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Jun
2015

Luxury yachts & Private jets November 2012

According to official Chinese statistics there are approximately 3000 luxury yachts registered in China and coincidentally 3000 privately owned aircraft, of which 200 are corporate jets and 100 aircraft that are licensed to fly frequently, which is 0.8 hours per day. These are not commercial aircraft, which by comparison can fly up to 9.5 hours per day.

The purchase of luxury yachts and private jets in China began in the mid 2000’s and has slowly grown as the UHNWI’s and principally their corporations have recognized how both can be used as business tools, their pleasure value in the case of yachts is only just being recognized.

The growth of both sectors has been hampered by a lack of suitable infrastructure and restrictive government policy. For example, Chinese airspace is controlled by the military, so much of it is closed to private aircraft, and gaining approval to fly can take anywhere between 48 hours for a corporate jet and up to 10 days for a light aircraft flying below 1000 metres and crossing provincial borders. Taking a private yacht to sea also requires submission of paperwork, and approval to travel between provinces.

 

 

Private Jets

The consumer perception and values of corporate jet customers in China are still in the primary stage of development, as the majority of buyers regard the private jet as a tool to flaunt their wealth, and only care about the pricetag and the range of the aircraft, rather than considering the practical issues of ownership. Therefore, among the corporate jets presently in China, those for long-distance luxury travel represent the mainstream, while short and medium range models are less popular.

Those purchasing private jets only tend to consider the size and the range, and have no idea about the practical issues of ownership. They therefore rely on others to help them make this type of decision, but unlike owners in Europe and the USA, who start with small jets and expand to larger ones, buyers in China go straight for ultra-long range models.

By the end of 2011, there were 70 general airports in China, and only corporate jet terminals located in Beijing, Shanghai and Shenzhen airports. In March 2012, the Zhuhai Xirui private jet Fixed Base Operation (FBO) opened, and is China’s first private jet 4S dealership. This FBO introduced an American management model to offer purchase, full management, flight training, maintenance and a refueling service to match the needs of the inexperienced buyers.

 

 

Luxury Yachts

There appears to be a new consensus about the new rich in China, that only a large luxury private yacht can make the difference between a billionaire and the ‘ordinary rich people’.The potential yacht consumers in China are made up of two groups of people; one group are real estate enterprises and private companies, the other UHNW individuals.

To the Chinese, yachts are a business tool. Compared to the purchase motivation for leisure and personal use in the European or US market, the owners in mainland China are greatly motivated by business values. “More than 75% of yacht buyers in China are large companies, who use them mainly for business entertainment”, according to Lu Bin, chairman of a yacht company in Hainan, who also commented that Chinese buyers prefer to buy big yachts that emphasize design and appearance rather than functionality.

According to the interviews carried out by FDKG with yacht dealers and media in the industry, the typical profile of a yacht consumer in China is male, aged from 35 to 50, who focus on the yachts with overall length above 50 feet, the bigger the better. Motor yachts represent more than 80% of the Chinese yacht market and in particular international brands have always been popular among consumers. International yacht manufacturers have identified that, as most of the yachts in China are used for entertaining clients, rather than sport or leisure, they must provide bespoke products at exhibitions delivering greater business attributes.

The British brand Sunseeker, claims that it will complete a 40 metre luxury yacht by December this year to sell in to the Chinese market, which will then exceed the 33 metre Predator 108 Special Edition yacht, the largest yacht sold so far, bought by Wang Jianlin, the owner of Dalian Wanda Group for £7 million.

 


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