Capitalising on luxury in China
The luxury market is booming in China, but will this equate to an increase in the charter industry?
It is self-evident that Millennials and Generation Z are the future when it comes to luxury brands and products. A recent study by Deloitte estimated that these groups will account for 40 per cent of purchases in the luxury goods market by 2025. When it comes to the conversation about the luxury market in China, this group have an even stronger influence. The growing upper-middle-class in the region, and move away from the traditions associated with the Chinese ideology, means that the luxury market is booming more than ever.
Luxury Society recently reported on the success of Gucci in China. ‘The Gucci Formula: When Storytelling in China is Done Right’ is an article that outlines how crucial the art of storytelling is to the audience. “Appealing visuals is a must, but China’s consumers now also demand an equally fascinating storyline,” they argue, citing Gucci’s colourful campaigns that feature a range of models and inclusivity-based advertisements to appeal to their audience. Gucci is also committed to offering a more authentic brand, drawing on local elements of culture, as well as heritage and craftsmanship (which has typically been very Eurocentric). Finally, the report highlights how the narrative of Gucci is constantly changing, reacting to social trends and offering freedom to the brand’s ever-changing story, rather than clinging to prescribed ideas that may have historically worked.
Of course, there is no industry that can directly mirror the yachting market, but it is worth paying attention to the success of luxury products to spot trends that will inevitably end up in our industry. And there are changes afoot. In a conversation earlier this year, Rose Damen, CEO of Amels, explained that the brand is making a conscious effort to use Asian models in its advertising campaigns, aiming to better connect with this region’s audience.
It’s generally acknowledged that the most common entrance into the superyacht market is through charter. So how can the charter market engage with these individuals in the luxury sphere? This concept was raised at last month’s VIP round table ahead of the Marine Tourism Summit in Hainan Province, China in 2019. The Summit will be a strategic meeting of marine tourism stakeholders from the region and yachting experts from further afield.
At the roundtable, Cameron Bray, managing director of Bray Management, remarked that in his native Australia, the day charter market is very popular with Chinese clients. This concept of charter hasn’t been embraced by the rest of the yachting world but, as has been discussed before, it’s important for yachting to not prescribe ‘traditional’ (Western) views on the subject. Bray suggested offering Chinese clients the opportunity to pay for just the day, or even an overnight stay, initially, with the aim of eventually securing longer charters.
Laurent Debart, CEO of YPI agreed that it’s vital for simple charter models to be established in the region, in order to showcase the opportunities that it can provide, offering the chance for clients to ‘dip their toe’ in the waters of yachting. If we are to apply the successes of Gucci to the charter market, the storytelling of this experience needs to be finely tuned, and expressed in a way that is appealing to the market.
When it comes to the logistics of chartering, there are still a number of areas that Hainan needs to improve. Mike Simpson of Simpson Marine, has been working in the region for decades. He argues that the charter market needs support from the owners themselves, suggesting that they need to be encouraged to charter out their vessels, and as a result, ensure that there is a fleet of vessels available. However, Martin Redmayne, who was chairing the event, argued that very few owners actually see the charter of their vessel as a business, rather a way to offset costs.
When it comes to the traditional legislative factors restricting charter in the region, John Kwong, president of International Yacht Harbour, highlighted that Hainan is the only place in China where you can legally charter. This, coupled with a recent announcement from the Chinese government that they are using Hainan as a ‘yacht experiment’ are all positive indications of movement forwards for yachting. Interestingly – if we are to refer back to Gucci’s success – marketing that focuses on heritage is often successfully deployed in the luxury market. Kwong observed that Hainan has been at the forefront of sailing for over 600 years. This could be a subject to further explore, encouraging potential clients to combine the region’s history with a new luxury experience.
If the charter market is to take off in China, and Hainan specifically, stakeholders in the region should look to successful luxury brands that have thrived and adopt their best practices. Engaging with this market is possible, but not without its difficulties. The discussions at the Marine Tourism Summit next year will look to address the intricacies of the region, consider the areas that still need to be developed, and how best to build a long-term plan for its future.
The Marine Tourism Summit in Hainan will take place in 2019. To find out more, please email: firstname.lastname@example.org. The Superyacht Group is the official media partner of the event.
Images from the VIP roundtable discussion hosted last month in Hainan.
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