The boat in­dus­try mak­ing big waves

China Daily (Canada) - - BUSINESS - By SHI JING in Shang­hai shi­jing@chi­nadaily.com.cn

The out­look for the Chi­nese yacht in­dus­try is one of mixed op­ti­mism and con­cern.

In re­sponse to the growth of the Chi­nese mar­ket, the big Euro­pean boat builders, such as Sunseeker In­ter­na­tional Ltd and Princess Yachts In­ter­na­tional Plc, have es­tab­lished op­er­a­tions in the coun­try, where they see greater op­por­tu­ni­ties than in their home mar­kets which are plagued by eco­nomic un­cer­tainty.

China’s yacht in­dus­try was worth 4.15 bil­lion yuan ($665 mil­lion) by the end of last year and 2.1 bil­lion yuan came from sale of lux­ury ves­sels worth at least 2 mil­lion yuan, ac­cord­ing to the 2014 Yacht Re­port re­leased by the For­tune Char­ac­ter Re­search Cen­ter, an in­dus­try in­for­ma­tion provider.

In 2013, the com­bined value of im­ported yachts rose 14 per­cent year-on-year, ac­com­pa­nied by a 31 per­cent in­crease in vol­ume.

Start­ing in 2014, the growth rate of China’s yacht in­dus­try is pre­dicted to be 30 per­cent, while the mar­ket value is ex­pected to ex­ceed 15 bil­lion yuan in the next five years.

How­ever, the in­dus­try is very much de­pen­dent on the ex­port of fin­ished boats and also parts. As the China Cruise & Yacht In­dus­try As­so­ci­a­tion has dis­cov­ered, the coun­try im­ported about 180,000 yachts be­tween 2011 and 2012, at a cost of $360 mil­lion, a re­duc­tion from 2012-13 when 290,000 yachts were im­ported at a to­tal value of $586 mil­lion.

Zhangzhou Yi­hong Yacht In­dus­trial Co Ltd builds SeaStella lux­ury yachts as an orig­i­nal equip­ment man­u­fac­turer, which means they im­port the parts and then as­sem­ble the boats in China.

The Hu­nan-based, Shen­zhen-listed Sun­bird Yacht Co Ltd, China’s first and now only com­pany with its own re­search and de­vel­op­ment cen­ter, has set up de­sign cen­ters in the United States and Italy, and is hop­ing to at­tract world-class de­sign­ers to work for it.

In 2011, Shang­hai Best­way Ma­rine En­gi­neer­ing De­sign Co first en­tered the yacht in­dus­try. In 2013, the com­pany, which also builds ships and works on ma­rine projects, sold its first yacht, mak­ing a profit of 6.2 mil­lion yuan.

That suc­cess is largely at­trib­uted to Shang­hai Best­way’s 2010 joint ven­ture with the Ital­ian yacht group FIPA (Foun­da­tion for In­tel­li­gent Phys­i­cal Agents). The JV al­lowed the Chi­nese com­pany to gain ac­cess to FIPA’s tech­nol­ogy and the po­si­tion of sole agent in China for FIPA’s Maiora range.

Some for­eign yacht mak­ers have tried to gain deeper mar­ket pen­e­tra­tion by fo­cus­ing on spe­cial­ized sec­tors.

For ex­am­ple, take the five com­pa­nies led by the busi­ness or­ga­ni­za­tion New Zealand Trade and En­ter­prise — Fu­sion Elec­tron­ics, Hella Ma­rine, Mar­inco BEP Prod­ucts, Nav­ico and Ve­tus Maxwell.

Rather than sim­ply build boats, these com­pa­nies spe­cial­ize in the pro­duc­tion of elec­tri­cal ma­rine de­vices, elec­tron­ics, en­ter­tain­ment sys­tems and light­ing. Few Chi­nese com­pa­nies have paid much at­ten­tion to this niche mar­ket, and even some of the Chi­nese Navy’s mar­itime pa­trol boats de­pend on the propul­sion units made by New Zealand’s Hamil­tonJet.

Be­cause Volvo Penta only man­u­fac­tures ma­rine prod­ucts in Swe­den and France, Gior­gio Paris, the com­pany’s pres­i­dent of re­gional emerg­ing mar­kets and the Asi­aPa­cific, said it will take time for Chi­nese brands to catch up with their Western coun­ter­parts.

“There is a sort of learn­ing curve for ev­ery­body, in­clud­ing Chi­nese man­u­fac­tur­ers. It’s a mat­ter of time,” he said.

“Chi­nese man­u­fac­tur­ers are clos­ing the gap, so we will see them more and more. It’s in the Chi­nese DNA to learn very quickly. They are con­stantly im­prov­ing,” he said.

Ste­fan Carls­son, pres­i­dent of Volvo Penta Europe, said: “This is re­lated to the Chi­nese buy­ing habit. Some­times when people buy cer­tain lux­ury items, they re­ally want the key brands. Rather than tak­ing it as a com­ment on the com­pe­tence of Chi­nese man­u­fac­tur­ers, it’s more about brand po­si­tion­ing.”

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