This past weekend, 72 yacht companies from around the world descended upon the tropical city of Sanya, Hainan to convince China’s wealthy to buy what is considered by many to be the ultimate maritime status symbol. However, in the nascent China yacht industry, one of the main goals of yacht makers at the moment is to convince China’s wealthy to do one thing: relax.
The event was the Hainan Rendez-Vous, a fair of luxury yacht, car, and private jet brands all clamoring for the attention of China’s super-rich. With both the second-highest number of billionaires and third-highest number of millionaires in the world, it’s no surprise why yacht makers are flocking to the country.
However, industry professionals are still waiting for the mainland yacht market to push off. According to Giordano Pellacani, the Asia Pacific manager of Italian yacht maker Benetti, less than 0.1 percent of those in China who could afford a yacht have purchased or even used one. Compared to about 5 percent globally, the industry sees massive room to grow in the coming years.
“We are still in the education process,” says Pellacani, whose company produces larger yachts that start at 30 meters long. Benetti’s goal in presenting in Hainan is to promote the brand in China for when the market for larger models takes off in the “next three to five years.”
Although there are some logistical challenges to owning a yacht in China at the moment, the main change needed for the industry to develop is cultural, he says. According to him, China’s “CEOs have no time to enjoy yachting” because many are in an all-work, no-play mindset, making it difficult to introduce the activity. Yacht companies are waiting for the mainland’s affluent to take after yacht-lovers in more mature economies like Hong Kong and Singapore. Delphine Lignieres, the CEO of China Rendez-Vous, the original organizer of Hainan Rendez-Vous for the previous four years of its existence, states that the strategy for yacht makers is currently “to promote the lifestyle of the boating industry on a 360-degree approach.” For Ferruccio Rossi, the CEO of Ferretti Group, another yacht maker that presented in Hainan, “We just try to get always nearer to our Chinese customers’ tastes, who are actually demonstrating a strong affection for yachting.”
China’s current anti-corruption campaign may have had a dampening effect on the market this year. This year’s event saw the number of brands exhibiting drop to 72 from last year’s 139. However, the lower number may also be attributed to controversies associated with the event itself. Last year, rumors of excessive “debauchery” surfaced on Chinese social media, and this year, a dispute arose over the copyright to the Hainan Rendez-Vous name. China Rendez-Vous, which was not associated with the event this year, states on its website that it is taking “legal action” against this year’s organizer for its use of the event name.
Pellacani believes that “the Chinese government is not against the luxury of yachting.” While tax rates on yacht ownership are in the range of 45 to 47 percent, local governments with port areas don’t want to miss becoming the next south of France, and are encouraging marina construction. “Marina construction has increased a lot,” says Lignieres. In addition to Sanya, Dalian, Qingdao, and Tianjin are also under development. China Rendez-Vous will be hosting a new event in Dalian this year called SO! Dalian, because, according to her, “Dalian should be a very strategic location for the boating industry.”
Potential yacht owners in China do face some difficulties at the moment, including complicated paperwork for traveling to other countries in the region and the challenge of finding a Chinese crew familiar with yachting.
In the current market, Chinese consumers are showing more interest in the smaller yacht models that they can command on their own, which fall in the 10- to 25-meter range. “The medium-sized yacht segment is certainly one of the most interesting for the Chinese market,” says Rossi. Over the past weekend in Hainan, his company revealed a special-edition yacht model aimed specifically at the China market named the Tai He Ban, which drew “inspiration from concepts that are deeply rooted in Chinese culture.”
One Chinese billionaire at the head of the yacht industry vanguard in China is Dalian Wanda owner Wang Jianlin, China’s current richest person. In June 2013, his company acquired British yacht maker Sunseeker, which is known for its iconic appearance in James Bond movies. In addition, Dalian Wanda is constructing a yacht marina in Qingdao as part of its massive tourist and film complex under development.
Wang is known for owning the largest yacht ever exported to China, a 33-meter long Sunseeker. For now, companies like Bennetti, which makes yachts up to 92 meters in length, are waiting for China’s wealthy to take an interest in bigger models as a culture of boating and leisure develops. “We represent the dream of the future right now,” says Pellacani.