Bloomberg Businessweek - USA (2019-05-27)

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Since2015,Chinahasrestrictedthenumberofpeople

aboardyachtsto12,includingcrew,regardlessofa boat’s

length.Becauseit takessixpeopletomaneventhesmallest

superyacht,thatseverelylimitsthekindofpartyonecan

throw.(Chinaalsoslapsonimportdutiesof44%anda

domesticsalestaxof36.5%.)

Andthat’sif ownerscanevenroundupa competentcrew.

“InFrancea boatcaptaincanremoveyourtoothorextract

yourappendix,”saysNoyel,a Frenchmanwhomadehis

fortuneinShanghaiinmanufacturing.“InChina,it’slikea

busdriver.”Theboatingculturejustisn’tthereyet,hesays.

Intheshortterm,he’smorebullishonSoutheastAsia,where

politicsaren’tasfraught.HehasofficesinIndonesia,the

Philippines,Singapore,Thailand,andVietnam.AsiaMarine

teamedupwithglobalyachtingcompanyFraserinAsialast

yearandsolditsfirsttwosuperyachtsunderthedeal.

TheChinesecoastlineitselfis a trickyplaceforboating.

Inthenorth,runofffrompesticides,chemicalfertilizers,

andindustrialeffluentspollutesmaritimewaters.Qingdao,

whichhostedthesailingcompetitionatthe 2008 Summer

Olympics,isalsoknownforanannualgreenalgaeinva-

sion.Inthesouth,withitssubtropicalclimate,strayingfrom

shoreintheheavilypatrolledSouthChinaSeacanresultin

anunplannedinspectionbyuniformedofficers.Chinahas

beenstakingitsclaimtothesedisputedwatersbydredging

upgravelanddepositingit oncoralreefstocreateartificial

islands, which it then stocks with troops and weapons.

Billionaire He Xiaopeng keeps his 86-footer in Hong

Kong. However, he says Xpeng Motors, his electric car

startup, leaves him no time to sail. “I just used it once last

year,” he says. “My friends use it more than I do.” Still, He

says he dreams of trading up to an explorer yacht built

for long-distance cruising, like the kind the late Microsoft

Corp. co-founder Paul Allen used to hunt for a sunken ship.

His situation isn’t unusual. “Once, a year after delivery,

I visited one boat, and they still had the plastic cover on

themattress—sonooneslepttherefora year!It’sunbeliev-

able,”saysFang,ofHeyseaYachts.It turnsoutthatyacht

owners in China are more likely to host friends below deck

foranafternoonofmao-taiandmahjong,thenreturnto

shorebynightfall.Manufacturersarefiguringthisout.Italian

builderFerrettiSpA,whichwasacquiredbyShandong

HeavyIndustryGroup-WeichaiGroupin2012,introduceda

lineofboatscalledTaiHeBan,wheremostofthesleeping

spaceiseliminatedtomakeroomforbanquettablesand

air-conditioned karaoke lounges.

O

ne of the few billionaires to take delivery of a

superyacht in China is Wang Jianlin, who moored

a 95-foot one in a marina his group owned in

Qingdao. He ordered it after his company, Dalian

WandaGroup,purchased92%ofBritishboatmakerSunseeker

in2013.ButlastyearWangsoldthecraftandthemarina.

ChineseconglomerateHNAGroupCo.,underpressurefrom

China’s governmenttounwinda debt-fueledacquisitionspree,

kept a 161-footeravailable for charters out of Hainan Island.

The ship was sold off in January.

At the sales dinner in January,

Noyel’steam presides over a

debateon the finerdetails of

conspicuous consumption among

a SiliconValleytechie,a hedge

fundmanager,andthehandler,

whoworksforasecretiveHong

Kong-basedmagnate.Theadviser

givesaninventoryofhisclient’s

acquisitivehabits—60carsanda

fewyachts,including one built in

the Netherlands. The sommelier

fills the glasses.

The next step in Noyel’s play-

book is to get potential buyers on

a charter cruise, where they can

savorthefloatinglifeinMonaco

orMykonos.“Withinthreeyears

thingswilltotally change,” says

Shao Huiliang, manager of Pride

Mega Yachts, a brand owned by a

ChinaInternationalMarineContainersGroupCo.unit.Pride

recentlylistedits290-footIllusionPlus, thebiggestChinese-

madeyachtever.Theprice:$145million.

Shao is one of many optimists in China’s yachting scene,

with hopes kept alive by the occasional yacht sale, such as the

86-footer that Simpson Marine sold in March, or the prom-

ise of new government-backed marina projects in Hainan and

Zhuhai. Still, none of those marinas are big enough for the

Illusion Plus. And Shao isn’t necessarily counting on a Chinese

client. He keeps the ship tied up near Monaco. <BW> QILAI SHEN/BLOOMBERG

Bloomberg Businessweek

WHERE THE MONEY IS

May 27, 2019

Workers at Heysea Yachts Group in southern

China finish the fiberglass hull of a luxuryboat