Why China’s ultra-rich haven’t warmed to superyachts by Tara Loader Wilkinson @FortuneMagazine February 10, 2015, 6:25 AM EST E-mail Tweet Facebook Google Plus Linkedin Share icons If there is one country where many people can afford to superyacht, it’s China. Now the world’s largest economy, some 11,000 Chinese citizens are considered ultra-wealthy, with assets over $30 million, according to wealth intelligence firm, Wealth-X. But, the superyacht industry hasn’t caught on big in China. Superyachts are officially defined as boats whose hulls at the water line measure longer than 24 meters, or 79 feet. A superyacht — typically a private boat that requires a professional crew to operate — costs $6 million on up. Just 34 –or 0.7 percent — of the world’s 4,836 superyachts are based in China, according to a 2013 study by the Auckland Government. In part, the lack of popularity is due to culture. Yachting is all about fun in the sun. And traditionally, many Chinese have avoided the sun and haven’t really done downtime. “The Chinese are not used to the idea of time away from it all, especially not European style,” explained Colin Dawson, chairman of the Asia-Pacific Superyacht Association.“They tend to take a very different approach to yacht ownership – it’s a business tool, not a leisure item.” Luc Khaldoun is the head of client advisory services at OneOcean Ventures, which provides a range of services for superyacht owners. He noted that his Chinese clients seemed to prefer yachts with “little open space” and wanted to “limit time spent outside.” There are also some pragmatic reasons why superyachting hasn’t caught on with the Chinese elite. China has a luxury goods import tax of 43 percent. Adding to the expense: the region lacks experienced crew, so Chinese superyacht owners need to relocate Europeans and obtain work visas for them. Photograph by Balint Porneczi — Bloomberg via Getty Images In recent years, the government also has cracked down on corporate corruption, and some may fear that cruising around on a superyacht and using it to entertain clients (and government officials) might make an exec more visible — and perhaps more of a target. And then, there’s just simple geography. Part of the appeal of cruising has been puttering around idyllic Mediterranean archipelagos. While China has a few key marinas like Nansha Marina in Guangzhou and Ocean One International Yacht Club, it still lacks some of the infrastructure to support superyachts, such as repair yards, as well as the Mediterranean’s pretty coastline. Of course, none of this has stopped a few ultra-wealthy Chinese from buying, and keeping, yachts — in Europe, the U.S., and even elsewhere in Asia. The superyacht market in China is growing, albeit very slowly. “Chinese looking into superyachts may buy in Europe and elsewhere in Asia,” said Nigel Stuart, managing director of Spirits Yachts, a yacht building company. He noted that Singapore, Thailand and Malaysia are “stunning blue water cruising destinations.” European brokers are regulars at the Shanghai, Dalian and Hainan Rendez Vous boat shows, hoping to lure Chinese buyers with the dream of cruising around St. Tropez, Cannes, and Capri. While China may not yet be a destination for yachting itself, it is gaining a reputation as a base for yacht-building, primarily because of its lower costs. According to Boat International, China now ranks eighth in the top ten superyacht building nations, and 28 superyachts were constructed there in one year, mainly in Shandong and Guandong, according to the Auckland Government study. To be sure, the Chinese yacht construction is small fry compared to Italy’s 269 yachts built last year, but the 43 percent import tax on luxury goods means that domestic construction in China will becoming even more appealing, as long as demand grows. Photograph by Simon Dawson — Bloomberg via Getty Images Meanwhile, China is not being written off as a market. Most superyacht brokers and builders say they are just biding their time. Some have dipped their toes into the Chinese market by opening a shop in nearby Hong Kong or Singapore, which both have a strong expat population and infrastructure better-suited to yachting. UK-based yacht designer Spirit Yachts opened in Hong Kong last year, while London-based Burgess Yachts is opening in Singapore later this year. “We are slowly preparing for when China comes on stream – when it does, it will come big,” said Jonathan Beckett, chief executive of Burgess. Many agree that China’s time will come, but just not for the next decade or so. “Is China the new market for superyachts? Not yet – is the answer. North America, Europe, the Gulf and the Middle East are still the markets of today,” said Beckett. Burgess, like many others, is refocusing efforts on traditional markets, and sales are on the up. Last year the ultra high net worth spent a combined $22 billion on yachts, according to data from Wealth-X. What the industry must remember is that it took 30 years to build a superyacht market in the West, so it may still catch on in the East.