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Luxury yachts & Private jets September 2014

Warren Buffett finally enters the Chinese private aircraft market

On 24th September, one of Buffett’s Berkshire Hathaway companies NetJets, a private aircraft leasing company claimed that after two years of application and approval, it had been licensed to carry out aircraft leasing services in China and has access to the necessary China Civil Aviation Administration CCAR -135 Ministry operation certificate.

NetJets is the first foreign company to provide the private aircraft leasing in China. The investment demonstrates confidence and understanding from Warren Buffett in and about the market. With a growing wealthy population, China is gradually developing into one of the fastest growing private jet markets in the world and currently 25% of global private jet orders come from China. Canadian private aircraft manufacturer Bombardier predicts that over the next 20 years, the Greater China region will purchase 2420 private aircraft and that approximately 1000 private aircraft will be delivered during 2013 to 2022 period. Although there are a number of restrictions limiting private flying in China, the indications from the government are that it is planning to gradually relax these restrictions.

On 16th September, the 2014 Beijing International Business Aviation Exhibition opened at the China Civil Aviation Flight Center. The future of China’s private jet market was discussed and one key topic of conversation was the fact that the business jet has a unique ability to save time in any business trip, especially for senior business owners. Now a greater number of wealthy Chinese consumers or successful businessmen are focusing on this fact.

The cost of a business jet for any international company is likely to be hundreds of millions of RMB, and if the usage is relatively low (which normally happens in China), the purchase of a jet is undoubtedly not a good use of money. This is especially true in China where many of the companies that could afford to make a purchase are state owned, and would be attacked by the public for such waste, never mind the current government’s anti-corruption policies being enforced. However, with government guidance, the business jet market has gradually become more active as the price of jets has reduced, and purchasers are now more mature and logical in their thinking, considering medium or small jets rather than large ones, and in some cases companies buy a jet together to increase the use and share the overall costs. The market appears to be going through a healthy development.

Other than larger business jets, the small helicopter market is also heating up. Compared to a business jet costing hundreds of millions RMB, the price of a helicopter is relatively low, ranging from hundreds of thousands to a few million RMB. Those who have bought helicopters include flight enthusiasts and helicopter industry investors. Additionally, the demand from navigation operations, crop spraying, tourism, medical treatment operations, border patrols, geological surveying and forest fire prevention among others will all promote the growth of the helicopter market in China. At present it is estimated that the total potential helicopters customer numbers are around 300,000 in China.

11 Participants are awarded the China National Yacht skipper License

On 8th September, 11 participants took and were awarded the ‘China National Yacht Driving License’ (skippers license) the first to do so. Back into 2005, the Shanghai Yacht Driving License was introduced and became the first yacht skipper’s license in the country. However the Shanghai license isn’t universal across the country meaning that the holder can only pilot a yacht in Shanghai waters, if he/she wants to travel to other provinces, they need to pass the local test and get another license. The national skipper license is different from any other previously in that the holder can operate all over China with it. Naturally its never as simple as its sounds and according to the regulations, they still need to apply to local government beforehand to operate in their waters. In future, every trainee in China will be taught and tested against this standard and receive a national yacht driving license should they pass.

‘More than 20 people signed up for the lessons, but only 11 actually passed the physical examination.’ according to Zhang Baofu, the Secretary of Cruise Yacht Marina of the Association of Chinese ports. ‘The new training focuses on the combination of theory and practice. After more than 50 hours of theory tuition and operational practice, the 11 selected trainees have all passed the final exam and become the first group of China’s National Yacht Driving License holders. I think the new license policy will help activate the yacht market and over the next 5 or 10 years, we will see rapid growth.’

8 sea scenic spots in Hainan will open for overseas yachts

On 11th September, The Hainan Coastal Defense and Port Office announced that eight scenic tour spots on the islands coast will be accessible to overseas yachts for six months to facilitate and support to the Hainan yacht and cruise tourism and yacht race activities. Previously, for national security reasons, foreign registered vessels were not permitted to enter these waters.

The 8 locations include Dongying Island, Boao Town, Shimei Shenzhou Peninsula, Haitang Bay, Nanshan Island, Longmu Bay, Qizi Bay and Lingaojiao.

‘The temporary opening of the sea scenic tour spots will really encourage overseas tourists, especially those from surrounding countries.’ according to Zhou Gongmin, the Director of Hainan Coastal Defense and Port Office ‘In addition, this policy is also an important element aimed at building Hainan as a international tourism island. The temporary opening of sea ports is actually considered a bold move in China and may lead a similar trend in the eastern coastal provinces and cities.’

Yacht exhibitions and events continue to proliferate

  • On 3rd September, ‘Baihu feast – First Daqing yacht and fashionable lifestyle exhibition’ ended in Sanyong Lake. Thousands of people boarded yachts and sailed to enjoy the beautiful scenery. At the exhibition, more than 10 yachts, 6 small outboard powered boats and 2 magnificent trimaran fascinated the visitors.
  • 19th to 21st September, the second ‘China (Changsha) International Yacht and Jet Exhibition’ was held in Changsha Orange Island Beach Paradise. Hundreds international yachts, business jets, luxury cars and other high-end products been brought together from over 10 countries for the exhibition.
  • 9th to 12th October, the second ‘Shenzhen Bay (autumn) international yacht exhibition will be held in Shenzhen. The exhibition space of 20,000 sqm hosted 70 companies from more than 10 countries, including Azimut, Sunseeker, Beneteau, Ferretti Monte Carlo. Meanwhile many international luxury brands will also be on display.
  • The Seventh ‘China (Xiamen) international yacht Expo’ will be held at the Xiamen Wuyuan bay yacht harbour from 7th to 10th November. Most of the top international yacht brands will be present.
  • The first ‘China (Zhuhai) international yacht Expo’ orgnised by Shanghai Shipbuilding Industry Association and its yacht branch will held on 14th November in Zhuhai, Guangdong Province.
  • On 4th December, the 2014 world yacht grand ceremony investment introduction and promotion conference will held in Haikou on Hainan Island for 3 days.

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