Yachting has traditionally been the preserve of the super-rich, and the market in China is still relatively small. But experts believe it is set for strong growth, partly through focusing on more affordable areas of the sport.

Two visitors walk past boats on display during the 20th China (Shanghai) International Boat Show in Shanghai, on April 9. Photo: IC

China's economy may be slowing down, but the country is still attracting more and more overseas yacht makers.

In March, BRP (Bombardier Recreational Products), a Canadian manufacturer of vehicles and water sports equipment, established a joint venture in Shanghai with a Hong Kong-based marine equipment company.

Chris Dawson, vice president of BRP, said at the founding conference that he was "confident" in the Chinese market.

BRP was one of the 550 exhibitors that attended the 20th China (Shanghai) International Boat Show (CIBS) from April 9 to 12.

According to a report the CIBS sent to the Global Times on Tuesday, more than 60 deals were signed during the four-day show, including sales of 48 yachts made both by domestic and overseas manufacturers.

The CIBS report said that this year's total trading volume at the boat show was more than 100 million yuan ($16.12 million), compared with around 80 million yuan at last year's show.

According to the 2014 China Yacht Industry Report jointly released by MGM Resorts International and the Hurun Research Institute, several Chinese enterprises have acquired overseas yacht makers in recent years. In 2012, Weichai Group, a Shandong-based motor vehicle manufacturer, obtained a 75 percent stake in Italian yacht maker Ferretti for 374 million euros ($400 million).

Early stages

Although overseas brands may be enthusiastic about China's yachting market, whether they can make a profit in the short term is open to question, industry insiders said.

According to a report by the BBC in 2014, it's a regular pattern that when a country's GDP per capita exceeds $6,000, the yachting industry in that country starts to enter a period of rapid growth.

The report said that China's GDP per capita in several areas, especially the Yangtze River Delta and the Pearl River Delta, exceeds $8,000, indicating a strong potential market for yachting.

However, so far China's yachting industry is still at an underdeveloped stage. Li Xiaohong, vice president of the China Cruising Yacht Club, told the Global Times on Tuesday that there are only around 4,000 registered yachts in China, a small number compared to the numerous yacht clubs and berths available.

"I think the growth rate of China's yacht buyers has slowed in the last two years, but smaller boats are selling well," Li said.

The China Business News also reported on April 15 that more than half of China's yachts are left unused for long periods of time.

Li said that a lack of professional boat maintenance and marina management were hindering the development of China's yacht market.

"For example, some of China's marinas are not built to professional standards, and unprofessional maintenance can shorten the operational lifespan of the yachts," Li noted.

However, Li said she was still optimistic about the prospects for China's yacht industry.

"For overseas yacht builders, China's market is larger and therefore has greater potential than their own countries. The sooner they enter China, the more likely they are to dominate the market here."

Wang Lina, a customer representative at the Suzhou Taihu Mercury Club & Marina, told the Global Times on Tuesday that overseas yacht manufacturers are unlikely to make a profit in the short term in China.

"But in the longer term, say more than five years, the Chinese market might give them a pleasant surprise."

Changing business model

Currently, many yacht clubs and yacht manufacturers are shifting their business model to adapt to new trends in China's yachting industry.

Traditionally, yachting has been a game of the rich. According to the 2014 China Yacht Industry Report, among the magnates on the list of China's 100 richest people, more than one-third owned private airplanes or yachts.

Owning a yacht is still very expensive.

"In Shanghai, for example, a 40-foot yacht costs about 4 million yuan. There is also the maintenance fee and the cost for a berth, which is about 400,000 yuan per year on the Huangpu River," said Li.

"Besides, the membership fee at some yacht clubs in China is very high."  

However, Li said that customers have become "smarter" in recent years. "Many customers used to buy expensive yachts just to show off. But now they want to spend more wisely."

That accounts for the rise of small-sized, cost-effective boats and water sports equipment. At the 20th CIBS, there was a 43 percent increase in the number of yachts on display that had a length of 8 meters or less.

Yacht clubs are also trying to shift their business model to attract a younger customer base.

For example, the China Cruising Yacht Club started providing sailing training last year. Renting boats for sailing is "a popular, more affordable sport," said Li.

Wang also said that the Suzhou Taihu Mercury Club & Marina is considering opening new yacht clubs that target the general public instead of more elite customers.

Inland market

Apart from changing their business models, China's yacht clubs are also turning their attention to inland and second-tier cities, rather than big coastal cities like Shanghai where there is already heated competition in the field.

The Yangzhou Evening News reported on Monday that a new yacht club covering 1.6 square kilometers will be built in the Shaobo Lake holiday resort in Yangzhou, East China's Jiangsu Province.

The China Cruising Yacht Club is also giving yacht club management training lessons to waterfront real estate developers, and Li said that more and more inland investors are turning to them for help. "We have customers from Changsha, Nanchang and even parts of Northwest China like Gansu Province."

Wang said that inland cities, especially those with large lakes, have great potential.

"Some people are afraid of the sea, but lakes are usually very safe," said Wang.

But Wang also cautioned that many inland yacht clubs have been set up by real estate developers, and are thus lacking in sailing industry professionalism.

The Jiangxi Morning News reported in 2014 that a yacht club in Nanchang set up by a developer was not operating properly. The report said that as the developer had not sold enough of the properties, it was not offering any services at the club.

"On the whole, however, a boom in China's inland yachting market could increase the popularity of the industry in general," said Wang.