Government Regulations, Dearth Of Maintenance Infrastructure, Culture Preclude Yachting Boom
Though they clearly have an interest in all the trappings of “the good life,” from private jets to tropical getaways and property around the world, China’s rich and fabulous have yet to jump into the wide world of yachting with both feet. But — as with the private aviation market in China — this is changing in spite of tough government regulations, the (even higher) cost of ownership, storage and maintenance, and a cultural aversion to fun in the sun. According to a Hurun Report survey, half of mainland Chinese worth at least US$1.5 million are interested in purchasing a yacht, and new marinas have popped up in the country in southern Hainan province up to northern Tianjin.
Anticipating a burst in domestic yacht demand in the years ahead, last year the Shandong Heavy Industry Group-Weichai Group acquired a majority of Italian yacht manufacturer Ferretti, and according to the China Cruise & Yacht Industry Association (CCYIA), China already has approximately 20 producers of superyachts. Yet, as the Italian Trade Commission recently noted, only one out of every 318 wealthy mainland Chinese is a yacht owner, compared to one in 25 in Hong Kong.
This week, the Wall Street Journal talks to Lamberto Tacoli, president of yacht builder CRN (a subsidiary of Ferretti Group) about the promise and difficulties ahead in China’s nascent yacht market:
What has kept China’s wealthy from buying yachts for personal use?
We have sold just one yacht in China, and we sold it to a Hong Kong customer. In China we need a lot of authorization, just like we are moving a military ship. It is an attack on privacy and freedom. Last year we wanted to take some potential customers in Hainan for a short trip, and we had to get the names of passengers and their passports way in advance.
The other problem is lack of services and expertise in China, like captains and chefs. The marinas are also often not in luxury locations. They have to park among fishing boats, and they are far away from shopping areas or high-end hotels.
Asians are not so keen on the seas, unlike the Mediterraneans. They like to go out with umbrellas to protect them from the sun. Culture changes will happen only step by step. Our mission is to help change the culture, and help people enjoy the sea.
As Jing Daily noted last year, there are other reasons why the yachting has yet to explode in China:
Much of this comes down to the fact that the majority of new wealth being created in the country is now not among residents of the coastal southeast, where weekend yachting would be easily accessible, but in landlocked inland areas like Shanxi province and Inner Mongolia. Though this wealth creation has been a boon for ultra-luxury automakers like Bentley and Rolls-Royce, it’s certainly more difficult to tap for yachtmakers, who are focused on courting the country’s relative “old money” in Guangdong province, Shanghai and Beijing.
Amid a much-publicized crackdown on lavish spending among well-off, well-connected government officials in 2013, and more restrained displays of ultra-wealth among more of the country’s billionaire entrepreneurs, yachtmakers like CRN should expect more of the same this year. Regardless of the stated interest of VIP guests at Hainan Rendez-Vous, it’ll likely be years before we see yacht sales in China get close to more established markets.