Economy

Riding on the crest of a wave

By Wang Ying (China Daily)
Updated: 2010-11-09 14:08

SUZHOU, Jiangsu - One of the world's most expensive yachts, the Hatteras 105 - which carries a price tag of 150 million yuan ($22.54 million) - will soon cruise in Chinese waters, Brunswick Boat Group, the world's largest yacht producer and owner of the Hatteras brand, said on Monday.

The yacht model has been custom-made for the increasingly important Chinese market, said Zhang Yao, general manager with Brunswick Trading (Suzhou) Co Ltd, who added that four clients have already shown an interest.

"In this sense, the yacht market is shifting from the former 'made in China' into 'made for China'," Zhang said.

China has overtaken the United States to become the world's second-largest luxury goods market, behind only Japan.

The economic boom is the main reason that the Hatteras brand has started exploring the Chinese market, said Karl Kemppainen, vice-president of sales and marketing at Hatteras.

"The economy in the Europe and the US has weakened badly in the past two years, but on the contrary, China's economy is growing rapidly," Kemppainen said.

Traditional buyers from the Middle East market also received a blow from the economic downturn, partly as a result of the falling real estate market, and China has now become an oasis for yacht builders mired in a financial desert.

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The number of wealthy Chinese citizens is growing at an unprecedented pace as the nation's economy continues to expand. The 2010 Hurun Wealth Report said there are 875,000 dollar-millionaires (people whose wealth exceeds 10 million yuan), and 1,900 yuan-billionaires in China, 6.1 percent and 7.8 percent more than last year.

Over the years, Brunswick has enjoyed a reputation as a luxury yacht maker, and has won many favor with, among others, North American syndicates, European nobles, and royal families in the Middle East.

Founded in 1845, the group entered the Chinese market in 1998 and has sold more than 600 luxury yachts over the past decade.

Brunswick is confident about projections for the Chinese market, Zhang said. "China's economy has grown for more than 20 consecutive years, and a new rich base is forming with the spending power for high-end leisure products, such as yachts," Zhang said.

Sales of luxury goods grew 12 percent in 2009 to $9.6 billion, accounting for 27.5 percent of the global market, according to a report from global business consulting firm Bain & Co. In the next five years, Chinese spending on luxury goods will increase to $14.6 billion, making it the world's largest luxury market.

The report forecast that luxury sales in China will achieve growth of 30 percent year-on-year in 2010, reaching 9.2 billion euros ($12.8 billion).

"China is positioned to become the world's third- largest country market by the middle of this decade," said the report named Luxury Goods Worldwide Market Study.