A brokerage firm’s growth into Asia may be deemed ill-judged without the support of local partners, or another form of local knowledge bedrock.
Though there remain few industry representatives who can say with confidence that they have dealt regularly with Asian clients, Allen Leng, chairman of Chinese shipyard Heysea Yachts, is one of the minority.
Since opening the doors to the shipyard in 2006, Leng has sold approximately 120 yachts, from 17.7m to 46.5m, with almost 100 per cent of the sales, up to 2015, to Asian clients. He caveats however, “It has dropped to about 90 per cent since 2015, and we project a drop to 70 per cent this year, and perhaps 50 per cent by 2020,” as the firm grows its international presence.
Leng laments those “Listening to ‘laymen’, who do not know Chinese marketing and publish wrong ideas to the media” – experts, who cannot possibly be experts because of the market’s infancy.
“Why do you think our yachts sell better than imported yachts?” he continues. “One of the main reasons is that people thought there would be no taxes when purchasing yachts domestically, while imported yachts pay up to 43 per cent. But that is a total fallacy.
“The tax on a yacht built in China is more than 36 per cent. With other examinations and testing, this fee can stretch to beyond 43 per cent. That is why yachting brands purchased to-date by the Chinese have not established shipyards in China” – and why the market, in part, continues to be slow to grow.
Expecting Asian countries to learn and develop an understanding of the yachting culture, as opposed to us better adapting our model to its clients, seems presumptuous. “What is a ‘yachting culture’ anyway?” Leng continues. “There is not a fixed pattern that could be defined by Asians, nor by Westerners. The products have to be suited to the local culture, but the yachting culture for Asian clients is not yet defined.”
Leng concurs with the industry’s belief that Asian clients’ primary use of yachts is for “business and entertainment”, and while they use yachts for “killing time”, their goal-orientated work ethic places the latter as less of a prerequisite in their daily lives.
He adds though that “When the ‘fat cats’ become aware of the use of superyachts as a social gathering platform or business place, they will be buying yachts in no time.”
Leng believes it’s the older generation who will remain the most likely candidates for superyacht ownership in Asia. “The younger generation will not have such a wild wish to own until they can prove it’s deserved, which may involve them having to earn a corresponding fortune,” he says. “This is because people will laugh at them and see them as black sheep if they don’t. This kind of phenomenon is reflected by the typical Chinese wealth tradition concept.”
It would seem from Leng’s comments that he believes entrants into the region to be strategising their businesses on information that is fundamentally unproven. And while that may be correct, in part, how is there scope for more due diligence in a market that is yet to show reliable and consistent tendencies?
Pictured: Heysea's new 152 design