The superyacht industry has been watching two nations hungrily. Each has a burgeoning super-rich class and both have problematic tax laws, erected to try to ensure this class’s interest in superyachts benefits manufacture at home. But while brokers speak about mainland China cautiously and in terms of future generations, they are shaking their maracas about Brazil.
The reasons are largely related to the differences in national tastes and traditions. ‘Brazil is a seafaring nation, they enjoy their time on the water,’ says Matt Emerson, Burgess director for the Americas. ‘The wealthy who could afford it have always been into yachting, but more charter in the Caribbean or Med than buying.’
But Brazil’s economic growth has propelled already rich Brazilians into a different bracket of wealth. ‘You’re now seeing that new wealth look beyond chartering and see the need for purchase,’ says Emerson. They are low-key and private about their wealth. Many are keen on quality northern European yards, while others have moved up from smaller Italian sport boats to their larger equivalents – for example Azimut to Benetti.
China’s new top tier is also keen on superyacht purchase, but comes to it from a very different angle. As Simon Turner, Singapore and France-based director of Northrop & Johnson, puts it: ‘They may be wealthy but when a Chinese person steps aboard a yacht for the first time, they literally have no idea what they are in. The closest thing they can associate it with is a ferry.’
So why do they want to buy? Turner describes the typical Chinese superyacht owner as a marina owner who wants a showpiece for their business; the owner of a golf club, polo club, or country club that has some waterfront, where they want to place a yacht; or a major businessman who wants a status symbol and platform for corporate entertaining. They are brand-conscious and desire accessible brands with high volume. ‘If a Chinese person comes to the south of France they are going to see Sunseekers, Ferrettis, Azimuts, Sanlorenzos, they’re unlikely to recognise a Feadship or Lürssen,’ says Turner.
In general these yachts are tools and trophies rather than the means to leisure.‘Chinese people work 24/7 and they don’t do two-week holidays relaxing – everything is business,’ says Turner. ‘Their yacht needs to be near their area of business so they can use it (and not, for example in Saint Tropez).’
When you also consider that the Chinese are often ‘not keen on the sun or boats rocking around’ and that regulations still make going to sea a bureaucratic pain, it is unsurprising that Chinese-owned boats are unlikely to move much. For the same reasons the Chinese have not shown much interest in charter. ‘Right now I have a Chinese group enquiring for the F1 Grand Prix in Singapore – so where there’s an event, an activity, a corporate need, I think we’ll see bits of it but I don’t think the Chinese will charter yachts to sail round Phuket and go diving.’
Turner is confident that educating Chinese owners about the yachting lifestyle will yield rich results in the future. But there is also a tax hindrance – 43 per cent of the value of a yacht to bring it into the country. ‘You’ve got this huge wealth gap and the government doesn’t want playboys going round in multi-million pound yachts and not be contributing,’ says Turner.
‘Then there’s the issue of manufacturing. China with any of its industries wants to compete, and they have a have a burgeoning boat production market, some of which is becoming very good, but its generally sub-70 feet (21 metres). China expects they can catch up and they will do that on the smaller yachts. Where they make a mistake is on superyachts. They’re simply not going to be Lürssen or Feadship in the next five, 10, probably 30 years.’
Brazil has made similar moves. ‘There are a lot of tax issues with regard to importing boats,’ says Emerson. ‘Azimut and Ferretti are building their own boats inside the country so that Brazilians can just go to the factory and avoid all the taxes of buying one from Italy.’ But like China, these tend to be smaller motor yachts or fast boats. Superyacht building has not taken off to a significant degree, making local ownership difficult.
In Brazil this has meant the wealthy tend to keep smaller boats in the country and larger yachts outside. For the Chinese there is a different hope on the horizon. ‘We’ve heard that Ferretti is going to start manufacture in China,’ says Turner. ‘[Chinese conglomerate the SHIG-Weichai Group] that owns it makes engines, albeit tractor engines. One would have to guess, and it’s pure speculation, that they’d want to manufacture the majority of those components and put them in Ferretti designs. You’re taxed on importing components, so you’ll get a much lower cost [known-brand] product that can be bought in China.’
Both nations make visiting by yacht so difficult, they are not popular cruising grounds. In China as well as bureaucracy in ports, six-month permits have been reduced to three, and a hefty bond is payable on entry. In Brazil pressure is building to relax high taxes demanded of foreign flagged charter yachts in its waters (rules on private yachts are less prohibitive). ‘There’s a group – marina owners, politicians, tourism, yacht builders – trying to ease laws so at least charter boats can come – they have the World Cup and the Olympics. They can show on a global stage their coastline and what they have to offer.’
Whatever the immediate problems, potential is growing in both countries. Emerson notes that while Brazil’s glorious coast is currently lacking in infrastructure for superyachts, marina builders are starting to develop that needed infrastructure for the upcoming events of the World Cup and Olympics. China, meanwhile, does not share the problems of Hong Kong, which has a sophisticated superyacht community and amenable entry rules, but severely limited berthing. ‘There are plenty of marinas in China, they’re not all great but some are and they’re learning,’ says Turner. ‘Marina space is probably not going to be an issue because they can build them very quickly.’
Indeed, it may be a slow-burner but the Chinese market is an awe-inspiring prospect. To a hungry industry, it’s like looking at cakes in a shop window. Just wait for opening time.
Abeking & Rasmussen