The $22.5 billion yacht industry is used to fluctuating fortunes, but in no part of the world is this truer than China. The potential is obvious, as the country holds claim to a staggering twelve percent of the world’s billionaires, has proud traditions of lavish entertainment, and boasts a 9,000-mile long coastline.
But the industry’s entry into the China market over the past 10 years has been anything but smooth sailing. In the wake of the 2008 financial crisis, China became the last great hope for yacht builders who sought growth in a country that was home to a million millionaires by 2012. However, China’s hefty 44 percent luxury tax, a dearth of yachting infrastructures, and a shortage of experienced crewmen saw those ambitions severely hampered.
Today, the industry sits in an economic middle ground. Provinces like Guangdong and Hainan, both idyllic cruising grounds, have invested heavily in maritime tourism infrastructure, yet deterring luxury taxes are still in place. Despite the market’s uncertainty, one Western company remains unfazed by the prospect of doing business in China. Benetti, a historic Italian shipbuilder with a dedicated Hong Kong office, continues to focus on expanding its Chinese clientele while also perfecting its approach to that market’s specific demands.
In an exclusive conversation with Jing Daily, Peter Mahony, General Manager of Benetti Asia, discusses the company’s unique China approach, the current state of the Chinese yacht market, and the contours of its future.
How do Chinese clients find Benetti?
There is a lot of information available to [Chinese buyers] on the web. We have a strong WeChat presence, and we have Chinese on our website, so they are able to do a lot of research before they come to us and get a defined idea of the size and range [of boats] they are looking at and how long they are prepared to wait. A lot of the homework has been done already. If we go back some years, there was a perception that [Chinese] buyers were not so informed. That’s really not the case now.
How does Benetti differentiate its brand from other brands in China?
Benetti is well known [in China]. We have a large fleet in Hong Kong and throughout APAC. We’re the biggest producer of this kind of yacht in the world, so we have accessibility and visibility, and they understand the stability of Benetti… Benetti is ideal for the Chinese market for several reasons: one very important reason is that we have a very wide range of yachts with full custom capability which other yards cannot offer at the same level.
How does Benetti customize yachts for Chinese clients?
[Chinese] want to entertain big groups, have a lot of fun on board, play games, and enjoy each other’s company… a European or an American may just lie on the front of the boat and sit in the sun. The use of the boat is fundamentally different. Recently, we totally changed [the design for a Chinese client] and had [put in] a huge round table and a performance area with a piano and a beautiful dining area. That is quite different than what we find European or American owners want, which is as many spa pools and swimming pools on board as possible. An Asian client will only want one or two. Additionally, we are open to working with all suppliers. A lot of the equipment on board will be Chinese or Asian, particularly on the entertainment side.
Can you describe the present situation for the Chinese yacht industry?
China is an up-and-coming superyacht market, and affluence is growing at an incredibly fast pace, resulting in a huge demand for travel and luxury experiences. Under the Belt and Road Initiative, the Chinese government is rolling out an updated marine tourism strategy and making moves like hosting the strategic summit for yachting and [growing its] marine infrastructure and tourism in Hainan. While yachting is still very new to this market and boating culture remains in its early stages, we are positive about seeing growth in China’s superyacht market in the not too distant future.
You mention Hainan, what role do you see the province playing in wider developments?
I see Hainan becoming an important destination for all sizes of boats, not just super yachts. They are developing infrastructure, the hotel infrastructure is there already, they have a high speed rail network, and the airport [infrastructure], so the region is already pushing forward. The local authorities are very motivated to enhance their marine tourism industry.
How do you see the Chinese yacht market changing over the next 2-5 years?
I anticipate a great evolution of yachting throughout the Chinese coastline, particularly [through] the great initiatives around Hainan. It’s a different type of yachting destination to Hong Kong, and as the rules open up and it becomes more available for people to have yachts, this will become a very prominent boating environment, maybe in the next 2 to 5 years. From Shanghai through Shenzhen, great work is being done behind the scenes at the provincial level to open up cruising grounds and develop the tourism industry. I see Hong Kong as the hub, but I think the hub will expand, and we will see very important growth throughout the region. People have said this for a long time, but we are seeing things moving in a positive direction.