At China’s annual yacht show this weekend, Beijing’s anti-corruption drive seemed to be giving vendors a sinking feeling.
The number of brands that exhibited this year at Hainan Rendez-Vous dropped to 72, down from 139 the year prior. Last year there were also a wider range of top luxury names represented, including Aston Martin and Chopard.
Set against the backdrop of the southern Chinese island’s palm trees and sand, Hainan Rendez-Vous, now in its fifth year, suffered a reputational hit in China after pictures of sex and drug parties flooded the Internet in 2013.
Such challenges for the trade show have been exacerbated by President Xi Jinping’s austerity drive among China’s elite officials. Since the anti-corruption push was launched, taking out a government official out for a day on a private yacht has become less socially accepted, reducing the value of such vessels in China.
In something of a surprise this weekend, Sunseeker Yachts, a formerly British yacht maker popular with rich Chinese—thanks to its comparatively low cost and past appearances in James Bond movies—didn’t have any yachts to take customers out to the sea, despite having been acquired last year by Chinese tycoon Wang Jianlin, chairman of Dalian Wanda Group and the country’s richest man.
A sales manager for Sunseeker China said that the company hadn’t closed any sales in China this year. “Last year our showroom was packed, but this year we see no guests after waiting for a long time,” said sales manager Huang Weifen.
Beyond the government’s anti-graft drive, Chinese yacht sales face other hurdles, including the fact that many Chinese don’t enjoy prolonged periods out in the sun or staying on boats overnight. Government rules that cap the maximum number of people allowed on a yacht at 10 and require advanced registration for guests also make sailing less appealing in China.
Accordingly, though Wanda’s Mr. Wang earlier this year called yachts among the top three ultimate luxuries for the Chinese rich–alongside private planes and luxury hotels—China’s wealthy have been slow to adopt the boating lifestyle. As the Italian Trade Commission recently noted, only one out of every 318 wealthy mainland Chinese is a yacht owner, compared to one in 25 in Hong Kong.
Still, many yacht makers are hoping that will change, and that any challenges dealt by the government’s anti-corruption crackdown are only a temporary blip. Italian yacht maker Ferretti Yachts, for example, saw its sales in China double last year and plans to move some production to China, as well as build a marina in the Hengqin Special Economic Zone near Hong Kong with a local partner. The yacht maker, acquired by Shandong Weichai Group in 2012, brought seven yachts to this weekend’s show.
Meanwhile, the company has signed a letter of intent with a Chinese client to build a 68-meter long luxury yacht for 60 million euros ($82 million), according to Lamberto Tacoli, president of CRN at Ferretti. If the deal goes through, the purchase will mark the biggest boat ever sold in China.
“China is still the place with fast wealth creation, and the new rich like to show off,” said Ferruccio Rossi, CEO of Ferretti Group. By contrast, European sales are down significantly from before, as buyers are afraid of attracting the taxman with new boat purchases, he said.
Though some yacht makers may be disappointed by Chinese sales prospects, others are still hopeful. Oliver Besson, CEO of Asia Yachting, pointed out that when he first came to the market in 1999, China had no yachts and no marinas. Now on Hainan Island alone, there are five marinas, he said.
“China is a medium-term market, and you need to show your boat to your clients as part of the education process,” Mr. Besson said. “If you don’t do this, it won’t happen.”
* China Rendez Vous Ltd, organizers of Hainan Rendez Vous have issued a statement declaring that they have nothing to do with the latest 5th Edition show in Sanya and that legal action is in progress to stop the abusive use of their company name.