Yachtmakers eye wealthy Chinese buyers

With a fortune made in Chinese finance, Li Wang already has six cars including a Bentley and a Porsche, and his eye on his next multi-millionaire's toy: a boat.

"I only know a little about yachts at the moment," acknowledged the chubby 27-year-old, strolling in golden sunglasses among the sailboats, catamarans and motor cruisers lining the jetties at a boat show in Dalian, Northeast China's Liaoning Province.

"It's not a big deal. Buying a yacht is on my schedule."

Li epitomizes the Chinese buyers being targeted by the world's yachtbuilders, whose vessels can cost as much as $100 million, taxes not included.

Despite its long coastline and 1.36 billion-strong population - including thousands of multi-millionaires - China has only an estimated 3,000 pleasure boats, and yachting remains a niche pastime.

In contrast the US is said to have one watercraft, albeit including small boats, for every 15 inhabitants.

Traugott Kaminski, head of China operations for Italian yachtmaker Sanlorenzo, brought two yachts to China in 2003.

"There were no regulations, no port, no yachting culture," he said, and even now the firm still has to "educate" first-time buyers.

But others are "sophisticated customers who know what they want."

"Think about the car industry, 10 or 15 years ago nobody expected China would become the biggest market worldwide and the same thing will happen to the yachting industry," he went on.

In another parallel with the global vehicle business, two major European yachtbuilders, Sunseeker of Britain and Italy's Ferretti, have been bought by Chinese firms in recent years.

Karaoke and mahjong

Several thousand visitors attended the event in Dalian, on the shores of the Yellow Sea, and despite the constraints of 43 percent import taxes, limits on infrastructure, and bitter northern winters, organizers said that "on-site sales occurred."

Chinese buyers have different requirements than Westerners, explained Kaminski.

"In Europe you will use the boat for a two- or three-week cruise," explained Kaminski. "In China, you are using it for a day cruise, so you don't need so many cabins, you need a big spa, and you need entertainment space."

In the West, the captain and crew are often seen as part of the family. Not so in China though, where the wheelhouse and kitchen need to be separate.

Chinese clients also want a round table to eat at, a karaoke machine, a mahjong table and more shade.

Marco Valle, sales director for Azimut (Milan), one of the world's major yachtbuilders, remembers the first yacht he sold in China, around a decade ago, to a rich businessman in Shanghai.

The client asked if it could be delivered without an engine, as he intended to keep it moored to show off to his contacts.

There are other contrasts.

"The market is really working in reverse," said Paul Blanc, Asia-Pacific director for boatbuilder Jeanneau, which is targeting China's upper-middle class, with boats from five to 25 meters, starting from 1.5 million yuan ($240,000).

"In China we're starting with big boats and the market is going to expand to smaller sizes," he said. "In Europe it is the other way round, people start with small boats and as they gain more experience and money, they buy bigger and bigger ones."

Growth has been rapid, says Blanc, but as well as import taxes, another major obstacle is a near total absence of public marinas nationwide, so that almost all yachting infrastructure is run by elite private yacht clubs, with memberships costing from 700,000 to 1 million yuan.

Superyachts

Such sums are irrelevant to the buyers of superyachts, says Jona Kan, sales director for Silver Yachts, which specializes in aluminum-hulled vessels more than 70 meters long.

His firm has only ever sold three ships - two to Middle Eastern buyers and one in the US - but, with prices confidential, it is still enough to sustain the business.

Now he is looking for an Asian customer.

"Our yachts will be bought by modern Chinese who already have been to all the best hotels in the world and now they want something special to go to places where nobody has been to, and with their own accommodation," he said.

According to an academic paper released in July, the top 1 percent of households in China control more than one-third of its wealth - an illustration of the breadth of social inequality in the country.

Demand for yachts saw a hiccup last year in the face of a much-publicized austerity and anti-corruption drive by Chinese President Xi Jinping, several vendors said.

But Kan is targeting customers in a different league, so rich that their money is supposedly clean.

"Their wealth is public and is acknowledged by the government," he said.

They would not need to import their vessel to China, he added.

"They can buy it offshore. The boat is built in Australia but has a Cayman island flag. It's already an offshore boat."