he Ultimate Luxury Item Is Now Made in China
ZHONGSHAN, China - Among the carp ponds, duck farms and moldering plywood huts that have long lined the bank of a Pearl River estuary here, a most incongruous newcomer has appeared: a long, towering shed for building very large luxury yachts, a product that has no market in mainland China.
Lion dancers bobbed and weaved as strings of firecrackers sizzled and boomed on July 3 at the official opening of the yacht factory - an emblem of how China is shifting its sights upmarket. Having mastered the manufacture of many inexpensive goods for mass consumption here and abroad, the country is getting into luxury goods, the kinds coveted by the world's most demanding buyers. China's competitive advantage is that it is doing this at lower cost.
Increasingly expensive brands of shoes, clothing and furniture are being made in this country, mostly for domestic consumption but sometimes for export. BMW has begun assembling some of its latest models in China for sale here, and Mercedes and Cadillac are preparing to do the same.
With yachts, though, China is braving a market where it has little recent experience or demand at home.
The economic boom has certainly created plenty of fortunes big enough to afford yachts. But they have never caught on among rich Chinese, who, unlike the boating set in the West, tend to keep their consumption as inconspicuous as possible. And no wonder, considering how widespread tax evasion and dubious dealings are here: few people want their lifestyles to attract official attention.
"You can gamble away $5 million a night, but don't buy something for $5 million and let people know about it," said Roger Liang, the Hong Kong hotel and real estate developer who is the owner and managing director of Kingship Marine, the company that built and runs the yacht factory here.
Besides, China is no one's idea of a yacht-friendly place. The country imposes tight restrictions on pleasure boating along its seacoast, because of concerns regarding Taiwan, and on its rivers, because of heavy barge traffic. That leaves most boaters confined to lakes inland, which are mostly too small and shallow for large powerboats.
Mechanics who are able to repair modern boat engines are scarce. And, in a country once known for its graceful sail-powered junks, so few people now have even a rudimentary knowledge of sailing that selling sailboats in China would be a hopeless exercise, several boating executives said.
Mr. Liang predicted that it would be 10 years before there would be a market in China for the 33-meter (108-foot) yachts that Kingship is building to order in Zhongshan. And it could be even longer before there is a domestic market for a 75-meter (246-foot) yacht like the one that the company is negotiating to build for a foreign buyer.
So, like Cheoy Lee Shipyards of Hong Kong, which owns a shipyard a few miles downstream in Zhuhai that makes mostly commercial vessels but also the occasional pleasure craft, Kingship Marine is angling for export sales.
Its first yacht has already been sold to a European buyer, said Dennis Yong, the sales and marketing director, and the company is close to a deal for a second. Both yachts were started last fall and now stand half-finished in the boatyard, their red steel hulls and dull gray aluminum cabins still in need of outfitting and paint.
Kingship is trying to sell on price, undercutting the Italian, Dutch and American shipbuilders that dominate the luxur