The exceptionalism of China
China holds a great deal of promise for the new build market. But, long-term strategies must look beyond…
The potential benefits of an explosion of interest in the superyacht market in China is unquestionable. Indeed, whether it be as a result of cultural homogenisation on the part of the world’s ultra-wealthy, or concerted efforts on the part of the superyacht industry’s marketeers and brokers, the superyacht market in China is starting to bear fruit as more ultra-wealthy Chinese begin to charter and own superyachts. If any further proof was required, the Chinese government’s determination to turn Hainan into China’s first superyachting hub should, hopefully, silence any further detractors.
According to the Wealth-X High Net Worth Handbook 2019: “For the last decade, luxury brands became ever more reliant on the mushrooming population of Chinese luxury consumers to shore up global sales, while managing the brand image (and often decline) in the west.”
Such a scenario is not unimaginable in the superyachting world. As new build business has continued to consolidate globally, shipyard’s have increasingly looked to China as the potential resolution to their woes and, seemingly, these strategies are beginning to pay dividends for the lucky few.
However, the luxury brands that benefitted so profitably from the booming luxury market in China quickly learned a difficult lesson. The Chinese market, while still vital to those businesses that successfully penetrated it, is not a cure-all solution. According to Wealth-X, as more and more brands entered the Chinese market, it quickly became “increasingly saturated and highly competitive”. At this point, the knee jerk reaction may be to search around for the next golden goose, but, as it turns out, another China is not easy to find.
If – or rather when – the Chinese superyacht market is cracked, it is not beyond the realms of possibility that established shipyards would experience a purple patch in the short-term, with new build sales growing to reflect the appetite of China’s ultra-wealthy. However, it is likely that the same saturating effect that plagued the luxury market may occur for the sale of superyachts. Indeed, it is also plausible that new domestic competitors would arise to take advantage of a burgeoning new build sector.
It is imperative, therefore, that any long-term growth plans are not too heavily focussed on China. As Wealth-X put it: “While China remains an immensely important market to all luxury brands – including increasingly ‘experience’ brands such as hotels – luxury brands are more honestly reformulating themselves as holistic global brands, focusing on international growth beyond now increasingly saturated and competitive markets. The most significant outcome from this has been an acceptance of China’s exceptionalism, and that ‘another China’ is not easily found.”
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