China‘s Super Wealthy Are Set to Build and Sell ’Super Yachts’
- Posted on May 12, 2011 at 12:30pm by
Billy Hallowell
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HONG KONG (AP) — With their sleek, modern lines and polished finish, the two yachts built by Samuel Wong’s shipyard fit right in among the multimillion-dollar floating palaces moored at a tony Hong Kong yacht club.
Onboard, a disco ball, karaoke system and garish neon blue accent lighting in the living quarters are hints that the vessel is aimed at the luxury yacht industry’s newest growth market: wealthy Chinese.
Yacht makers are hoping they will be the latest to benefit from China’s booming economy, which is creating a growing class of wealthy tycoons splurging on luxury lifestyle pursuits. Rich Chinese are already known for spending lavish sums of money on flashy apartments, designer labels such as Louis Vuitton and high-end cars such as Porsches and Rolls-Royces.
“People in China first will buy houses. Then cars. Then the next step will be the yacht industry,” Wong said hopefully at a recent boat expo in Hong Kong. His family-owned shipyard located in Zhuhai, across the border from Macau in mainland China, has been building fishing and house boats for 40 years.
Two years ago, it expanded into luxury yachts under the Accelera brand, a name chosen for its vaguely European sound. That illustrates another recent trend: Chinese companies are expanding into high-end boatbuilding, a field traditionally dominated by the Americans and Europeans. But in Wong’s favor are high import duties for foreign yachts, part of China’s strategy to help companies in a range of industries develop into global competitors.
About 20 companies in China, including 11 backed by foreign investment, are producing superyachts, which some define as longer than 24 meters (80 feet). Hong Kong-based Kingship Marine is building a 144-footer at its yard in Zhongshan in China’s southern Guangdong province. The company hasn’t found a buyer yet for the $27 million vessel, which is the biggest being built in China, but Managing Director Roger Liang believes there won’t be any shortage of interest.
China is “just like Russia five years ago. Suddenly Russia became a very important player, so this could happen to China,” he said, a reference to billionaires such as Roman Abramovich, who owns at least three yachts.
Yacht companies report that China sales started taking off two years ago, raising the possibility that some are being bought with improperly diverted stimulus money and bank lending that flooded the economy as part of government efforts to deflect the 2008 financial crisis. However, sailing experts say many are also being bought by young entrepreneurs who have made fortunes taking their companies public.
China’s yachting industry is still in its infancy but local governments are hoping for rapid expansion.
The city of Tianjin is building a 9-billion yuan ($1.4 billion) yacht port that will be the country’s largest, with 750 berths to accommodate luxury yachts up to 295 feet (90 meters) long, according to a report in the China Daily newspaper.
Hainan Island on the southern coast, meanwhile, is being positioned as the Chinese Riviera. Qingdao, Xiamen and other ports along China’s 14,500-kilometer (9,000 mile) coastline are also being developed to attract the yachting crowd.
There’s no shortage of wealthy Chinese with money to blow on luxury motor yachts, a notoriously expensive pasttime. China has 875,000 millionaires and nearly half of them want to buy a boat, according to a survey last year by the Hurun Report, China’s version of the Forbes Rich List.
There is plenty of room for growth, with about 1,300 private yachts in China, according to figures cited by state media. In the U.S., the world’s biggest yacht market, there are 17 million privately owned recreational boats, according to industry publication International Boating Industry.
However, some sailing enthusiasts are skeptical and say China still has a long way to go before it can rival the superyacht’s natural habitats of the Mediterranean or Caribbean.
One problem is murky regulations that vary from province to province. Some cities have rules governing boat ownership and how and where they can be operated, while others don’t. That makes it difficult for sailors to make longer journeys.
Poor sailing infrastructure is also a problem, with relatively few experienced staff at a small number of marinas, some of which are located in the middle of industrial areas.
Meanwhile, imported boats are subject to an import duty of at least 43 percent compared with about 15 percent for locally made watercraft. Some yachting experts believe the Chinese government is using the tax to help develop the country’s fledgling yacht building industry.
“The Chinese really want to control it, up to the point where probably their own industry has developed to a level that it can run by itself,” said Bart Kimman, who runs a yacht management company based in Hong Kong.
To get around red tape, Chinese yacht owners are buying and registering boats in Hong Kong, a special administrative region of China with a separate legal system.
Albert Wu, general manager of the Gold Coast Yacht and Country Club, said an increasing number of his 220 berths are occupied by mainland Chinese-owned boats.
Stiff duties don’t seem to be deterring status-conscious Chinese from buying ships from established American and European boatbuilders.
Frankie Chan, who traveled with his boss from Beijing to visit the show, was planning to buy five British-made Sunseeker boats.
Chan is vice president of Oursjia, which rents out luxury cars and high-end furniture to 500,000 clients in 60 cities around China. About 10 percent of them have been requesting luxury yachts.
The pair were inspecting two 60-footers that their company would take delivery of, including a sleek, black Predator model costing about 20 million Hong Kong dollars ($2.6 million). They also plan to buy three others that are at least 90 feet long, and come fitted with flat screen televisions, full size fridges and a rear “garage” hatch to stow dinghies, jetskis and other toys.
Chan and his boss plan to travel to Italy later in May to look for more boats to buy. Eventually, they want to have a fleet of 50 yachts from a range of brands based at marinas around China.
“You can’t compare with the European boats. If you talk about high-end boats, European boats are the best,” said Chan.
Gordon Hui, managing director of Sunseeker Asia Ltd., said that until two years ago, it had almost no sales to Chinese customers. Since then, he‘s sold about 25 boats to Chinese customers and the market now accounts for 8 to 10 percent of the company’s annual production of about 200 yachts a year.
Chinese shipyards are hoping to compete with their foreign rivals by undercutting them on price. Wong’s company sells three yachts under the Accelera brand, including a 98-footer that sells for HK$38 million ($4.9 million). Wong reckons that’s a quarter of the cost of a comparable American or European model. The company equips its boats with imported generators and other equipment but benefits from lower labor costs at its shipyard in Zhuhai, just over the border from Macau.
Wong has sold some 10 vessels, including one to a company boss from China who paid his deposit of several million Hong Kong dollars in cash.
“We couldn’t it count it quickly enough, so we had to go buy a cash-counting machine,” he said.
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ImaHippyBurning
Posted on May 14, 2011 at 1:30pmBetter them than us right oBUMa????
Report Post »JJj
Posted on May 13, 2011 at 4:33pmEveryone wants to blame the politicians, American business owner, the Chinese, etc. Lets be clear where the problem is. It is the people that vote for these idiots that are the problem. I always hear people talking about the symptoms of the problem and never the problem. Get the fool that lives next door into a debate about his liberal beliefs and then we will start to solve this problem. When we have the highest corporate tax rate in the world, why would anyone in their right mind want to do business here. To many people think that business are in business so that someone else can have a job. What a bunch of fools. Business’s are in business to make money, end of story and if our country wants to make it so that moving a company over seas makes more money, who’s fault is that. I’ll tell you. It’s those fools that keep electing these politicians that think this way.
Report Post »Jenny Lind
Posted on May 13, 2011 at 3:33pmWOW-and after our “luxury tax” about destroyed our yacht industry! It just keeps getting better!
Report Post »swigs
Posted on May 13, 2011 at 12:25pm“…China has 875,000 millionaires and nearly half of them want to buy a boat, according to a survey last year by the Hurun Report, China’s version of the Forbes Rich List…”
I reckon that makes us poor socialist. Thank you progressive marxists commie left-wing nut jobs infiltrating both political parties.
No wonder Russia and China see us as a threat to their capitalist way of life.
The irony abounds. :(.
Report Post »tugdiver
Posted on May 13, 2011 at 9:28amWhen a CEO can get a product built for less money in china and americans will buy that product then the CEO deserves a big bonus. If the americans will not buy a product made in china and will buy a competitive product in the USA then the jobs stay here. The Unions should appreciate the phrase “Pigs get fat, hogs get slaughtered.”
I am in my own practice. I have had to make changes to be competitive with the hospital buy outs. Big acquisitions have come and gone, I remain.
Report Post »historypaper
Posted on May 13, 2011 at 8:10amThe hostile Barack Hussein Obama administration isn’t looking too bright today. He has spent trillions of dollars and all the money is originated off shore, actually communist loans from China.
Report Post »He’s only half finished destroying the white middle-class to be replaced by a hard-left socialist U.S. government.
If you want your country and if you want your liberty and freedom look out the window. It’s not the America that we know and love.
There is now a war in America.
dizzyinthedark
Posted on May 13, 2011 at 7:49amYeah good luck with that losing field! Takes alot of fuel to run them, small market of people to own them–dwindling in this economy. Losing proposition–but don’t tell China!!
Report Post »scrapadapolis
Posted on May 13, 2011 at 6:27amFoolish Americans..
Report Post »Zorro6821
Posted on May 13, 2011 at 7:03amThat is true. We can only blame ourselves. China does what is best for China. China is not engaged in useless wars, open borders, political correctness, green politics etc. They are just building their empire as stealthily as possible. Meanwhile we are arguing about gay marriage, DADT, amnesty, and all the political correctness that we lost our focus. The loss of our economy forever.
Report Post »swigs
Posted on May 13, 2011 at 12:30pmAnd you’ll never see a Kenyan as their elected national leader even if his mother was chinese.
Ever wonder how they deal with the illegal immigrant problem?
Report Post »it‘s not a problem when it isn’t encouraged.
Ruler4You
Posted on May 13, 2011 at 6:25amWith super poisonous byproducts from super toxic processes in super unregulated and uncontrolled businesses.Super!
Report Post »theyarenotmeopinion
Posted on May 13, 2011 at 2:38amgoddamnit
Report Post »LovinUSA
Posted on May 13, 2011 at 2:19amAnd just whom, do they think they are going to sell all these wonderful yahts to? George Soros can buy , but then won’t that be a bit boring after a while.When you can buy, whatever you want, when you want, how you want , and where ever you want, and you have it all, doesn’t it appear boring?When you have all you want in life to make you happy, you get bored, and then, it is when you start Dicking with people, nations and the world and their people becuase there is nothing left to amuse you and you are all alone, you have destroyed all that you have, by manipulation, and now ther is ONE, oh YIPPIE KI YAY, George, so go in the corner and play with your trillions and wipe your self with it as well, because it won’t be worth a dime, when there is no one left to play with……….
Report Post »Czar Casm
Posted on May 14, 2011 at 11:15pmInteresting point. Let’s do an experiment. Send me a ton of money, enough so that i can’t run out, and I let you know how long it takes for me to get bored. I‘m willing to sacrfice my time for this experiment so don’t be worried about me. Send the cash asap to P.O. Box CZAR CASM, Texas.
Report Post »GdHUs
Posted on May 13, 2011 at 1:56amAs long as they don’t start building bass boats.
Report Post »Cold War Vet
Posted on May 13, 2011 at 12:27amNo doubt, that money comes at the expense of millions of lost American jobs.
And our nice large “American” companies who sold us out by transferring all production to China.
Thank You, Walmart, et al.
Report Post »Zorro6821
Posted on May 13, 2011 at 6:56amActualy you are wrong. You can thank our greedy politicians who were bought and paid for by the corporate lobby to pass bills allowing China as free trade partner for the benefit of the likes of GE, Mattel, Apple and every other fortune 500 company to make their stuff there. Walmart only sells the cheap stuff here as nothing is made in the USA anymore. So don’t blame Walmart. They actually employ Americans.
Report Post »TexasTBone
Posted on May 13, 2011 at 10:13amAmerican companies buying Chinese goods is partly responsible for this growth, but you need to understand that Honk Kong was a British colony for a long time. China’s turn to capitalism is the real reason for their new found wealth. If all of the commi idiots around the world would learn from China and turn to capitalism they too would prosper.
Report Post »and as for those people here in the US that think its bad that China is prospering, you don’t understand true capitalism (sink or swim) America will just have to adjust and move forward.
Lotus503
Posted on May 13, 2011 at 10:26amWe need to sell the American dream to the Chinese through our products. I think they’re starving for it…
Report Post »TheLascone
Posted on May 13, 2011 at 11:17amThis shouldn’t suprise you …..
Report Post »http://www.flickr.com/photos/23630227@N06/4291903310/in/photostream/
Secret Squirrel
Posted on May 13, 2011 at 11:41am…
Report Post »I just bought one at Wal*Mart.
banjarmon
Posted on May 13, 2011 at 2:31pmSky high Union wages drive work over seas, labor is cheaper. Don’t blame business wanting to stay in business.
Report Post »Jaycen
Posted on May 13, 2011 at 3:15pmThat’s an accusation based on….oh, nothing.
Why don’t you bother to learn something about the topic before you spout off? I’ve been to China. I’ve seen the prosperity. A lot of it has little or nothing to do with America.
I’ve met and talked to several small business owners who simply run their own little shop efficiently and dilligently. They don’t sell to American companies, they sell to other Chinese. They own cell phones, nice cars, and homes.
Report Post »