of New Zealand’s long ex­per­tise in mar­itime crafts.

How­ever, the path cho­sen most fre­quently by com­pa­nies is co­op­er­a­tion be­tween do­mes­tic out­fits and over­seas brands, es­pe­cially fi­nan­cial links.

Wang Jian­lin, chair­man of Dalian Wanda Group and China’s rich­est man ac­cord­ing to Forbes mag­a­zine and the Hu­run Re­port, bought the pri­vately owned Bri­tish lux­ury yacht man­u­fac­turer Sunseeker In­ter­na­tional last year.

De­spite the slow­ing growth in the in­dus­try in the past two years, Fer­retti SpA, the renowned Ital­ian lux­ury yacht maker, man­aged to achieve growth of be­tween 20 and 30 per­cent in the Chi­nese mar­ket in 2012 and 2013.

Chen Gang, chief rep­re­sen­ta­tive of Fer­retti’s Shang­hai Rep­re­sen­ta­tive Of­fice, said the com­pany has huge brand name recog­ni­tion among Chi­nese con­sumers, de­spite prices as high as 40 mil­lion yuan for a 24-me­ter yacht.

Fer­retti’s ad­justed strat­egy, which places greater em­pha­sis on the Chi­nese mar­ket, has helped the com­pany achieve fast growth in China, and it es­tab­lished a for­eign-held oper­a­tion and a joint ven­ture in Zhuhai, Guang­dong prov­ince, last year.

The Ital­ian out­fit was one of the first over­seas yacht mak­ers to seek fi­nan­cial co­op­er­a­tion with Chi­nese com­pa­nies.

In 2012, the Chi­nese equip­ment man­u­fac­turer We­ichai Hold­ing Group Co Ltd based in Shan­dong prov­ince bought a 75 per­cent stake in Fer­retti, which could en­cour­age other for­eign com­pa­nies to fol­low suit in their at­tempts to en­ter the Chi­nese mar­ket.

“In the wake of the global fi­nan­cial cri­sis, many over­seas com­pa­nies have been seek­ing co­op­er­a­tion with Chi­nese com­pa­nies. Be­cause many of these ven­tures have been suc­cess­ful, we will def­i­nitely see more ac­tiv­ity of this kind in the fu­ture,” said Chen.

Chen’s view was echoed by Ste­fan Carls­son, pres­i­dent of Volvo Penta Europe, who said Chi­nese con­sumers ac­knowl­edge the pres­tige and pro­fes­sion­al­ism of the Swe­den-based man­u­fac­turer of ma­rine power sys­tems, and it’s joint ven­ture with Dongfeng Mo­tor Corp Ltd has helped fur­ther the com­pany’s “foot­print” in the Chi­nese mar­ket.

Al­though sales rose slightly in 2011 and 2012, the growth slowed in 2013. Now, in­dus­try ex­perts pre­dict that next year sales of large or medium-sized yachts will re­main on a par with 2013. Com­bined with the con­tin­u­ous growth of smaller boats and sail­ing boats, the growth rate of yacht sales will reach 30 per­cent next year, ac­cord­ing to Yang Xinfa, deputy sec­re­tary-gen­eral of China As­so­ci­a­tion of the Na­tional Ship­build­ing In­dus­try.

“China’s yachting in­dus­try has un­der­gone struc­tural changes dur­ing the past few years,” the deputy sec­re­tary-gen­eral said.

“On the one hand, sales of large and medium-sized yachts have re­mained slug­gish be­cause of strict govern­ment poli­cies and the coun­try’s eco­nomic slow­down. On the other, de­mand from own­ers of small and medium-sized en­ter­prises and the mid­dle class has grown rapidly as people be­gin to bet­ter un­der­stand the yachting cul­ture,” Yang added.

As the in­dus­try be­comes more widely ac­knowl­edged, the trend of fi­nan­cial co­op­er­a­tion be­tween China and the in­ter­na­tional yacht in­dus­try will deepen and be­come more de­tailed this year, as com­pa­nies in­ves­ti­gate the man­u­fac­ture of parts and other equip­ment, Yang said.

The four-day Shang­hai boat show, the largest of its type in Asia, and the long­est-run­ning in­dus­try show in China, at­tracted 550 ex­hi­bi­tion­ists from 20 coun­tries and re­gions this year, along with record vis­i­tor num­bers of more than 40,000.

That can largely be at­trib­uted to the show’s lo­ca­tion at the Wa­ter Ex­hi­bi­tion Cen­ter to the north of the Shang­hai’s iconic Gar­den Bridge, and the 48,000-squareme­ter in­door arena of the Shang­hai World Expo Ex­hi­bi­tion & Con­ven­tion Cen­ter, ac­cord­ing to Gao Haiyan, di­rec­tor of the high-end busi­ness depart­ment of the ex­hi­bi­tion or­ga­nizer, Shang­hai UBM Si­no­expo In­ter­na­tional Ex­hi­bi­tion Co.

Gao said he has no­ticed a sub­tle change in cus­tomer phi­los­o­phy. While in the past, more at­ten­tion was paid to price — the higher, the bet­ter — nowa­days cus­tomers care more about de­tails such as en­gine speed and per­for­mance, and the fa­cil­i­ties on the boat.

“It’s a sce­nario we’ve been wait­ing for 19 years. We’re pleased to see that yacht buy­ers nowa­days see the hobby as part of a healthy life­style, rather than a lux­ury that will show off their so­cial sta­tus,” he said. Con­tact the writer at shi­jing@ chi­nadaily.com.cn

PHO­TOS PRO­VIDED TO CHINA DAILY

Five hun­dred and fifty ex­hibitors from 20 coun­tries and re­gions at­tend the four-day Shang­hai boat show in mid-April.

XU CHENG / FOR CHINA DAILY

Lux­ury ves­sels on dis­play at the 19th China (Shang­hai) In­ter­na­tional Boat Show. The growth rate of China’s yacht in­dus­try is pre­dicted to be 30 per­cent in 2014.

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