As a Chinese metaphor for entering the market economy born of the 1990s, ‘to head out to sea’ made for some great imagery. Abandoning the solid ground of the state sector, Chinese entrepreneurs of the early opening up and reform period waded into the unknown. Crashing through waves of regulation, these pioneers faced a sink-or-swim battle to stay afloat in the tides of international commerce. Some got out of their depth, and their businesses went under. Many survived, and became captains of private enterprise. As the state sector now groans under inefficiency and corruption, their work keeps the Chinese economy above water.
Today, a small but growing number of wealthy Chinese are taking the ‘head out to sea’ metaphor literally. Private yacht ownership, once the preserve of Hong Kong’s property tycoons, is catching on among the mainland’s burgeoning millionaire class.
According to the 2013 Hurun Wealth Report, China has 1.5m high net-worth individuals, defined as those whose assets total more than RMB 10m. The super rich, with assets of RMB 100m or more, number 64,500. Hurun finds that travel and driving rank among Chinese millionaires’ favourite leisure activities; they own between three and four cars each.
Yacht ownership didn’t feature in the report. But a separate survey conducted by the firm reveals that more than half of all mainland millionaires were interested in the prospect.
Domestic interest in water-borne leisure is also indicated by the growing popularity of boat shows around China. The largest is the China (Shanghai) International Boat Show. Now in its 17th year, the show originally started out in an underground car park. Last year it saw 40,000 visitors. Dozens of domestic manufacturers competed for business alongside a host of international brand-name staples from the US, UK and Italy.
Chinese companies have made headlines as they have taken over some of the world’s most prestigious yacht makers. The Shandong-based Weichai Group acquired a controlling stake in Italian shipbuilder Ferretti Group for $230m in January 2012. In China, Weichai makes tractors and bulldozers. Last summer, British Sunseeker International was acquired by Dalian Wanda Group, a mainland property giant, for £300m.
Wanda’s Chairman, Wang Jianlin, is China’s richest man and owns one of his new company’s yachts. At the London Boat Show in January, Steward McIntyre, managing director at Sunseeker, told the Guardian newspaper that the company is already adjusting to the particular needs of Chinese clients, with some models being fitted out with mahjong tables and karaoke rooms.
Despite the general interest, market potential and recent acquisitions, however, yacht ownership on the mainland remains a relative rarity. A 2011 investigation by the Italian Trade Commission reported that while there were 88 pleasure yacht manufacturers in China and a host of international players, only 0.3% of the country’s high net-worth individuals owned vessels – one in every 318. The market is largely supply-driven, the report concluded.
A number of issues are holding the industry back. Firstly, Chinese are facing a problem that haunts yacht-buyers worldwide: purchasing a pleasure cruiser is one thing, but finding somewhere to keep it is another issue entirely.
Five years ago marinas tailoring to pleasure yachts were almost non-existent in China. Owners were forced to keep their vessels in Hong Kong, where berths were already few and far between, or in run-down fishing ports on the Northeast coast. In 2009 the State Council passed the Shipbuilding Industry Revitalization Plan, which aimed to support commercial industry but also opened up more southern coastline to private marina construction. In the same year, the State Council announced that the yachting industry would be a key component in the development of Hainan Island, China’s southernmost province.
Since the change in regulation, some private luxury marinas have been built, though not enough to satiate demand. Two of the biggest are Nansha Marina, in Guangdong, and Serenity Marina, on Hainan Island. Both were completed in 2012. Nansha sprung up on a former Pearl River Delta quarry site, and boasts 352 berths.
The wider complex features a golf course, a resort hotel, bars and restaurants. The marina’s pontoons are wide enough to be accessible to golf carts. The clubhouse was built in the style of a 19th century Qing dynasty fort: close-by lie the ruins of a real fort, from which imperial China tried – and failed – to repel the British during the Opium Wars. Serenity Marina is similarly opulent, though admittedly lacks Nansha’s fortifications.
Another issue for aspiring boat owners is the lack of trained captains. In China any boat over 55 feet requires a captain. Anything over 100 feet requires a crew. With that in mind, Italian yacht company Azimut Benetti Group is offering master classes to potential captains, whilst other companies are hosting training courses in cities throughout China for the purpose of training captains and crew members. So severe is the shortage that one company is even seeking out former ferry operators and fishing-boat captains.
While the coastline has been somewhat freed up for private use, a host of regulatory issues continue to prevent Chinese yacht owners from using their vessels for what are intended: yachting. There remain precious few open coastal areas for private sailing, and rivers are crowded and polluted.
For instance, in an ideal regulatory environment Nansha Marina would provide a suitable launching pad for weekend trips to the casinos in nearby Macao or to the pristine islands off Hong Kong. In reality, the paperwork and licensing needed to sail across three separate Chinese administrative regions make the trip a logistical nightmare. According to marina manager Albert Khong, Nansha members are essentially restricted to day-tripping for picnics to islands in the Zhujiang River Estuary, or entertaining at dock.
Sailing up the Chinese coast represents a similarly nightmarish scenario. There is no inter-provincial yacht license in China: skippers must be registered in every province to which they wish to sail. The fees to obtain a license are reasonable – on Hainan Island they total RMB 16,000 – but for every provincial license a boat-owner must attend a week-long training course and pass a test.
Subtropical Hainan Island remains the most attractive option for the prospective Chinese yacht owner. Indeed, Sanya, Hainan’s capital, has been the most popular domestic tourist destination for China’s rich for four years running, according to Hurun. Serenity Marina even boasts two quaint little islands, both with jetties, nearby. And there are plans on the books to increase the number of provincial berths by 7,700 by 2020 and 23,500 by 2030.
That’s all well and good, but so long as budding skippers are effectively unable to sail between administrative regions, yachting in China will continue to be the preserve of those who don’t mind sitting at dock.