Almost all of us who have anything to do with pleasure boats, wonder how is the boat market going to be in the future? Where is it going from here? Do pleasure boats have any future? Will the trend of owning and selling boats be a larger market or smaller due to world’s economy. What will particularly happen in Asia? Which country will be the major boat market? China, India, Indonesia perhaps? Importantly what steps should be taken today, in order to create a better market in these countries.
In Hongkong, we are realizing the obvious saturation of boating market and almost all dealers and global manufacturers of boats are pointing towards China and India. Making these 2 countries the biggest potential boating markets.
Lets talk about China first and realize that in 2005 we had big hopes for the boating business in China, we thought that the boating industry would be huge by the year 2010. Well, we are in 2010 now and China clearly has not picked up to that level of prediction, so the market is still slower than what the lot of industry experts had predicted. The reason behind that is China’s rules and regulations in pleasure boat industry. Taxation and licensing rules are very unclear in China. The rules are different for different states in China and for new boats there is a 40% tax.
Infrastructure and development speed in China however, is fantastic. But there are very few pleasure boats that are floating on the waters of China. There are definitely buyers for a high end yachts, but the maintenance is still difficult and costly. People are prepared to pay to own a luxury yacht but they are not willing to put a lot of time, over spend on maintenance, pay high taxes and go through long procedures to acquire licenses. Some marina clubs in China are now assisting in providing necessary licenses for their members, but it is not cheap. Another way the Buyers handle this issue, is by simply keeping and using their boats in Hongkong. This obviously overcrowds HK’s marinas and does not help much to boost sales into China.
A way to overcome this issue and in order to create better regulations in future, is for brokers in Hong Kong to sell more low priced and good quality used boats into China. If dealers stop hunting for high end clients and direct more marketing towards the younger and median rich clientele, It will create a lot more pleasure boats in the waters of China. The market will surely respond. Forbes list of 2010 confirms that there are 64 billionaires in China, however, a point to note that there are over 900,000 people whose net worth is more than 10 million RMB. Majority of these people are younger than 39. Even a larger and younger population exist, who are up to 5 million RMB worth.
There are definitely more number of people who are willing to spend a small amount of money initially for a boating venture. Since boating lifestyle is not very common for China, the importance should be given to bringing more boats into China, which are not very expensive and are good in quality.
This can fill the marinas, force the management to grow and also provide decent opportunities for shipyards to work.
It will also force government to look into creating manageable regulations and taxing, and if the growth of this concept is healthy, this will undoubtedly create a friendlier and hassle free market for the high end yacht buyers. In any case, China will have a large boating market, but to make it earlier than later, depends on our actions today.
Lets talk about India.
One of the biggest advantages India has is that Indian mentality and lifestyle is very adaptable to western lifestyle. India adapts and accepts ideas, culture and products from the west very easily. High number of Indian population speaks in English. Almost everyone understands English. If you are a non-Indian company, you can easily find educated work force in India. It is also easy to set up a service centre and to train workers due to India’s language capabilities and educated population.
GDP growth of India is currently 7.2%, The country is ranking no.5 in the billionaires list and India currently holds approximately 200,000 millionaires with net worth of USD 1 million to 10 million, and a larger population of people that are worth slightly less. India’s upper middle class population is expected to grow about 10 times in the next 10-15 years.
But here are the set backs! India’s politics is a chaos, corruption exists in many sectors and things become inefficient.
Major concern is that the infrastructure growth is slow. Due to corruption and differences in political groups, it is difficult to commence any kind of infrastructure. The marina which was due to be built more than 5 years ago in south of India is still not ready. Therefore the speed of development of marinas is a lot slower than China. Boat owners still do not have berthing facilities in India.
On a positive note, being the world’s largest democracy the rules and regulations are flexible and with its plus points, if the luxury boat business does reach a good start like having few working marinas and few decent boats. Indian market for boats will see faster growth than of China’s boating market.
The dealers of boats in India also need to market cheaper and quality yachts for bigger clientele. More boat chartering businesses also can boost the industry in this initial stage.
I am also sure it wont be too long until I can have hassle free cruises in the waters of India and China.
by Baggy Sartape
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