A new skipper at the helm
Chinese owners steer yachting firms into new waters as industry grows
Working with Chinese colleagues after one company has bought another is a valuable experience for both sides even if there are noticeable differences between the two, says Lamberto Tacoli.
“Our Chinese partners are very smart,” says the chairman and CEO of the Italian luxury yacht maker CRN SpA. They are “very respectful, very hard workers” who realize that what the company sells its customers is extreme luxury that you cannot afford unless you are a multibillionaire, he says.
In 2012, China’s largest bulldozer maker, Shandong Heavy Industry Group, bought 75 percent of Ferretti Group, CRN’s parent company, for 178 million euros ($228 million).
Advice and help from Chinese partners has allowed Ferretti to sell more than 50 yachts in China. Last month CRN signed a letter of intent with a Chinese customer to make a 68-meter yacht that will be the largest CRN has delivered to China and one of the largest yachts in the country.
Shandong Heavy Industry’s acquisition of Ferretti is an example of an emerging trend of Chinese firms buying or investing in established Western yacht makers to grab a share in the country’s young but rapidly growing yacht market.
Last year Dalian Wanda Group Corp Ltd of China bought a 91.8 percent majority stake in the UK’s Sunseeker for 320 million pounds ($495 million).
Also, the Chinese conglomerate Sundiro Holding Co invested in the Italian shipyard Sanlorenzo, aiming to set up a joint venture to make yachts of between 10 meters and 20 meters in the island province of Hainan.
In such deals, the Chinese partners are keen to keep the branding and key production of the yachts Western because these are considered attractive to the Chinese.
Stewart McIntyre, managing director of Sunseeker, says that under Chinese ownership his business will remain the respected British brand it has always been. “We fly the DNA of Sunseeker and the DNA of Sunseeker is British.”
Tacoli says the acquisition of Ferretti has not shifted production of yachts to China. Ferretti was founded in 1968 and entered China by opening a sales office in Shanghai in 2006, when China’s luxury yacht market barely existed, let alone was known to Western yachtmakers.
Tacoli says: “We wanted to control the activities step by step. So in 2006 we opened our office in Shanghai managed by three people, one Italian and two Chinese.”
To establish its brand, Ferretti sponsored and attended Chinese boat shows, including the Shanghai Boat Show and Hainan Rendez-Vous. Through such investment, Ferretti has consistently sold two or three yachts a year in China over the past few years.
Following Ferretti’s success in Shanghai, it decided to open an Asia-Pacific office in Hong Kong and is now enlarging its Shanghai office.
Luca Boldrini, sales and marketing director of CRN, says Shandong Heavy Industry Group’s acquisition has helped his team find answers to many of the questions it had about the Chinese market. CRN has incorporated more popular Chinese elements in design, such as karaoke and mahjong rooms, while still relying on the brand’s signature Italian design.
Tacoli says he has realized Chinese yachting culture differs from the European one in that it is used more for entertaining business partners than for providing leisure for the family.
While it is hard for business people everywhere to separate business pursuits and private pursuits, Chinese yacht owners are more apt to use their vessel socially to show off their wealth, he says.
In China, people spend money to show they have money, he says, but that culture will change in five to 10 years when more yachts in China are being used for family holidays.
One possibility he sees for Ferretti to grow in China is to start a new production line there to build entry-level yachts for the Chinese market, while keeping luxury yacht production in Italy.
Sunseeker is looking at a similar idea. A Chinese plant would make yachts of 17 meters or smaller, McIntyre says.
Manufacturing in England would continue to supply the global market. Sunseeker makes about 200 boats a year and can double that, he says, but if demand from China is to exceed that, it makes sense to make yachts there too.
Manufacturing in China would reduce prices because import tax will no longer apply, and it would also increase the speed of making and delivering the boats to customers, he says.