In June, one of the world’s most famous makers of luxury yachts signed an agreement to invest more than three billion yuan to build its Asia-Pacific headquarters on Hengqin island. It will include a marketing and service centre, a yacht club, a navigation school and annual yacht exhibition.
The decision by the Ferretti Group of Italy is a milestone in Zhuhai’s efforts to become the premium yachting centre of China, from design and manufacture to the first choice for sailors in the Pearl River Delta to race and moor their boats.
The city is already home to one of the biggest yacht manufacturing centres in China. Established in 2002, the Pingsha Yacht Industrial Zone has 18 producers, six supporting firms and 30 trading companies, with a total investment of US$ 300 million.
In 2012, its production was worth 1.39 billion yuan, with exports of US$ 74.5 million, increases of 19 percent and 16 percent respectively over 2011. The main export market is the US. The target for 2015 is to double output to three billion yuan, with boats ranging from 17 to 300 feet.
Initially, the manufacturers aimed at the export market; but they are increasingly looking at the home market. By the end of this year, 960,000 Chinese people will have over 10 million yuan in assets; among them, 60,000 have assets of over 100 million. They are the growing potential market for yacht manufacturers.
In April 2013, China had 46 yacht clubs with 6,404 berths; berths are in short supply.
“The target is to become China’s largest yacht manufacturing base, with high status in the world, inviting significant yacht tourism in China, with a renowned exhibition and sales centre,” said the Investment Promotion Bureau of Jinwan district, of which Pingsha is a part.
The market is extremely competitive. Other coastal cities have targeted yacht manufacturing as a priority sector; they include Dalian, Qingdao, Xiamen, Guangzhou and Haikou and Sanya on Hainan island. More than 20 cities now organise an annual yacht exhibition.
In addition, foreign manufacturers increasingly target the Chinese market, which they see as one of the most promising in the world. Some sell from their shipyards at home and others are investing in factories in China. They are major competitors for the yacht-makers of Zhuhai.
Ideal for yachting
Zhuhai has ideal conditions for yachting. It has an average temperature of 23 degrees Celsius, allowing for the use of yachts almost throughout the year. It has 146 islands and a coastline of 690 kilometers. It is close to Macao and Hong Kong, which have more than 10,000 registered yachts, and is in the Pearl River Delta, one of the richest areas of China.
So it was no surprise that the city government selected the sector as a priority industry in 2002. It designated the Pingsha Yacht and Leisure Tourism Zone for this purpose; it was designed to accommodate 21 manufacturers.
The best known local company in the zone is the Sunbird Yacht Company, founded on 3 January 2003. It initially targeted the domestic market and started exports in 2008. That year, it produced its first 80-foot luxury yacht. In 2010, it listed on the Shenzhen stock exchange. In 2012, it reported total revenue of 582 million yuan, an increase of 46.9 percent over 2011.
Other tenants of the zone include Zhuhai Jianglong Shipbuilding Co, Tricon Marine and Zhuhai McConaghy, a subsidiary of McConaghy Boats of Australia. The company was founded in Sydney in 1967 by John McConaghy. In 2006, it opened a facility of 2,500 square metres in Pingsha; it has since expanded this to 10,000 square metres, to make yachts including Olympic Class Elliott 6m to Volvo 70 and America’s Cup racers.
One of its vessels was a 140-foot Adastra Trimaran, built for a Hong Kong client for long-range ocean voyaging. It was custom-built, with a carbon fibre superstructure and light oak cabinets for the interiors. There are carbon fibre hatches, port-lights, ladders and hinges, to make the vessel extremely light. It has accommodation for six crew members and nine guests, with a lounge area, dining table and navigation station.
Initially, the Chinese firms made vessels following designs from abroad. But they have gradually developed their own research and design capability.
Also under construction in Pingsha is the Southland Yacht Club. The Zhuhai Southland Group is investing 600 million yuan in the project, which has a land area of 80,000 square metres and a water area of 220,000 square metres. It will include berths for 600 yachts, a marine sports activities centre, a five-star hotel, resort hotel, a yacht club and exhibition area, and a repair and maintenance dock. It aims to be the largest such club in south China and a venue for international meetings and conferences.
Local leader
The most famous local brand in Pingsha, Sunbird, now has three factories – in Zhuhai, Yuanjiang in Hunan and Foshan in Guangdong – and is able to build 1,000 boats a year. Since its foundation, it has sold more than 10,000 vessels at home and in 18 countries and regions abroad, ranking first in China.
In its report for the first half of 2013, the brand declared income of 255.8 million yuan, an increase of 32 percent over the same period in 2012, and post-tax profit of 29.96 million yuan, up 12 percent. It said that the market was extremely competitive, with foreign yacht-makers setting up sales networks and taking a market share in China.
Of the sales, 40 percent were commercial yachts and 56 percent special yachts. Special yachts are those ordered by the military or other departments of the government, for fire-fighting, border patrols, anti-flooding and other special purposes. Sunbird has a 47.5 percent market share for this kind of vessel in China; for 2013, it expects special yacht orders of 500 million yuan.
It has 1,800 employees, including 300 Research and Development technicians and designers.
Ferretti project
The agreement announced by the Ferretti Group in June marks the next step in making Zhuhai a yachting centre. It aims not only to be a place of design and manufacture but also a centre for yacht sailing for leisure. This is one of the most popular pastimes of the wealthy in Hong Kong and Macao and increasingly on the mainland.
The group signed an agreement with Hengqin New Area and Shizimen Holdings to invest three billion yuan in the Ferretti Yacht Asia-Pacific headquarters in Hengqin.
It will include a waterside recreational commercial complex, including a marketing and service centre to display new products, an area for trial rides and piloting, a club for ship owners, a navigation school and a public yacht club. In addition, the group will co-host a global yacht exhibition with the Italian Yacht Club each year in Hengqin.
The company was founded in 1968 by two Italian brothers to make luxury yachts and is a famous name in the industry.
In January 2012, Weichai Holding Group, a subsidiary of Shandong Heavy Industry Group, paid 178 million euros for a 75 percent of Ferretti. Under the terms of the agreement, Ferretti will retain its existing management as well as its headquarters and production facilities in Forli in Italy.
Zhuhai is competing with Shenzhen and other cities in the Pearl River to welcome the yachts – over 10,000 of them – from Hong Kong and Macao. As from 1 January 2011, owners have been able to apply for a licence in Zhuhai without giving up their original one from where they are from.
Previously, they had to give up their original licence as well as take their boat to Zhuhai for the authorities to assess and photograph. Because of these rules, only two of the owners had a licence in Zhuhai.
Gree yacht club
Ferretti and Southland are not alone in building yacht clubs. The property section of Gree Real Estate, the property arm of the Gree Group, a Zhuhai firm that is one of the world’s biggest manufacturers of air conditioners, also plans a yacht marina and club as part of a major property project.
Gree Coast contains 6,800 apartments and is nearing completion in the Tangjia district of the city, on the shores of the Pearl River. The cheapest unit is 18,000 yuan per square metre and the average price is 24,000 yuan.
“We will start work on the marina in 2014, with 220 berths and a club on the shore in front of the building,” said Yan Yan, a sales representative for Gree Coast. “We are aiming at owners outside the mainland, especially Hong Kong and Macao. It is hard for them to find berths there. Very few of the buyers of our apartments, from the mainland, will have yachts.”
She said Zhuhai had over 100 islands and that, on two of them, Gree Real Estate has built hotels where yacht owners can stay while berthing their yachts. The company sees enormous potential in developing Zhuhai and its waters as a yachting centre.
It is investing two billion yuan in Donggao island, 30 kilometres to the southeast of the city and considered to be one of the most beautiful among the 146 in Zhuhai. It has three excellent beaches, with facilities for surfing, scuba diving and sailing. It has a land area of 4.7 square kilometres, a population of 400 and four useable roads.
Gree Electronics reported revenue in 2012 of 100 billion yuan, with a net profit of nearly 7.4 billion yuan. Set up in March 1985, it has used profits from its electronics business to diversify into trade and real estate, becoming one of the leading property developers in the city.
