When will the Chinese superyacht market take off?
China has been a growing market for business jets, commercial aviation and helicopters for several years. However, the world’s second-largest economy has yet to witness comparable growth in superyachts.
Talk of China as an emerging superyacht market really kicked off around 2011. The country’s super-rich are getting richer and the first few have started buying superyachts. Naturally, the global industry wanted to tap into this growing wealth and we have seen a few large Chinese shipyards such as Kingship and CMB break out as major builders.
China has 594 billionaires – the largest of any country – surpassing the US which has 545 according to the BBC. On top of this, there are some 11,000 Chinese citizens who are considered ultra-wealthy.
Most European and US shipyards have an Asian representative, so it is not as if no-one has a presence, but these yards are used to transactions with big pay-outs from banks to fund that yacht, things work a little differently in China.
The potential is certainly there. However, there are more than a few boundaries in the way.
Why it is not taking off:
There are three key issues apparently preventing yacht companies from really lifting sales and services: communication, lack of engagement and bad marketing.
Firstly, to sell a yacht, sellers need to know their prospective clients, and they need to talk. In America and Europe, deals are arranged via email, meetings and dinners. In China, whilst the former two are present, a lot of the day-to-day communication is handled via social media and not over email.
When companies do figure out how to engage with the market, they tend not to put in as much effort as is required to sell there. A lot of sellers and yards look wistfully towards the market and talk about how it is ‘promising’, but they are not getting many sales right now. If you want to tap into the market, it is necessary to learn about and appreciate Chinese culture and try and build long-term business relationships.
Finally, one cannot push a product to a client base that does not want to buy it. An interest in yachting is typically born from a love of the ocean – something not always typical of the average Chinese multi-millionaire.
Step One: Communication
Business is generally done differently in China, social media is a massive part of day-to-day business in China. Not much business is done over email, it is all social media, and if you are not into that your business will suffer.
The two key platforms on which business in done on are WeChat and Weibo. WeChat is an all-in-one social-media platform, combining functions from platforms like those of Facebook, WhatsApp and Instagram into one ‘super app’ that is used almost universally for talking business in China.
WeChat has more than 980 million monthly users, with around 963 million of those in China alone – according to Statista.
According to Liz To, Asia chief representative at Yachting Partners International: “It is essential for companies to create localized marketing strategies. For example, here in China we have a completely different social media landscape. WeChat is an app that combines WhatsApp, Facebook and Mobile payment in one single platform, and Weibo is the Chinese equivalent of Twitter but with more functionality. If your brand doesn’t have a presence on these two platforms, it simply will not reach the Chinese consumer.”
Step Two: Engagement
The potential market in Asia is vast but it will remain only a potential market unless the effort is put into creating change.
Whilst countries such as China and Japan do not have the connection to yachting and luxury that countries like Russia or the UAE have, the billionaire network is vast and, if the superyacht market wants their business, it needs to put the effort into achieving that.
Speaking to Jan Jaap Minnema, sales broker at Fraser who has sold a large number of boats in China, including the largest yacht to ever be sold in the region, he said: “I have sold a number of boats in Asia, I sold the biggest yacht ever built in Asia. The speed of what people are hoping for the Asian market to emerge has been wishful. The people who are wishing sometimes are not putting the effort into investigating the Chinese or Asian culture.
“With everything in life, when you don’t understand it, learn. Put in the effort. Results will not just fall from the sky, and the Asian market will not just develop by itself. If you don’t educate people or explain or make trips out there and talk to people, it will not happen.”
Emannuel Delarue, CEO of NDA Group expresses a similar sentiment, saying: “I would advise brands to strongly control and manage their images on the Chinese territory, not to be too much tied up with one key person. Some dealers are great, fully understanding the necessity of long-term strategy, but unfortunately we have seen too many one shooters able to generate a few sales thanks to their personal network but unable to build a long-lasting business.”
Step Three: Marketing
China is still discovering yachting. Approaching the market with your established business model tailored to an already established customer base is a hard sell.
It is not just selling the idea of the asset to a Chinese client for either business or leisure that the industry should address, it is actually getting people interested in sailing and the sea. Many yacht owners in Europe and the US already had a love of the ocean before buying – passion that had existed since childhood.
However, Mr Delarue, CEO of NDA Group thinks that the tide is starting to turn: “It has been said widely, and it’s still true, that mainland China is still discovering yachting. 18 years-ago not a single marina was open.
“During this period, we have seen substantial changes in the yachting culture — at the start boats were business tools (bigger units than in the West and its show-off culture) while now I feel that a real breed of yachtsmen/women is appearing — people loving boating and actively participating. New trends are also appearing, for example with specific way of sharing boats between friends and business partners.”
The infrastructure problem?
When people talk about why the Chinese market is not taking off, the topic that generally comes up is a lack of infrastructure. This is less of an issue than might appear. While there are only a small number of suitable marinas that can accommodate superyachts, they are far from being filled right now.
Mr Delarue said: “At the moment, given the fact that many marinas are far too empty, this is not a need. The real need is in better management and finding the right business model.
“Actually, the real difficulty is to convince China Mainland marina owners to change their approach, their pricing strategy and help them to organize more real boating events. This will really help more yachting enthusiasts (and there are a lot) to experience boating.”
There are around 10 marinas in China where you can berth yachts between 31 metres and 50 meters and only the Gold Coast Yacht Club can berth yachts between 51-70 metres.
It might also be a bit presumptive to assume that Chinese owners would want to berth their yacht in China. There is nothing stopping a Chinese owner from doing exactly what most other owners do and berth their yacht overseas, in Marina di Capri, Port de Saint-Tropez or in One Island Park for example. If they wanted somewhere a little closer to home, there’s the Phuket Yacht Haven in Thailand.