KAOHSIUNG, Taiwan (Reuters) - Fast-moving Asia is vying for a bigger share of the multi-billion-dollar luxury ship market serving the rich and famous.
Led by Taiwan and increasingly China, Asia has narrowed the gap with the West in recent years, though it still lags Europe in the race for a market where individual yachts can sell for tens of millions of dollars.
Asian yacht-builders offer prices that average about a third less for Taiwan and up to half as much for China compared to boats built in the West.
But low prices sometimes come with lower quality, especially from China, and less individuality, say industry watchers.
“Taiwan is already a good market with experience with building yachts and China could be the future one,” said Francesco Frediani, vice president of sales at Italian luxury yacht maker Riva Yacht, which counts actors Nicholas Cage and Sophia Loren among its clients.
“They are growing their expertise at the moment but in terms of handling boat-related problems, Europe still owns the expertise,” he said.
Taiwan and China are Asia’s two current leaders, with about 100 orders on the books this year — three-quarters of those for Taiwan — for yachts of 80 feet or longer, according to industry tracker ShowBoats International. The figure was up sharply from 2005, when the pair had about 60 orders combined.
While growing, those numbers still trail well behind Italy, the world’s leader with more than 400 orders on the books alone this year, and the United States, with more than 100.
“Taiwan’s boats sell good, people like them,” said Andy Ye of Floating Life, a Switzerland-based boat manager of super yachts that recently opened a Shanghai office.
“But in terms of innovation, the Italians or the Dutch or the French have more innovative designs. They set the trends, Taiwan follows.”
The gritty workshops where Asia makes its super yachts contrast sharply with the glitzy finished products.
A sprawling, hanger-sized building hums as sweat-soaked laborers work inside the steel shells of four 90-foot yachts being built by Jade Yachts in the south Taiwan port city of Kaohsiung, where the industry is based.
These massive hulls filled with sawdust will eventually end up as swanky, multi-leveled yachts with rooms for 12-14 guests and trimmings such as glass elevators, Jacuzzis and entertainment centers with state-of-the-art audio and video systems.
Jade kicked off its mega yacht business in 2005 with a splash by re-outfitting a massive 210-foot research vessel into a luxury craft, reportedly for high-end fashion house LVMH group.
Huang said the 90-foot yachts currently under construction carry a list price of 8 million euros each, though he added the LMVH refitting was significantly more expensive than that.
“These are very expensive toys,” said Luke Huang, special assistant to the president during a recent factory visit. He said that Jade’s select slate of customers so far has come from as far afield as Russia, Malta and Spain.
“The buyers are all very rich,” he remarked.
Such wealth helps to shield the industry from the kinds of economic downturn now plaguing the United States and spreading to other parts of the world, said Jack Chen, chairman of the Taiwan Yacht Industry Association.
“These are people with lots of money, even when the global economy isn’t so good,” he said. He added that growing geographic diversity among buyers is also helping to shield the sector.
Within Asia, Taiwan has a 30-year jump on China making yachts, a tradition that dates back to the 1960s and ‘70s. Opinions differ on why Taiwan first emerged as a yacht-building location as early as the 1960s, while the rest of Asia apart from China has remained a relative backwater.
But most agree low costs and the abundance of U.S. troops — including many sailors — stationed on the island during the height of tensions between Taiwan and China in the 1950s through the ‘70s was a factor as some of these sailors worked with locals to build boats in their spare time.
“It’s a lot less than it’d cost in the U.S.,” said David Povich, an American lawyer, on a recent trip to inspect a boat he is having built by Tayana Yachts, also in Kaohsiung.
China has emerged more recently as Taiwan yacht builders moved to the mainland in search of lower costs.
Just as Asia is new to yacht building, the growing numbers of rich Asians are also relative newcomers to yacht owning, despite the region’s reputation for showy displays of wealth.
According to ShowBoats International, a paltry 4 percent of people with 80-foot or longer yachts on the order books were in Asia in 2008, while nearly half were in Europe and a quarter were in North America.
Within Asia itself, many buyers come from places with large Western influences.
“There are some Asian buyers, mostly in Hong Kong and Singapore,” said Ye of Floating Life. “In China the yacht market is just starting out. But Chinese people have lots of money and luxury product consuming is on the rise, and so is yacht buying.”
Additional reporting by Melanie Lee in Singapore