China’s Yachting Industry is Getting Cruise Speed
Even though there’s little tradition for yachting in China, there is a market growing not only in terms of purchasing, but in manufacturing also.
As China’s economy grow, so it does the number of millionaires and billionaires and it has increased to levels compared only to the US and stepping over those of Europe. Yachting is one of the luxury industries reserved for just a little that can afford it, and therefore it’s a good indicator of how much of the global wealth an economy has. In fact, yachting only stands for 7 billion market share out of the 1.044 billion of the global luxury industry reported for 2015 by Bain & Co.
Why should people expect growth in China as a leader in this industry also? China is earning its reputation for the production of super-yachts and mega-yachts, whose production and exports have been steadily growing over the years.
In the meantime Europe is still the leading region for superyacht building, clearly leaded by Italy, China’s yacht manufacturers in Guandong and Shandong show the potential to increase their share in the global production scenario.
The world leading China-based superyacht manufacturer Pride Mega Yachts, launched at the prestigious Monaco Yacht Show at the end of September 2015, their new 88.8m superyacht called Illusion proving the innovation and luxury behind China’s yacht industry.
But while on the production side China is showing significant growth, China’s super rich are slowly beginning to turn their eyes to sailing back home, so it could take a while for yachting to truly take off in China as a luxury past time.
What can the yachting industry expect in China? While it is considered actually the world’s largest economy with over 1 million millionaires and 67,000 citizens who can be classified in the ultra-wealthy bracket with assets of over $US16 million or more, only 0.3 percent of China’s rich own a yacht. Chinese culture nurtures the tendency to avoid the sun and the foreign concept of down time, which means that the yachting trend as a leisure will have it difficult to start.
“The Chinese are not used to the idea of time away from it all, especially not the European style. They tend to take a very different approach to yacht ownership – it’s a business tool, not a leisure item”, said in an interview Colin Dawson, chairman of the Asia-Pacific Superyacht Association.
There are also other aspects that are braking China’s yacht industry to reach full speed:
- The luxury good import tax of 43%. Even if the government is promoting Haitao and Free Trade Zones to reduce this for other luxury goods, it’s not possible for yachts.
- The lack of experienced crews. This means Chinese superyacht owners not only need to relocate European crewmembers, but also obtain work visas.
- The fact that China simply has few key marinas and also lacks the infrastructure for supporting yachts. In fact, when China’s ultra-wealthy do buy and keep yachts, it’s usually maintained in Europe, the US and elsewhere in Asia making it more costly.
Why is China Becoming a Driving Force in Yachting? As Chinese people are travelling more and more into Europe and US, their interest of using yachts for leisure is gaining traction. According to Boat international, China ranks eighth in the top ten super-yacht building nations. Having in mind that they’re young in the industry, it still pales in comparison to countries like Italy which has a much historical tradition both in design and manufacturing.
Many companies are taking positions as they’re seeing how the figures are growing steadily. London-based Burgess Yachts expanded earlier this year to open a division in Singapore, anticipating the take-off of the Chinese market. However, the interest in yachting is there. The Shanghai-based research firm Hurun found in a recent survey that more than half of the Chinese with a worth of over $1.5 million or more have expressed an interest in owning a yacht.
Yachting companies have to understand in their approach to China, that they have to consider to take a long-term approach to developing the market in Asia and don’t expect to gain immediate traction. At the same time, they must be realistic about the investment in time and resources required for success. Additionally, they must survey the market and adjust their operations to the culture and mentality of the Chinese millionaires who are putting their eyes on the yachts, the ones that are now, as well as the new ones, each time younger, that will appear in the following years.
