While Chinese companies maintain controlling interests in Sunseeker and Ferretti Group, and an ownership stake in Sanlorenzo, the anticorruption campaign of Chinese President Xi Jinping initiated in late 2012 has frozen domestic yacht sales in that country.
“It was zero to whatever number you could think of, and we all thought it would continue,” Yuan Fang, CEO of Heysea Yacht Group told The South China Morning Post. Heysea is based in the southern city of Jiangmen, Guangdong province.
The yachting sector had been bullish up to that point, largely because builders in Europe and the US were hampered by the financial crisis. But the anticorruption laws, which targeted status symbols like yachts, effectively killed China’s burgeoning yachting sector.
“The China market is pretty much dead after more than three years of anti-graft policy,” Gordon Hui of Sunseeker Asia told the paper. Sunseeker Asia has struggled in China despite its Chinese ownership. China’s 43.65% import tax on yachts also helped dampen enthusiasm for sales. Hui told the paper he is optimistic about emerging markets in Southeast Asia, but he does not expect any significant changes for the Chinese market.
“About 15 years ago, yacht companies started flocking to China, but we didn’t see growth happening in the same way – the infrastructure just isn’t there,” Jonathan Cannon of Cheoy Lee Shipyards told the paper. Cheoy Lee, established in Shanghai in 1870 and based in Hong Kong since 1936, was once China’s largest yacht builder but most of its production in Guandong is now in commercial vessels. Most of its yachts are sold in Florida.
Some Chinese builders are seeing a brighter domestic market emerging in China. “There was no chance to sell anyone yachts [outside China] in 2008,” says Fang, so Heysea set its sights on the domestic market. The company had a breakthrough in 2010, with eight orders for the Heysea 82 model. Being able to offer its boats at about a third of European competitors, Heysea has an advantage. Fang says the company’s order book is full for 2018 and nearly for 2019. Last year, the builder made the top 20 list of the world’s superyacht builders by Boat International for the first time. Heysea is the only domestic Chinese yard on the list.
“In China now, if you want to get the business, you only build big yachts,” Fang says, adding that the lack of public marinas means berthing fees are so high that most people just buy larger yachts.
Heysea also designs its boats to Chinese tastes, with galleys on the lower deck and staterooms converted to entertainment areas. Fang says the company has taken orders from the US and Australia, but building in China to meet the expectations of American and European owners has its challenges. Quality is an important issue that Chinese builders need to address.
There have been some breakthroughs on that front. UK yacht designer Evan K Marshall’s 42.7m King Baby, built by IAG Yachts, was the largest fibreglass yacht built in China and was very well received at the Fort Lauderdale Boat Show in 2016.
Other Chinese companies have acquired non-Chinese builders. Last October, Zhongwang acquired a controlling interest in Silver Yachts, which builds aluminium superyachts. The company, currently building an 85m superyacht called Silver Loft, says it will soon acquire a shipyard in the Pearl River Delta.
“We really think the market is about to explode,” executive Jona Kan told the paper, adding that Silver Yacht has always intended to enter China’s domestic market. “What we see is that demand for the very big 60m-plus yachts is growing,” he told the paper, pointing to the growing population of Chinese billionaires. “Our typical clients already have private villas, private jets and listed companies. They are already highly visible and they have no need to be low profile.”
Kan told the paper that China’s reputation for poor quality needs to be addressed. “Everyone’s iPhone is made in China – it’s time for China to build more superyachts,” says Kan.