By Godfrey Zwygart
It is a fact: In the last ten-plus years, since the start of the yacht market growth in China, many western companies with great expertise in the marina field have failed miserably to secure any consistent and long term contracts. In this article I try to examine the Chinese market specificities and the obstacles companies face when trying to enter this market.
First a few numbers to get a perspective: China has roughly 25-30 marinas in operation (9 of them are located in Hainan province) with probably a hundred more under planning or construction. The total number of yachts is estimated to be around 20,000. Most marinas are small in size and few offer more than 300 berths. With these figures why do foreign companies have a hard time getting a share of this market?
MANAGEMENT
Major hospitality chains have done extremely well in China, with thousands of hotels managed by foreign brands, under very well established and recognized structures and management systems. So why are these systems not effective for marinas? The problems are multiple.
- Size factor: most marinas are small and often built as a satellite to real estate projects and therefore operations are hardly financially viable. Smaller promoters do not have the habit of hiring or contracting foreign companies to handle their business, and usually prefer to remain local. On the other hand larger marinas are often state owned, and for various reasons governmental bodies will prefer to deal with local corporations.
- Financial control: Chinese companies have very strict administration and control systems and usually want to keep 100% control over finances. At present western management contracts mainly offer a package, whereas the management company has full control over the expenditures and operations. In addition they are often expensive. This cannot work with penny conscious medium size Chinese companies, unless it has been proven effective in terms of financial return. So far most marinas in China at present (except for a select few) have the reputation of not being profitable.
- Fear factor: Mid-size Chinese entrepreneurs like to work with people they know well whereas trust comes from years of experience. So a Chinese boss will rather put his trust in people he knows for years (often relatives) even if these individuals are clueless or inexperienced about the marine business. In addition investors with little or no international practice will be fearful of communication problems that may arise in dealing with foreigners.
DESIGN & EQUIPMENT & SERVICES
Designers still have a good card to play on this market, providing they have been on the Chinese market for years and have a good, proven track record. Hopefully in the future, larger corporations will be investing in marinas and the market may well offer increasing opportunities.
Equipment suppliers (pontoons, ancillaries, etc.) are facing several serious obstacles.
- Firstly, they rarely have a Chinese entity which means they can’t issue local invoices, and payments need to be made abroad and in foreign currency which for local companies is very troublesome.
- Secondly, they seldom have a local production unit, which in turn means higher costs due to taxes and shipping.
- Thirdly, equipment is not rocket science and local companies are learning fast. Some of them even expanded and have become very tough competitors on foreign markets.
In terms of yacht services, the market is extremely tough. Price competition is very fierce and there is no organisation or professional federation to enforce consistent pricing. The small guy next door can always offer a better deal even if he barely makes any profit and if the service quality is not on par with what I would call professional yacht services.
CONCLUSION
The Chinese marine and yacht market is undoubtedly gigantic and can offer enormous opportunities. However the access card can be excruciating and pricey. One should be prepared to be cost-effective, have personnel that can communicate perfectly and is familiar with Chinese business habits and customs, and overall be extremely patient, resilient and adaptable. An easier path to market access is establishing a long term partnership with a Chinese company, bringing branding and technical knowledge while benefiting from local experience and production capability.
Godfrey Zwygart
Frenchman Godfrey Zwygart is a former captain and chief engineer who spent decades in Taiwan, Hong Kong and China. Originally trained in the French Naval Academy he served on both navy and merchant ships and as captain on mega yachts. He moved to Asia in the 80’s as a boat builder in Taiwan, and now specializes in development, management and marketing of world class international yacht marinas and yacht clubs.
In 2010 Zwygart moved to Sanya to build and act as general manager operations of the multi-awards winning Sanya Serenity Marina.
The 5 gold anchors platinum marina has been a host twice for the Volvo Ocean Race, as well as the Clipper Race and the youth world sailing championships.
Zwygart then established Marevisio Co Limited, aiming to help marinas and super yachts brands in the Asian region through management consultancy, training, and services. Zwygart has published two books as well as a large number of articles in Chinese and he is a prominent figure in China’s yachting and marine industry.
As foreign expert for the Hainan government, he collaborates with the local government on the development of the Hainan free trade port.
Those wishing to contact Godfrey can do so on +86 188 0899 8617 or email at
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