Luxury yachtmakers have long struggled to gain the attention of China’s wealthy thanks to a combination of government regulations, high cost of ownership, storage, and maintenance, and a nascent yachting culture. However, this situation may be slowly changing as companies hone in on the market and engage in robust marketing to potential Chinese buyers, often using Hong Kong as a gateway.
In a recent Bloomberg article reporting from the Monaco Yacht Show, it was apparent that yacht dealers are salivating over the possibility of a China yacht boom, but obstacles still stand in the way. According to the article, shipbuilders believe China has the most potential as a future market thanks to a boom in high-net-worth individuals, but these individuals are cautious about buying. In the words of one yacht dealer:
“We’re on the cusp of the Chinese infiltrating the market,” said Peter Thompson, a partner at brokerage Worth Avenue Yachts, who was showing yachts to clients at the Monaco show. “It’s in its infancy. There is an enormous amount of money but the guys who made it are very careful with it.”
He cited an example of a Macau casino owner in his eighties who is “hesitating about buying a boat.”
“I think if he was American he would just go for it,” Thompson said.
The fact that the industry is in such infancy is part of the reason for the caution, says Singapore yacht owner Adrian Lee Chye Cheng, 33, of the Asia market. In his view,
“The yacht industry is very peculiar; it’s something you have to learn, understand and feel,” Lee said. “You wouldn’t go out and buy a yacht if you don’t know enough. I’ve seen people buy a Ferrari on impulse or go to an air show and like a plane and just buy it. A yacht takes more time.”
However, the China market is showing signs of speeding up, with Hong Kong leading the mainland. According to a study by Camper & Nicholsons, 11 percent of super-yachts worldwide went to Asia in 2012, compared with just 3 percent in 2011. Hong Kong and mainland China took up a large chunk of this percentage, comprising 9 percent of total deliveries. More orders came from wealthy Hong Kongers than mainlanders, as Hong Kong came in seventh and the mainland eighth for the total number of purchases.
As a result, some yacht companies are using Hong Kong as their door to the mainland. On October 29, Italian yachtmaker Sanlorenzo announced the establishment of Sanlorenzo China Holding Limited in Hong Kong, which plans to distribute not only to Hong Kong, but also to the mainland, Macau, and Taiwan. The company embarked on a joint venture with Sundiro Holding in China to set up the office, and according to CEO Traugott Kaminski, the company has created recent models “specially designed according to the requests of their Chinese customers, we have the best products for the Great China market needs.”
On the mainland, Dalian Wanda is leading the charge in building up the yacht industry, first with an acquisition of famous British yachtmaker Sunseeker this spring, and later, plans to build up the infrastructure that will make storage and ownership logistically easier. In order to combat concerns about access to mooring that are currently hindering sales, the company announced in September that it will be building a yacht marina and trading center in Qingdao to accompany the massive “movie metropolis” it will be constructing there.
Pursuit of a stronger Chinese cultural inclination toward yachting is also underway. With the development of beach resorts across China, especially in Hainan, companies are hoping to encourage more of a “fun in the sun” vacation culture among both China’s affluent and rising middle class. In order to aggressively promote yacht culture among China’s wealthy, events like the Hainan Rendezvous, created by China Rendez-Vous Ltd., lure HNWIs to the tropical island to show off the benefits of the lavish yacht-owning lifestyle.
If things go as planned for these companies, China could make up one third of total yachting demand by 2020, with expected total sales of around 100,000 units by then. However, with the government’s current anti-extravagance campaign, some wealthy may be holding off purchasing one of the most significant displays of wealth one can buy.