China Market Overview

The first thing to say about this year’s China International Boat Show (CIBS) is that it was a superbly organised event and extremely well supported in terms of international exhibitors. But there is certain irony to the praise. For despite the fact that this was arguably the best boat show that South East Asia has ever seen, it was staged in the heart of a city that thus far has virtually no local pleasure boating demand, save for a handful of boats, most of which have been brought into the area by the marine industry to ‘test the water’ or were built in the area to test business elsewhere.

That Shanghai, a vast city with a population of around 20 million, currently has no local pleasureboating infrastructure is a huge shame, as in every other sense the city has so much going for it. It is a key location, one that certainly serves as a gateway to the People’s Republic of China in every sense. Beyond being one of the busiest cities commercially, culturally it is also a trend-setter, more open and vibrant than capital city Beijing.

Thus far, the only real demand in China remains the mature but fairly localised market of Hong Kong, some 1,200km to the southwest of Shanghai.

Having been and seen, most international visitors that IBI canvassed during the event could only agree that to win business in China they must be prepared for a slow build up. The consensus was that China is a very interesting territory, but that a serious start for local pleasureboat demand was for optimists, probably three-five years away, though perhaps 10 years seems a more realistic scenario.

So what are the problems that a Chinese marine leisure industry has to circumvent? Well, to begin with the market must quite literally start from cold and it is not just a matter of removing a communist lid. There has never been a boating tradition in China. Moreover, the relationship the Chinese have always had with the sea is problematic in itself.

For the Chinese the sea has tended to be viewed as ‘yin’ — the dark side! It is said most Chinese parents would rather their children do just about anything than deliberately play on or in water and, therefore, the majority of Chinese can’t swim. But, nevertheless, attitudes do change. We need only to look to the way boating has been taken up by the Hong Kong Chinese over the past 10-15 years. Boating activity there used to be mostly sailing oriented and largely for the expatriate community, but interest has expanded significantly with local Chinese interest in both power and sailing areas. Now sailing activity is split around 50:50 there between the expats and the local Chinese. And the powerboat business is split 90:10 in favour of the Chinese.

It will probably prove very useful for anyone serious about trying to stimulate marine leisure interest in China to understand just how Hong Kong actually functions as a marine market. Indeed, many rich Chinese mainlanders aspire to live in Hong Kong, not least for the safety and security it offers. In Hong Kong there is more to spend money on and wealth is less conspicuous.

A key thing to understand about boating in such hot climates is that there’s not the same level of refreshment to be gained from being on the water that there is in other parts of the world. Also, the main perception of the sea is that it is where the lower classes go to earn their living by fishing or transporting cargo — ’sun-tanning’ is very much a western thing.

The boat market for the Hong Kong Chinese is mostly about motorboats, although things are changing slowly — for instance, there will even be a Chinese-backed syndicate in the next America’s Cup. Chinese owners of big motoryachts, and there are lots up around 30m (98ft), don’t tend to use their boats in quite the same way as the more established expat community there does. The expat sailor tends to go sailing for the pure enjoyment of it, whereas a typical Chinese motoryacht owner is likely to go out at the weekend for a short run and then anchor, or possibly just to sit in it the marina. The boat is more of a ‘hangout’. In the cool of the air-conditioning, the usual recreation would then be karaoke, mahjong, cards and so on. Brokerage boats in Hong Kong represent really good deals, because there is so little time on the engines. The other factor of course is that there are not too many places to cruise to, as marina developments are few and far between.

And marina development will be key to a domestic marine leisure scene. Expensive fashions sell because wearing them is easy. Similarly, fine cigars and cognacs are easily consumed and golf is as popular as golf courses can be built. Expensive boats require marinas, maintenance and training.

At the moment, however, there is lots of talk about marina developments all over China, but things move slowly. Despite the fact that the government at a provincial level certainly professes an interest in developing marine activities and tourism, there are still an incredible number of bureaucratic hoops to be jumped through before a project becomes reality. Indeed, one would-be marina developer, who has been working on the same project since 1997, told IBI that at least 90 different approvals are necessary for a marina project. For instance, the Chinese military imposes all sorts of restrictions on what happens along its coastline, which includes marina developments and anyone wanting to ‘cruise’ the coast. At least a few marinas must be built in time for the Beijing 2008 Olympic Games to cater for the watersports and sailing activities, and there are plans for a luxury marina complex to be built next to Shanghai’s Oriental Pearl Tower in time for the city’s hosting of World Expo 2010.

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Summarised from the China Business Report in IBI's August/September 2005 issue The full report can be purchased from International Boat Industry - Back Issues Department, PO Box 772, Peterborough PE2 6WJ, UK Tel: +44 (0) 1733 385 170. Fax: +44 (0) 1733 239 356 mailto:backissues@johndentonservices.com Copies are £15 each plus postage (£1 UK; £2 airmail Europe; £4 airmail elsewhere)