China super rich set to propel luxury yacht sales

The Sunseeker Predator 60 - more like this heading for China
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 an upmarket Hong Kong marina. On board, 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.

'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 show 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 favour 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, boating 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, and
Hainan Island on the southern coast, meanwhile, is trying to position itself as the 'Chinese Riviera'. Qingdao, Xiamen and other ports are trying to get o board the gravy train.

There's no shortage of wealthy Chinese with money to blow on luxury motor yachts, a notoriously expensive pastime. 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 only about 1,300 private yachts in China, according to figures cited by state media. However, some sailing enthusiasts are sceptical and say China still has a long way to go before it can rival the superyacht's natural habitats of the Mediterranean or Caribbean.

For a start, there are 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.

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.

Full story: http://www.foxnews.com/world/2011/05/12/china-super-rich-set-propel-luxury-yacht-sales/#ixzz1MC3eAB1O