Future of boating market in China and India
Almost
all of us who have anything to do with pleasure boats, wonder
how is the boat market going to be in the future? Where is
it going from here? Do pleasure boats have any future? Will
the trend of owning and selling boats be a larger market or
will it suffocate like many luxury products due to the roller
coaster ride of the world's economy. What will particularly
happen in Asia? Asia being the big part of world's economy,
what part will it play in boating industry? Which country will
be the major market? China, India, Indonesia perhaps?
Importantly what steps should be taken today, in order to
create a better market in these countries for the future.
In Hong Kong we are
realizing the obvious saturation of boating market and almost
all dealers and manufacturers of boats are pointing towards
China. A lot of European manufacturers are also pointing at
India. Making these 2 countries the biggest potential boating
markets.
Lets talk about China first and realize
that in 2005 we had big hopes for the boating business in
China, we thought that the boating industry would be huge by
the year 2010. Well, we are in 2010 now and China clearly has
not picked up to that level of prediction, so the market is
still slower than what the lot of industry experts had
predicted 4 or 5 years ago. The reason behind that is China's
rules and regulations in pleasure boat industry. Taxation and
licensing rules are very unclear in China. As a matter of
fact, the rules are different for different states in China.
Mainly for new boats, tax is about 40% of the boat's value
creating a barrier for sales.
The
infrastructure however, is simply fantastic, China's
development of marinas are in the best speed that one can hope
for. But what is missing in this picture are the number of
pleasure boats that are floating on the waters of China. There
are definitely buyers for a high end expensive yacht, but the
the support and maintenance of that yacht is still not expertised, is
not easy and therefore costly. In any country even in Hong
Kong, people are prepared to shell out a substantial amount of
money to own a luxury yacht but what they are not willing to
do, is to put a lot of time and over spend on upkeep and
maintenance. Another thing that people are not willing to do
is of course pay taxes and go through a long governmental
procedure to acquire a license. This issue however is being tackled by marina clubs in China. Few clubs
now assist in providing necessary licenses for their members
who are willing to pay the cost of such services. Another way
the Buyers handle this issue, is by simply keeping
and using their boats in Hong Kong. This obviously will
overcrowd Hong Kong's marinas and not help much to boost sales
into China.
A way to overcome this issue, in order to create a better
regulations in the future for pleasure boats in China, is for
brokers in Hong Kong to sell more low priced and good quality
used boats into China. If we are to stop hunting for clients
only for high end yachts worth many millions of Euros and if
we direct more marketing towards the younger and median rich
clientele, It will create a lot more pleasure boats in the
waters of China. The market will respond in a very positive
way. Forbes list of 2010 confirms that there are 64
billionaires in China, which makes the ranking No.2 in
Billionaires list. however, a point to note that there are
over 900,000 people whose net worth is more than 10 million
RMB (USD 1.3m), Majority of these people are younger than 39 years
of age. And even a larger and younger population exists of up to 5
million RMB worth.
There are definitely more number of
people who are willing to spend a small amount of money initially, to try out
a boating venture. We have to keep in mind that boating
lifestyle is not very common for China as yet. So the
importance should be given to bringing more boats into China,
which are not very expensive and are good in quality.
This very concept will fill the marinas,
forcing the management to grow and also provide a decent
opportunities for shipyards and engineers to work in this
sector.
This
will also force the government to look into creating
manageable regulations in terms of licensing and taxing for
pleasure yachts, and if the growth of this concept is healthy,
this will undoubtedly create much more friendly and hassle free
market for the very wealthy to buy the high end yachts. In any
case, China will have a large boating market, but to make it
earlier than later, depends on our actions today.
India! Lets talk about India.
One of the biggest advantages India has is that Indian
mentality and lifestyle is very adaptable to western
lifestyle. India adapts and accepts ideas, culture and
products from the west very easily. High number of Indian
population speaks in English. In India almost everyone will
understand you if you speak English. If you are a non-Indian
company, you can easily find an educated work force in India.
It is also easy to set up a service centre and to train workers in a specialized industry in
India due to India's language capabilities and good
educational level among the population. India has been a
British colony for over 150 years and the rules and
regulations of the country are still similar to that of
Britain in many ways. Another advantage to grow the boating
market in India is the expertise of the Indian
media and advertising professionals in terms of marketing.
GDP growth of India is currently 7.2%, The country is ranking
no.5 in the billionaires list and India currently holds
approximately 200,000 millionaires with net worth of USD 1
million to 10 million, and a far larger population of people
that are
worth slightly less. India's upper middle class population is
expected to grow about 10 times in the next 10-15 years.
But here are
the set backs! India's political system is a chaos, corruption
exists in many sectors and things become
inefficient, especially if you want to start a new industry.
An example of inefficiency in India is that to start a private
company there are about 13 different legal procedures that one
has to take and the time frame takes minimum of 30 days. While
in Hong Kong this very same procedure is done with high
efficiency in less than 45 minutes.
One major concern is that the infrastructure growth in
India is slow. Due to its own democracy and differences in
political groups, it is difficult to commence any kind of
infrastructure. The marina which was due to be built more than
5 years ago in south of India is still not ready. Therefore
the speed of development of marinas and likewise developments
is a lot slower than what it could have been, if the political system was
more sound. Of course the boat owners still face a major
problem in finding a place to keep their boats. Because currently there are
no marinas with standard berthing facilities in India.
A
good point again, being the world's largest democracy the
rules and regulations are flexible in India, and with its plus
points, if the luxury boat business does reach a good start
like having few working marinas and a small number of boats to
begin with, the Indian market for boats will see faster growth
than of China's boating market.
The traders and dealers of
boats in India also need to convey a message that boats are
not just for the super rich and make boating look more affordable
and common in their marketing strategy, and to start this,
cheaper and good quality boats need to be floating on the
water. More power boat chartering businesses also can boost
the industry in this initial stage.
I am also sure it wont be too long until I can cruise the beautiful waters of India and China on a private yacht with safety and with ease. Awaiting for that day.
