Forget entertaining clients in karaoke bars. These days, Chinese businessmen are more likely to be talking deals on luxury boats.
A total of 36 boats worth 130 million yuan ($19 million) were sold at the Xiamen Boat Show in late 2010 — 35 percent higher than in 2009. Cai Zhibin, head of the event organizer Xiamen Road Bridge Yacht Development, says the sales were so amazing they took "everyone in the industry by surprise."
While mid-range yachts account for bulk of sales in the U.S. and Europe, China consumers are snapping up boats at the high- and low-end.
"Luxury boats are mainly sold to entrepreneurs who use it for business entertainment, some buyers tell us," says Cai. "I've already earned back the investment on the boat, just by doing a few deals on it."
Experts say the prospect of having a "floating palace" has more than offset the multimillion-dollar price tags, the 40 percent import tax and running costs equivalent to several cars. As one prospective buyer puts it:" You've got to have some expenses in life."
China's boat business has been picking up steam especially after Beijing specified "leisure boating" as a direction for tourism development. Several cities are vying to become China's Riviera, including Tianjin, Qingdao, Dalian in the north, Shenzhen, Sanya, Xiamen in the south, Shanghai and Hangzhou in the east. The number of marinas is expected to double to 60 by 2014. Regulators are working on cutting the red-tape involved in operating a boat.
Meanwhile, investors are taking note of the sea-change. China's only listed yacht maker — Sunbird, has seen its shares jump 50 percent in less than 2 months of its listing. Local yacht makers may be behind in designs and technology, but they offer lower prices, more convenient after-sales services. Most of all, they understand Chinese tastes.
International brands — like Azimut, Princess, Sunseeker, are all expanding their China presence. Yachting related businesses like Nuvolari & Lenard — the custom super-yacht designer to the stars — PLANS to open a design center in Xiamen in hopes of tapping demand from the mainland market.
But a lack of proper of proper infrastructure support for boat owners could be a barrier to growth. Right now there is not enough standardized marinas, fueling and maintenance facilities, as well as qualified people to run them. "China needs a mentor to improve infrastructure, we want to set up a school to train boating professionals here," says Eriberto Morsanuto, Asia country manager of Nettuno Yachts.