Taiwan Market Overview
During the 1970s, when it first started to produce relatively large numbers of pleasure craft, Taiwan was mostly turning out boats in the 9m-15m (30ft-50ft) sector. Quality was not the driver back then. The main reason for sourcing boats built there was price. And in those early days Taiwanese labour costs were very low.
But times have changed. Over the past 30 years, international competitiveness and standards of living have been moving in opposite directions, to the point where Taiwan is now far from being the world’s low-cost manufacturer. Today its economy ranks as one of the strongest and richest in the world and its industry is rooted not in cheap goods, but in the high value, high technology arena. In boatbuilding terms, that translates to bigger and bigger boats. And as the boats have got bigger, the volumes have plummeted and the build quality has gone up.
So with FOB or ‘free onboard prices’ of boats sourced in Taiwan looking less and less attractive, price is no longer the unique selling point that it was once. That means Taiwanese yards must now compete globally in terms of total package — design, quality and value for money. But as the country is so distant from its main markets of North America and Europe, and thus far has no real local market to speak of to underpin activity, the task is far from easy.
These days, ironically, the main threat to Taiwanese industry comes from China, not in political terms and military hostility, but from cheap labour. For China is now developing as Taiwan did during the 1960s and ‘70s, albeit very possibly at a much faster pace. And yes, for the past few years Chinese-built boats have begun to appear in the world’s marine leisure markets.
These days, as much as 90 per cent of the boatbuilding investment and activity in China has Taiwanese connections of some kind. Many Taiwanese boatbuilding operations are involved either directly or behind the scenes with fledgling Chinese boatbuilders, although perhaps this should come as no surprise. Taiwan has all the necessary ingredients: money, know-how and motivation. And it has a common language.
Labour in the main industrial centres in China can be anything from a 10th to a 20th of what is in Taiwan, although Taiwanese builders are quick to point out that a lot more labour in China is required than in Taiwan and that staff need more in terms of management. Yard paid rates in Taiwan are around US$7 per hour, which means they would be charged out at US$14-US$18. Taiwanese yards have even started to employ workers from countries like Thailand on short contracts to help reduce their labour costs.
For Taiwan’s hardware and equipment manufacturers the position is similar, but a bit less of a struggle, as generally shipping hardware is more cost-effective than an awkward size and shape yacht.
The greatest-ever volume of boats exported by Taiwanese builders was 1,828 in 1979, when the average size boat produced in the country was 9m-12m (35ft-40ft), says C N ‘Jack’ Chen, chairman of the board at the Taiwan Yacht Industry Association (TYIA), as well as president of motoryacht producer Bluewater Yacht Builders. And when IBI last took an in-depth look at the Taiwanese boatbuilding industry back in 1996, that number was nearer 450 and the average size was probably around 14m (46ft).
"Today the TYIA has close to 25 member boatbuilders, which compares to about 60 at its peak six or so years ago," says Chen. "And the smallest composite boat built in this country now is around 13m (43ft) and the biggest is 56m (150ft). Plus, we are starting to see the construction of steel and aluminium yachts, including some very big superyachts."
As for numbers, Taiwan builds probably only around 200 boats a year, of which the average size is probably around 20m-21m (66ft-69ft). However, adding up the numbers accurately is not always easy, as most Taiwanese yards when asked about how many boats they build tend to answer in terms of potential capacity, which is often fairly optimistic. Of whatever the total is, probably around one-third would be trawler-style yachts. Then there would probably be only 25-28 sailboats delivered each year, mostly from either Queen Long (Hylas) or Ta Yang (Tayana).
As to the size of boats built, it is telling that in a recent superyacht builders’ survey published in the January ’05 issue of US luxury yacht title Showboats International, Taiwan ranked number five in the table with 44 ‘projects’ over 24.4m (80ft) in hand that added up to 1,249m (4,096ft), which makes for an average 28.4m (93ft). By way of comparisons, the top four slots went to Italy with 249 projects adding up to 8,413m (27,595ft), the USA with 97 projects and 3,419m (11,215ft), the Netherlands with 48 projects and 2,312m (7,586ft) and UK with 58 projects and 1,671m (5,480ft).
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Summarised from the Taiwan Business Report in IBI's April/May 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)
