Enjoying life on the ocean wave
Wealthy Chinese are dipping into the heady world of luxury yachts
China has become a new focus for Western luxury yacht makers after the global downturn hit Western buyers hard and emerging markets such as Russia and the Middle East are still to mature.
Karaoke bars and mahjong tables are increasingly becoming common on luxury vessels, whose makers were once content to install sunbathing decks and fine-dining tables to meet customer demand.
The yachts, priced at as much as a few hundred million dollars, are widely seen as the ultimate status symbol, after sprawling mansions, expensive cars and private jets.
The market is relatively new for China. Western brands are keen to seize the first-mover advantage as the market grows.
“The Chinese market is extremely important,” says Mohammed Al- Barwani, chairman of the Dutch yacht maker Oceanco.
“It is a fast growing market and it is getting more and more sophisticated.”
Oceanco has attended the annual Chinese yacht exhibition, Hainan Rendez-Vous, for the past four years, Al-Barwani says.
“The idea is to invest today for a market that will develop in the next four to five years.”
S ome Chine s e hav e expressed an interest in Oceanco’s yachts and have visited the company’s manufacturing site in the Netherlands, he says.
Oceanco says its has built yachts for Chinese owners living outside China but not for customers in the country.
Al- Barwani’s optimism about the Chinese market is shared by Burak Akgul, managing director of sales, marketing and design at Perini Navi, an Italian manufacturer.
Perini Navi set up a sales office in Hainan last year, managed by Enrico Zanella, an Italian who has lived in China since 1999 and who has become established in the country’s yachting industry.
“For us, finding the right person to work with was important,” Akgul says. “Enrico has worked hard with some contacts that he already had.”
Companies such as Oceanco and Perini Navi are still finding their feet in China, but the potential is immense. Figures cited by the yacht charter company YPI Asia in 2011 showed there are about 1,300 private yachts in China.
This compares with 17 million privately owned recreational boats in the US, the world’s biggest yacht market, industry publication International Boating Industry says.
Chinese companies that recognize the potential have started buying Western yacht companies or set up joint ventures. Last year the Chinese conglomerate Dalian Wanda Group bought the UK’s Sunseeker International for 320 million pounds ($525 million).
In 2012, the construction and agriculture machinery giant Shandong Heavy Industry Group bought a controlling stake in the Italian luxury yachtmaker Ferretti SpA in a deal worth $500 million.
Despite the potential size of the Chinese yacht market, the country still lacks sufficient marine infrastructure to support the industry, including marinas that host yachts, experienced yacht crews and luxury harbors that sailors could enjoy.
The most popular marinas in China are in Qingdao, Shanghai, Hong Kong and Hainan, but sailing between them would take one to two days each.
Those distances are a deterrent to sailors, so Chinese people are not exposed to the idea of being able to see many places within a short cruising time, says Peter Lurssen, chief executive of the German yacht maker Lurssen.
“It’s not the concept in the Mediterranean when you go with your boat to Nice and cruise casually over to Cannes for half an hour, then you go swimming. In the evening you go to San Tropez, which takes another two hours. The next day you go shopping in Monaco, which takes three hours.”
Were it not for the fact that China lacks marinas, and that it is difficult for foreign owners to obtain cruising permits, more Chinese would have embraced sailing, he says.
Under Chinese regulations the skippers of foreign yachts must report to authorities everywhere they berth. Some yacht owners regard that as too much hassle, Lurssen says.
Few yachts sail to China. If more did, Chinese people would see for themselves that doing so is not that complicated, he says.
Hainan has seven marinas with a total of 1,170 berths. The province’s yacht industry development plan calls for 25 more marinas with 14,200 berths to be built by 2030.
Al-Barwani acknowledges that the lack of marinas is a problem. Those in the yachtbuilding and related sectors would benefit from such investment, he says.
“Typically, hotels, yacht clubs and resort companies will find more business opportunities if the yachting industry grows.”
In addition, Al-Barwani says, China needs time to build up support sectors such as yacht maintenance, insurance and banking and finance.
Another big barrier for Western yacht exporters is an import tax of about 40 percent on yachts sold to China, he says.
One way of overcoming this problem would be to set up joint production of yachts in China, he says, adding that he thinks current demand for the vessels in the country is insufficient to make such activity sustainable for Oceanco, which makes mainly big yachts.
Lurssen calls the high yacht tax prohibitive and says it is “a way to keep foreign-built yachts out”. The secondary yacht market, which further facilitates the affordability of yachts in the West, is almost non-existent in China because Chinese customers are barred from importing a vessel that is more than a year old, Lurssen says.