“There will be no business without the involvement of China in the next five years" — Murat Vargi, founder of MV Holdings and owner of M/Y Jasmin made this statement in 2009 at the Global Superyacht Forum. Five years on and has China become as integral as he, and many others, expected? Angela Audretsch speaks to Vargi.
At the 2009 Global Superyacht Forum, Murat Vargi, founder of MV Holdings and owner of M/Y Jasmin and M/Y Jasmin II, gave a keynote presentation on the future of the superyacht industry, its position alongside other luxury markets and the importance of emerging nations like Turkey and China. “There will be no business without the involvement of China in the next five years," he told the audience.
2009 was a year that followed the unprecedented economic downturn in 2008, one that saw both established and emerging markets suffer. It consequently became a year for recovery. At the close of 2009, the Asia-Pacific, led by China and India, was expected to show the strongest GDP growth of any world region with the Capgemini World Wealth Report in 2010 reporting that China accounted for 49 per cent of luxury-market growth as its wealthy spent “heavily on private jets, luxury cars, lavish homes and other luxury goods”. Superyachts were not yet on the list of luxury purchase for Chinese UHNWIs but for many, it wouldn’t be long.
Skip to 2014, the year of the horse, five years since Vargi’s comments; has China become as integral to the superyacht industry to the extent he and many predicted? “The business as regard to Chinese involvement in yacht sector has not developed as I predicted in 2009 so far,” Vargi tells me. For him, the downturn’s effect on orders and prices has meant that the penetration of Chinese builders to the market has slowed down more than he expected. “One of the main obvious obstacles of Chinese shipyards continues to be their distance to European customers.” Vargi argues that these European customers are looking to pay less for European quality and specifications – what should debatably be China’s selling point - but they still want easy access to the shipyard during construction.
Many argue that the Chinese are unlikely to really ‘take’ to superyachting in the same way that other parts of the world have. They don’t have a yachting culture, they have traditionally spent time and money in big metropolises rather than tropical beach resorts, however, an indication that this might be changing can be seen in Hainan island, China’s answer to a luxury holiday resort locations. The island, which boasts China’s only real superyacht marinas and well as upmarket villas and resorts, has seen a rise in demand (from locals) and rising house prices over the last couple years according to reports from Savill's in China. If we take Xing's observation that over the last five years there has been a growing interest in yachting as a hobby among the Chinese and the growing interest in places like Hainan, there is a good indication that China will jump on the superyacht bandwagon yet.
“[Demand] will inevitably increase in the next ten years as [China’s] economic growth continues,” Vargi tells me. “Chinese shipyards should plan their next five to ten years carefully and position themselves with better quality by know-how transfer.” As Vargi notes, the penetration of China to the superyacht industry my be slower than expected but, when it comes to high end luxury goods, China is in the lead. Superyachts may be next on the list.