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China yacht market

Discussion in 'General Yachting Discussion' started by Savasa, Sep 14, 2010.

  1. Savasa

    Savasa Senior Member

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  2. Loren Schweizer

    Loren Schweizer YF Associate Writer

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    Thanks for sharing that article, Peter.
    With standards of living on the upswing, it would seem that China will develop a burgeoning middle class/upper class which, after purchasing the requisite home and automobile, might just turn it's attention to boats and their attendant freedoms.

    The article warns of high import taxes on boats; there are quite a few domestic builders to negate the need for imports.

    A lot of fortunes are being made in China by Chinese as they acquire the expertise and technology of higher-end Western goods such as cars and electronics.

    The status-minded Shanghai business owners may well have their eye on U.S- or Euro-built yachts in the not-too-distant future requiring some knowledge of Mandarin on the part of yacht brokers.

    "Tlust me--I'm a yacht blokah".
  3. Capt J

    Capt J Senior Member

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    Speaking of which I just loaded 2 yachts going to China. They were a late 90's 40' Searay SB and a late 90's 46' Carver FB both with diesels.....
  4. 84far

    84far Senior Member

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    I heard there dropping a lot of those taxes and procedures which should get things moving. Should be interesting to see how it takes off.

    Far
  5. tirekicker11

    tirekicker11 Senior Member

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    But it will be taking another decade or so before China is up and running regarding watersports.

    It is a very strange situation. I remember the first China International Boatshow I visited was also visited by hundreds of People's Liberation Army soldiers just to get the visitors numbers up and attract large investors. On the other hand I know that the local government in the south is slowing things down because they don't want to expose the gap between rich and poor to much. Currently a buyer pays about 40% pleasure tax on top of the normal taxed (GST) boat.

    IMHO I find that Chinese people are no 'waterpeople' in general. In proportion the majority of boats that actually leave the marina's here in Hong Kong are owned by westerners. Especially the sailing yachts. Many Chinese owned boats are only used as a status symbol and to entertain: playing majong or karaoke while lying in the marina. I dare to state that in the majority of the flybridge cruisers the beds have never been used.(to sleep on) Just because the average Chinese doesn't want to stay over night on a boat.

    Selling boats to Chinese is a strange excersise. The first question a Chinese buyer asks is the discount (sometimes even over the phone before meeting) and the second question is about the speed. At boatshows all powerboats are advertised with their max speed.
    I can't prove it but know that most of the new boats sold by dealers are sold with a discount so high that there is no profit made. You can not sell to a Chinese without giving discount, that would be an insult. So a discount of 20% on the MSRP price of a powerboat eats away all the profit a dealer can make after having had it stored on the hard or in a marine berth for some time at the local rates.

    At this moment the infra structure for boating is poor in Hong Kong, especially compared to the US or Mediteranee simply because the local government isn't interested in pleasure boating.
    In mainland China the infra structure is non existing; If you own a boat there are no places to visit and cruising around polluted ports as Dalian and Shanghai may get boring after some time. Even newly developed sites as Hainan have no real infrastructure.

    The upperclass Chinese are looking into new ways of spending their money but it will take quite some time before China will be on the pleasure boating map if it ever will get there.
  6. Savasa

    Savasa Senior Member

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    Greetings,
    A very well reasoned and astute reply tirekicker11. Thank you. Loren, I think tk11 raises a valid point that the boating infrastructure (marinas/waterways) is just not developed enough yet for Chinese buyers to invest in a boat for reasons other than prestige. It did not seem to me, on a recent, first time visit to PRC, that "mucking around in boats" was a leisure option considered by many.
    As an export comodity, I think the time is coming where, given sufficient domestic investment, one will be seeing more Chinese "higher end" yachts coming on the market
    Peter
  7. wildkactus

    wildkactus New Member

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    as pointed out above the big hurdle in this market is the willingness of the chinese to become pleasure boaters, its just not that big a deal for them. most of my chinese friends are not that interested in boats or the boating lifestyle.
    Also there are restrictions still on who can operate vessels for pleasure in certain parts of the country. maritime laws are still very much commercially focused.

    There is some move tho as the younger gens are looking to the lifestyles of the western cultures and boating is one, but it is mainly a status / business thing at the moment.

    the infrastructure is slowly being put into place. there are a few new marina's being built Yantai, Shenzhen, Qingdao and ofcourse Hainan, but it's the access to good qualified trades people and service centres for service and repair work that is lacking.

    and those discounts always amaze me, how dealers make a living in boats or even cars as some of the discounts are just crazy.
  8. Loren Schweizer

    Loren Schweizer YF Associate Writer

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    Interesting points you all offer.
    As far as the discounting goes, I recall various large business transactions (not mine, sadly) where the Oriental buyer pressed the issue of determining the seller's cost and then telling the seller how much profit they would be allowed to make. Serious bidness!

    As to the Chinese not being water-people, did I not read somewhere that, prior to Columbus' expeditions, Chinese seafarers explored as far as the West coast of Africa? They ought to have some kind of saltwater in their veins...

    But, forgetting all that, it boils down to marketing. Is there a mystery as to why all the boating publications (even as they shrink in pages) over the years featured comely lasses in bikinis, hair flying in the breeze, having a king-hell time, smiling at the guy driving the boat...the working theory being I suppose, "if you buy this boat, you'll get the girl, dummy".

    Infrastructure? There must be a Chinese coastal equivalent to Pascal's sandbar off Key Biscayne where you just show up on Sunday afternoon, no dues, no rules, radios blasting music, adult beverages being consumed in mass quantities...a welcome party break from the Party Rule, no?

    The Chinese economy is slated to surpass that of the U.S. in the next thirty years, per the WSJ. Number One global economy with no boating?
  9. ArcanisX

    ArcanisX Senior Member

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    Fairly typical maneuver, actually. The Chinese are, in general, very hard-haggling people. Besides, what often confuses Westerners, the entire process is comparatively shifted from the deal itself to determining if the parthners are "good people" and deserve respect, which changes the way negotiations go and focus of arguments used.

    In addition to what was as far as my experience goes correctly described above, another Chinese "cultural perk" is that they are way more reluctant to pay top-coin for consultations, expertise, man-hours and stuff like this. Probably because manpower in itself is traditionally cheap there.

    My wild guess is that many of their boats stay in marines in some part because they do not want to pay what competent foreign Capitans ask, and they still haven't developed their local workforce in the field (that could be expected to run much cheaper).
  10. toolmaker

    toolmaker New Member

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    I live in Northern China, own company and property here.

    It is highly unusual for Chinese to buy outside their circle of friends and relationships. If they are talking to you and your not introduced by mutual friend, its because they exhausted all options.

    If you are introduced by mutual Friend, pricing is not an issue, its not the top concern. Delivery and completion of business are the highest concerns, which really amounts to what is termed Saving or Giving face. It is being able to deliver on time and on agreed price, regardless. Non performance in China is cause for serious action; losing government position, losing business license, or being denied Visa extension. It is sacralige to Deliver product or service late or change pricing within your circle of friends.

    There are entire villages that live on boats here, cannot relate to post regarding this is not a boating culture, quite the opposite. The problem is the environment, which is being cleaned up, the next 2 5 year plans are based on cleaning up energy production and water, including ports and waterways. There are tens of billions set aside, which are very large amounts in a nation where the average cost to build is 11.00 USD per square foot.

    In just one redevelopment region there are 600 Square Miles of port being added to the Lioayang Peninsula, brand new Facilities including pleasure marinas designed by European companies, and built by European Companies.
    It will take time, but China is modernizing at a frightening rate, i don't think anyone understands how quickly China is moving, there will be 300 Million Chinese entering the Middle class in the next 7 years. These are young adults, and this is the Boating market.
  11. tirekicker11

    tirekicker11 Senior Member

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    Good points Toolmaker,

    Same for Hong Kong untill recent but are they boaters by choice? As far as I know the sea is still the place where poor lower class people make their living and the middle class doesn't want to be associated with.
  12. 84far

    84far Senior Member

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    Good rebuttal, I really think there culture will hold them back for a few more years to come. Cheers

    Far
  13. toolmaker

    toolmaker New Member

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    http://www.boatshowchina.com/MarketInfo/tabid/272/language/en-US/Default.aspx

    Some fairly recent information regarding China's Boat market.

    The best opportunities are for brand name foreign manufacturers with status. China is highly focused on brand name products, luxury tax is dropping to 10%, and will probably be eliminated in the next 1-2 years.

    It is still a difficult market for this product in China, but for companies willing to invest in long term relationships with business and Government, the payoffs is tremendous. It will take 3-5 years to establish themselves, but once done the sales are by relationships, not advertising.
  14. 84far

    84far Senior Member

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  15. toolmaker

    toolmaker New Member

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    "This is also very interesting, you hear so much of this... but there's so many westerns getting "worked over" over there...? Designs stolen, workmenship etc... Personally there's so many stories going around that I just don't want to touch the place when I get more involved with the boat building....? Cheers"


    This is completely accurate. Anyone wanting to do business in China needs to do their research, spend time (4-5 years) investing with physical and financial presence and building those precious relationships. Otherwise do not attempt it, you will be worked over and lose everything.
    For a company to succeed relationships with Government is all important. Nobody will touch your designs or work if Central stands behind you. If you have only business contacts, you are fair game.

    Ive seen the flip side of this as well; foreign companies come here, make a big splash and leave their hosts hanging in the wind. They damage their host and cause loss of position in business or government and worse.

    Understanding Chinese business is relatively simple and yet takes years to act upon; the relationship drives the business. Not price, never price. And Government is an active and supporting partner. If a company that build boats comes to China and does not build relationship with Central Government, they will either pay 2-3X over market for everything, or will find themselves at the mercy of their business contacts.

    It is still at its infancy, but for long term success and if fitting their global business plan, the time is now to invest in China's pleasure and working boat industry.
  16. Loren Schweizer

    Loren Schweizer YF Associate Writer

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    DeFever builds (or built) a line of trawlers. They moved operations from Taiwan to PRC in the mid-'90s and set up shop in Suzuho (sp?) on the outskirts of Shanghai in what was called the POCTA yard. U.S. content arrived in containers, engines (Deere) were sourced from the regional distributor, and boats were exported to the U.S.

    Toolmaker, is it plausible that these boats could be sold for domestic consumption?
  17. toolmaker

    toolmaker New Member

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    Defever

    Hello Loren,

    yes, they should be selling to mainland Chinese.

    Chinese culture loves status symbols; Mercedez ( anything German Really), Range Rovers, Rolex, brand names carry high premiums in China and sell. Cars with V8 engines have a 100% tax on them in China, yet Mercedez and Range Rover V8 models are Backlogged with sales for 8-10 months. Price does not matter much in China, if the product has Brand name or a relationship is making the introduction.

    If a boat company produces a marketing plan that envelopes their product as a status symbol, it would sell. ( as long as quality and Delivery capability is there). I am not familiar with Defever, this is just general statement.

    The city is Called Suzhou, beautiful city with over 2000 year history. Ive been there several times, the culture and people are wonderful. Highly recommend that region, if you go plan your visit as World EXPO is ongoing at this time, best climate is Fall / Spring.
  18. tirekicker11

    tirekicker11 Senior Member

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    Sorry, Defever are displacement yachts. Only mature boaters will appreciate these and other trawler type boats.
    Chinese are generally speaking immature boaters; they want to go fast in a sleek looking boat and if they can't have that they want big and impressive.
    That is why at local boatshows all boats are advertised with their max speed.

    I have been in the Chinese boating scene for 6 years now and know of only one trawler type boat ( a Coot from Seahorse) that belonged to a Chinese owner.

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