Expansion and self-destruction of yacht manufacturers

The financial crisis of 2008 and 2009 put yacht manufacturers in a very difficult position. Stock markets in and around Asia were doing very well in the early 2000s. At that time, China’s economic growth and infrastructure development were already high, and the Chinese began to show interest in luxury yachts. Boat manufacturers seized the opportunity and set up showrooms near newly built marinas in China. Chinese boat shows, such as the one in Shanghai, drew even more manufacturers into the industry. Hong Kong was still the main port at the time, as Chinese buyers bought and moored their yachts in Hong Kong due to Hong Kong’s zero duty. All of this interest in the industry created a lot of hype and the industry grew steadily as more and more manufacturers rushed into China. Other industries in China were also doing very well, and wealth was growing at a rapid rate. Many of the big luxury yacht manufacturers decided to expand to improve their delivery times and thus capture markets. They also believed that expansion would be a low-risk move, because even if the European or US markets slowed down, Asian markets, especially China, would still have customers to absorb their production.

In 2007, the Hong Kong stock market reached a new high, and many news channels and so-called professional investors again said that the market had reached a new high and would not fall again. Businesses were running smoothly, markets were booming, and banks were lending. The hype surrounding China’s growth and wealth led to rumors among manufacturers about how many boats were being sold in China. Agents and manufacturers exaggerated the number of high-end luxury boats they sold. Because of this hype, many yacht manufacturers around the world had taken out large loans, bought a large amount of building materials, and were expanding their factories on a much larger scale. And then the unthinkable happened. The financial markets crashed in 2008. Needless to say, many yacht manufacturers were now facing bankruptcy. Although exchange rates were favorable to the Chinese, and some high-end clients bought yachts to take advantage of the exchange rate, these sales were not enough to bail the factories out of their financial debts.

As the markets collapsed, public companies began to lose money and clients in most Asian countries stopped buying yachts, except for some clients from China. Most of the money from Chinese customers came from internal development in China.

Even years after the market crash, yacht builders still found it hard to recover. Many famous Italian and British yacht manufacturers were acquired by Chinese companies. In 2015 many of the yacht builders are still on the mend. The effects of this recovery can still be seen today in many factories. Today it is still possible to buy new boats with engines and generators that were made in 2007, because the factories still keep the stock they bought at that time.

The 2008 market changed the dynamics of the yacht manufacturing business. Reckless expansion to capture market share led to huge financial losses when financial markets crashed, forcing many yacht manufacturers to sell their businesses. Financially strong Chinese companies saw the opportunity and bought many of the European yacht factories, shifting control and ownership of some very famous brands from the west to the east.

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