Singapore Yacht Show (MCS Lifestyle Photography)
Boat Asia, which celebrated its 21st year, took place over the same four days as Singapore Yacht Show, now in its third year. But despite the clash of dates, organisers said they saw record numbers visit their nautical extravanganzas.
Singapore Yacht Show more than doubled last year’s attendance while Boat Asia enjoyed a healthy uplift in visitors too.
There were two reasons for such a high turnout. Firstly, boat builders and brokers know that Singapore has the world’s highest percentage of millionaires and want to appeal to them directly. So with more superyachts on show than ever before the crowds came in their thousands.
“ Boat builders & brokers know that Singapore has the world’s highest percentage of millionaires ”
Secondly, the yachting industry wants to break into China, the world’s most populous country and home to a rapidly growing number of millionaires and billionaires.
Singapore is a good entry point as many wealthy Chinese visit the city state looking for luxury properties to invest in, along with residing here. But among all the excitement and expected sales there was an element of caution about China’s sailing community and how quickly it would actually grow.
One man who is well placed to give an opinion of China’s expected yacht sales is John Lu, CEO of Horizon, which has grown to be become Asia’s biggest yacht builder. Speaking aboard Tango 5, a 115-foot superyacht moored in Singapore’s Keppel Marina, he was quick to downplay the China excitement.
“I think the growth of the Chinese boat-buying market has been exaggerated. Yes it is getting bigger but not that big. The culture is just not there yet and yachts are bought more for entertaining than for sailing.”
“ There was an element of caution about China’s sailing community & how quickly it would actually grow ”
While China is still be on his radar, Lu is looking at more promising markets in Indonesia, Malaysia and Thailand. Another major name in the yachting community, Tilli Antonelli, was also downplaying China’s impact on boat sales in the short-term.
Tilli is somewhat of an entrepreneur and visionary having founded Pershing 30 years ago before selling it to Ferretti, the world’s biggest yacht builder. He went on to found Wider Yachts in April 2010, which made its debut at this year’s Singapore Yacht Show.
Antonelli is also in a strong position to comment on the China’s yachting scene having taking on the Chinese for control of Pershing in 2009. Antonelli eventually lost out to the might of China’s Shandong Heavy Industry’s which snapped up the world’s biggest yacht builder instead.
“ China’s rapid wealth creation started back in 2000 but people still prefer luxury cars, planes & houses to yachts ”
“I feel China needs another 10 years to grow the market. Its rapid wealth creation started back in 2000 but people still prefer luxury cars, planes and houses to yachts,” he explained.
Instead, Tilli still sees potential in developed Asian markets such as Hong Kong, Singapore and Malaysia. “These countries already have a yachting culture. They know what they want and also upgrade their boats. But in Mainland China there is no such culture and yachts are more for entertaining on than anything else.”
The fact of the matter is that Chinese consumers have not yet evolved into high-end consumption, despite a love affair for Louis Vuitton, Prada and Coach. But there’s a huge difference between a handbag and a yacht. For example, Ferretti is a high-end brand yet less than 20 boats were sold in China in 2011 among a population of 1.4 billion.
“ Hong Kong, Singapore & Malaysia already have a yachting culture, they know what they want ”
While not all citizens can afford a luxury yacht, China’s base of millionaires is growing all the time, along with its army of billionaires. There are about 400 billionaires, in US dollar terms, in China but it only has around 100 yachts that are more than 60 feet, the superyacht category.
As yacht builders reminded me, China is still on a learning curve on how to spend its wealth. When it comes to flaunting their fortunes the majority prefer fast cars and flashy properties, and not necessarily bought in China. China bulls will argue that yacht sales trebled from 2009 to 2010, but the fact is they were at a very low base to start with. Yes new marinas and yachting facilities are being built but serious growth is still many years off.
Shanghai is well positioned to become a hub for recreational sailing in China but this won’t happen overnight. New marinas and waterfront developments are being built but the infrastructure is still weak.
“ Shanghai is well positioned to become a hub for recreational sailing in China but this won’t happen overnight ”
Currently there are not enough berths for the yachts in circulation. So people are reluctant to buy a new yacht for fear they’ll have nowhere to moor it. While hundreds more berths are required there is also urgent need for the support facilities yachts need, such as gas stations and waste disposal.
There are also tight restrictions on the private ownership of berths, although the Chinese government plans to relax these.
Until the right environment is created for a yachting set, sales are likely to remain subdued. But it’s not just the infrastructure that is holding back sales, there is also a cultural barrier to overcome. The sea carries plenty of superstitions for the Chinese while boats are associated with poverty, used by fishermen simply to earn a living.
So while yacht builders and brokers hope that China is in the early stages of a yachting boom, it may not all be plain sailing.
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