Anti-graft seizure resonates through Chinese luxury market
Fresh concerns over the viability of the Chinese yacht market have surfaced after it was reported that Beijing officials seized £8.75 billion in cash and assets from Zhou Yongkang, one of China’s wealthiest people…
Fresh concerns over the viability of the Chinese yacht market have surfaced after it was reported that Beijing officials seized £8.75 billion in cash and assets from Zhou Yongkang, one of China’s wealthiest people, and his entourage.
Citing officials who are part of the anti-corruption sweep that’s taken place over several months, Reuters last week reported that Zhou, China's Public Security Minister, had been under arrest since last year. The Communist Party's anti-corruption watchdog had frozen bank accounts with deposits totalling 37 billion yuan and seized domestic and overseas bonds and stocks with a combined value of 51 billion yuan after raiding homes in Beijing, Shanghai and five provinces.
300 apartments and villas worth around 1.7 billion yuan, antiques and contemporary paintings with a market value of 1 billion yuan, as well as more than 60 vehicles had all been confiscated Reuters’ sources said. Most of the assets were not in Zhou's name.
Though a yacht was not reported to have been part of the portfolio of assets seized, the news of Zhou’s arrest and the seizures has pointed to the risk associated with luxury in China under President Xi Jinping. Because of secrecy surrounding the investigation, it is unclear whether the Party’s case against Zhou is limited to seizing ill-gotten gains or whether the vast extent of the seizure is intended to send a broader message about luxury consumption by the leading political and business figures in the country.
“The new government of China is fighting corruption; the confiscation of Zhou's family assets is critical progress,” says Ronnie Wang of Marine Dragon Consulting in Shanghai, a superyacht industry observer. Under Xi’s national anti-graft policy, government officials and employees of national corporations are required to limit wasteful behavior. The policy has meant that corporation executives think twice about openly entertaining officials; luxury yachts are seen as part of a luxury lifestyle that may incur indignation from the public.
The 2013 Hainan Rendezvous was beset by raunchy rumor after it concluded last year, with China’s national newspaper running a story about drug use and prostitution at parties surrounding the show. It’s not the message that yacht industry professionals working to develop the Chinese market want to see continue. But in a land where UHNWIs are being minted on an almost daily basis, yachting’s mixture of luxury lifestyle and business appeal is the obvious sales pitch.
“Yacht owners often use their yachts for business purposes, so this kind of policy has an indirect impact on luxury yacht consumption,” Wang says. “But I think it will only have a short-term influence: Yacht buyers are mainly from the private sector and compared to the growing demand for leisure lifestyle this is not a critical issue."
Understanding the lifestyle desires of potential Chinese yachting customers has been undertaken with the seriousness of divining the future from tea leaves by brokers and yards exhibiting at the major boat shows, like the Singapore Yacht Show happening this week. But according to Wang, the Chinese yachting classes may have more in common with their European and American counterparts than otherwise assumed.
"Potential yacht owners tend to keep low profiles rather than being the types that show off," Wang insists. "In today’s political atmosphere, Chinese buyers may put off their purchase, but the demand does exist and it will be realised in the near future.”
See our Singapore Yacht Show News, brought to you by SuperyachtNews.com and SuperYachtTimes.com – official media partners of the Singapore Yacht Show.
Citing officials who are part of the anti-corruption sweep that’s taken place over several months, Reuters last week reported that Zhou, China's Public Security Minister, had been under arrest since last year. The Communist Party's anti-corruption watchdog had frozen bank accounts with deposits totalling 37 billion yuan and seized domestic and overseas bonds and stocks with a combined value of 51 billion yuan after raiding homes in Beijing, Shanghai and five provinces.
300 apartments and villas worth around 1.7 billion yuan, antiques and contemporary paintings with a market value of 1 billion yuan, as well as more than 60 vehicles had all been confiscated Reuters’ sources said. Most of the assets were not in Zhou's name.
Though a yacht was not reported to have been part of the portfolio of assets seized, the news of Zhou’s arrest and the seizures has pointed to the risk associated with luxury in China under President Xi Jinping. Because of secrecy surrounding the investigation, it is unclear whether the Party’s case against Zhou is limited to seizing ill-gotten gains or whether the vast extent of the seizure is intended to send a broader message about luxury consumption by the leading political and business figures in the country.
“The new government of China is fighting corruption; the confiscation of Zhou's family assets is critical progress,” says Ronnie Wang of Marine Dragon Consulting in Shanghai, a superyacht industry observer. Under Xi’s national anti-graft policy, government officials and employees of national corporations are required to limit wasteful behavior. The policy has meant that corporation executives think twice about openly entertaining officials; luxury yachts are seen as part of a luxury lifestyle that may incur indignation from the public.
The 2013 Hainan Rendezvous was beset by raunchy rumor after it concluded last year, with China’s national newspaper running a story about drug use and prostitution at parties surrounding the show. It’s not the message that yacht industry professionals working to develop the Chinese market want to see continue. But in a land where UHNWIs are being minted on an almost daily basis, yachting’s mixture of luxury lifestyle and business appeal is the obvious sales pitch.
“Yacht owners often use their yachts for business purposes, so this kind of policy has an indirect impact on luxury yacht consumption,” Wang says. “But I think it will only have a short-term influence: Yacht buyers are mainly from the private sector and compared to the growing demand for leisure lifestyle this is not a critical issue."
Understanding the lifestyle desires of potential Chinese yachting customers has been undertaken with the seriousness of divining the future from tea leaves by brokers and yards exhibiting at the major boat shows, like the Singapore Yacht Show happening this week. But according to Wang, the Chinese yachting classes may have more in common with their European and American counterparts than otherwise assumed.
"Potential yacht owners tend to keep low profiles rather than being the types that show off," Wang insists. "In today’s political atmosphere, Chinese buyers may put off their purchase, but the demand does exist and it will be realised in the near future.”
See our Singapore Yacht Show News, brought to you by SuperyachtNews.com and SuperYachtTimes.com – official media partners of the Singapore Yacht Show.
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