Mr. Liu Honghui, Chairman of Guangzhou Deli Docks Engineering Co., LTD
Established in May 2005, Guangzhou Deli Docks Engineering Co., LTD is a marina integrated operator, business scope covering consulting, planning, design, construction, investment and operation,had completed more than 1000 marina engineering projects so far. The company was invited to participate in writing the standards on the yacht marina by the Ministry of Communications as well as some drafting and compilation on local standards.The inspection standards exclusively written by Deli Docks on marina and pontoon bridge in Guangdong province got high praise from so many government leaders, owners and the cooperating company. Mr. Liu Honghui master in yacht marina construction, what unique insights will he bring us?
1. Oceanway: What is your opinion on the development and current situation of domestic yacht industry, especially on yacht marina?
Liu: Firstly, I think it appeared a very big deviation on the orientation of yacht industry in whole China, which a misunderstanding influence people that yacht industry is in large-sum investment and high-end luxury enjoyment.If in Hong Kong or abroad, you will find that yacht is not a luxury, but a good water leisure lifestyle. I have contacted a lot of Hong Kong players, who are freshmen on yachts. Everyone thinks it is a good leisure sport. The threshold is in very low on buying or selling a yacht in partnership , and it will not cost too much to play once.
Secondly, from the perspective of investment, the investment on yacht marina is too large, It will even cost hundred millions of money to meet the basic function (100 berths) , but the existing revenue volume simply cannot support such a huge investment.
Thirdly, the operators have some deviation out of the market positioning.A lot of people think yacht-style as a high-end luxury life,which blocking many people to participate in yacht enjoyment.Moreover,it brings a lot of negative effect that some player being overpowering in public place .On the contrary, in recent years, small powerboat and yacht & sailing instead of big yacht everywhere,with good experience and price in low threshold.
Lastly, up to now, there has no “actual public yacht marina” in China. A public yacht marina like a parking lot, it would boost the entire yacht industry. Considering that , if you have to buy an expensive membership before buying a yacht, no boat-playing atmosphere , high berthage, worthless, which will depress the buyer. In fact, our Chinese ships are not worse than foreign ones. In overseas, you will find that most of the ships are old ones, especially the small boats (speedboats, fishing boats ). Because some misunderstanding still in some people’s mind and play with water not cope with the appetite of most Chinese people. It is terrible! Communicating with foreign counterparts, I found that 80% of foreign yachts/sailboats are under 40 feet, but the yachting activity are in vivid atmosphere, culture and content, especially, various competitions and activities, which are worth learning by us.
2. Oceanway: Comparing with foreign counterparts, what is the differences in construction of domestic yacht marina in terms of safety standards and environmental protection etc..This question also reflect some problem in our industry. What do you think?
Liu: First of all, we also participate in the construction of many yacht marina projects in foreign countries. Foreign countries government pay close attention to the rationality and scientificity of the project. If the government plans to develop a yacht marina in a certain place, relative construction standards will be setting, so the unsolved problem be reduced to some extent . In China, it was complicated with too many restrictions from the start.In addition, the procedures and methods of port declaration in China are based on the standards of port law. The port law was enacted in the 1960s. Although it has been revised once or twice, the main contents remain unchanged. Most of them are for commercial purposes . As for port, shoreline, water area and environmental protection, it is in very high declaration threshold.
Secondly,It is unclear on the division of safety and supervision responsibilities. In foreign, under the condition of apply for the certificates of nationality,shipping and driving in accordance with the law, operation is possible if no safety problem be hidden. If making a mistake, you have to take the responsibility for your behavior. But in China, where the yacht industry is a niche industry and still in its early stages of development, such strict standards will become an obstacle to development. At present, the management method of yachts is based on the ships, which leads to the regulations such as members of yacht be restricted less than 12 people, boats in-navigable condition and some yacht-prohibited water area etc, it may seem surprising!
Thirdly, foreign government concerned about the engineering quality of the marina and the rationality of the overall planning. In China, everything seem to be supervised but nothing being cared actually . It is terrible .The difference of guidance led to disparate in result. For example, nowadays, a lot of problem arise for error selection on marina site ,which resulting in typhoon and flood occur frequently.
3. Oceanway: What should be noticed on investing in the marina?
Liu: There are two key points on investment in the construction of the marina.The first is the risk, including the legitimacy of the project, scientific and engineering reliability, which is the first need to consider.The second is the business model, and the business model should be the guarantee of profitability, so far, a really good, mature business model has not occur in this industry.
Regarding the profit model, firstly,we should make a orientation that the yacht as a leisure lifestyle. After making the orientation clear, it will be separated yacht-style from the high-end luxury life. The economic income and consumption structure of Our country are olive model, and the quantity of middle class consumers is in very large. Yacht also has rich contents to support their consumption. Secondly, from the perspective of income, commercial rental of yachts should be the first priority so far. If the mass market consumption plays a major role one day, the industry will really flourish,followed by commercial or commercial activities with a certain purpose.Thirdly, there should be a variety of fun to support the consumption of yacht or sailing, such as yacht tourism, diving, fishing, etc., among which sailing is the best way, because it is relatively low cost of use.Lastly, yacht club or sailing port platform, more business form or to do some extension on this platform, such as wine party, banquet, catering, business activities, hotels and so on, and then extend is like the “China Rendez-Vous” banquet,exhibition, BBS or activities etc..
Invest in a yacht marina, we should face a question that how you make money ,which is the profit pattern. Variety of marketing plan, including training, water sports, regular accessories store,should be made by the extension of the industrial chain, forming a circle around the yacht consumption. From business and profit model refinement or rich content to support long-term development.In foreign countries, it is usually combined with tourism and sports.Two sectors are closely combined to form a leisure lifestyle and realize normalization.At present, most of the domestic yacht is in idleness. How to exploit the potential value of the yacht is the key to ignite the whole yacht industry.
Moreover, with at least half of China’s marinas tied to real estate,there is the most immediate and fatal problem that lack of management and supporting marinas rarely in service..From the perspective of business, the business model of Dameisha, Longqi or Hongzhou yacht club should be replicable or imitated. However, the success cases is related to opportunity and trend, especially in special period..A membership used to sell for more than $1 million, while few people to buy it. When an article does not produce value, it is actually a very bad phenomenon, so I think it should be noticed to the control of business model and business risk on the investment of yacht marina.
4.Oceanway: At the initial stage of project, whether the orientation of yacht marina will affect the development in future ? why a lot of new-built marina with better condition than before still cannot develop well? What’s the reason?
Liu: Yes, nowadays, a lot of completed yacht marina only few people visited, this is so terrible! The reason lie in when setting up the project, the original intention was not clear. A few sponsor make a hasty decision and lack of deep consideration for the long-term development of marina. Why the newly-built yacht marina with better conditions has not good development. I think there are two main reasons. Firstly, the market acceptance is not enough, that is, these yacht players is not in large quantity. The secondly, the purpose and value of sailing.For example, the Singapore yacht club not only allows members to live there all year round, but also the consumption is in acceptable level as well as in very good entertainment atmosphere. Therefore, everyone likes to spend money in the yacht club and really enjoy the pleasure brought by yacht life. In terms of yacht playing atmosphere, It is more obvious in Hong Kong . The people in Hong Kong is under great pressure,many people release their pressure by playing Yacht. In addition,even people play once a time a week,so many people accumulate into a large consumption group.In addition,the yacht club can not only meet the needs of the group with yachts, but also meet some functional needs of the society, such as pink tea, which makes people feel that spending money on the yacht club is not a luxury consumption but a real lifestyle that everyone can enjoy.
Reviewing domestic model is in too simple.which in the name of luxury and give a person obstacle in heart. The membership cost in hundreds of thousands money so as most of them sell difficult. It is necessary to provided cheaper membership differentiate from original membership, which attract more people can consume in yacht club and guides them to contact & participate in the yacht life.
5. Oceanway: At present, many yacht clubs are unprofitable in operation.Whether is too large amount of money invested in with too long circuit date, which easily lead to accumulated costs?
Liu: Yes! at present, the investment in a yacht marina, especially in the coastal port, it should be at least more than 50 million yuan. With the regular operation mode and project income, it is difficult to achieve profitability.Secondly, under the current regime of China, the more intermediate links, the more cost and the longer the approval time.When the project may have not officially started, the upfront cost in at least 3 million, 5 million or even 10 million yuan have been spent in. In case of accident occur in some intermediate links or departments, the time and cost will be more greater.Thirdly, as mentioned above, the current revenue cannot support its normal operation, so the number of berths is also a problem. It is not cost-effective to build less than 300 berths, which have no scale effect. However, if more than 300 berths marina are built, it will be in higher cost, more difficult to recover the cost without a profit model.
At present, the berth vacancy rate of yacht marinas & club in China is at least 60%. Many yacht marina and berths in china have been built,but lack of yachts and shortage in professional management and operation.At this time,similar hotel contract operation or managed operation group may gradually appear, which is worth learning from. The yacht will be operated by professional people or teams.But whether it is a contract operation or a managed operation,a common problem in China is that the owner may take back the operation right after the first improvement for various reasons, and then the club collapse again after the owner takes over, which is the most terrible phenomenon.There is no spirit of contract phenomenon which is also Chinese characteristics.
To be continued…
