Chen Ferguson

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The Luxury Boat Industry will be the Next Booming
Consumer Industry in China

• Chen Ferguson
• ????chen.ferguson_at_Chinaboatmarket.com
• phone[phone]

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• Considering the economic development
  potential and disposable income increases, the
  recreational boating industry will be the next
  booming Chinese consumer industry, after housing
  and automobiles.
• Mr. Yang Xinfa, Deputy Secretary-General of the
  Chinese Ship Industry

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If you earn 20,000 Chinese Yuan per month, you
will be able to rent a boat If you earn 500,000
- 1 million Chinese Yuan per year, you will be
able to buy a boat. - Based on current
Chinese living expenses
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• Projection of the Boat Demand in China
• In the U.S., one in every 14 people owns a boat.
• China and the U.S. share similar water resources.
  As Chinas economy further develops, Chinas 1.3
  billion populations would have a demand of 182
  million boats based on the U.S. boat per person
  ratio

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Factors Influencing the Luxury Boat Industry
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• Chinas Economic Development
• Nearly half of Chinas 1.3 billion population is
  expected to live in cities by 2010 and will have
  income over US3,000.
• If the per capita GDP is around 3,000, the
  demand of big ticket items, like luxury boats
  starts to take-off.
• In Shanghai today, the per capita GDP has reached
  4,800.

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• Chinas Water Resources Historical Heritage
• China has over 90,000 lakes, 6,500 islands, and
  about 20,000 kilometers of waterfront coastline.
• There are 20 coastal cities which have
  experienced rapid economic development.

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• Chinas Cultural Influences
• To be rich is glorious was Deng Xiaopings
  edict in 1997 and ignited an economic boom.
• In China, owning a boat is much more a
  proclamation of wealth, success and capability
  rather than a life-style.
• Chinese boat consumers have the deeper
  psychological need of claiming their success,
  which can be satisfied by owning a boat.

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• Chinas Sustained Quality Labor
• China has 200 universities (in comparison India
  has 80 universities). Among them, 60 of those
  universities train engineers.
• China has 1 million rural citizens, who could be
  moved to cities every year to keep the general
  labor cost at a fraction of the U.S. labor cost.
• The standard Chinese labor rate is 0.70 per
  hour, which is about 1/16th that of the American
  labor rate.

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• Chinas Financial Capital
• Chinese government has created favorable policies
  to attract inflow of foreign investment. China is
  the largest recipient of foreign direct
  investment receiving 64 billion in 2004 for a
  cumulative total of 563.8 billion.
• According to a survey, the three most attractive
  international locations are listed below with the
  specific percentage from the survey participants
• Attractive intl locations from survey
• 1. ?? (China) 82
• 2. ?? (India) 56
• 3. ?? (East Europe) 38

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• Chinas Administrative Policies
• Nearly all coastal cities in China have recently
  promulgated policies to attract investment to
  develop boat industries.
• Amoy (Xiamen) is building a wharf which will hold
  900 boats ranging in size from 10 to 30 meters.
• Shanghai is to build marina facilities along the
  downtown Huangpu River to transform the city into
  an international tourism metropolis. Shanghai is
  going to build 10 ports for public, private, and
  commercial use.
• Zhuhai established the Pingsha Industrial Zone,
  the largest boat and boat-related product
  manufacturing center in China.

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• Issues for Chinas Luxury Boat Industry to
  take-off
• Regulations and Policies
• - China Luxury boats can only navigate in
  limited areas, mainly in certain lakes.
• 2. Infrastructure
• - Chinese marinas and marina-provided services
  are limited.
• 3. Finance-Related Issues
• - Chinese banks generally are not willing to
  provide a loan for personal boat purchase,
  because of the risks involved.
• - Because of limited insurance development and
  availability in China, boat insurance is still at
  an embryonic stage.
• - The second- hand boat market in China is
  almost non-existent. Nobody knows by how much and
  how quickly a boat will depreciate in China.

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• ????????
• Chinese government has created favorable policies
  to attract inflow of foreign investment. China is
  the largest recipient of foreign direct
  investment with a cumulative total of over 800
  billion.
• According to a survey, the three most attractive
  international locations are listed below with the
  specific percentage from the survey participants.
• Attractive intl locations from survey
• 1. ?? (China) 82
• 2. ?? (India) 56
• 3. ?? (East Europe) 38

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?????????????

• The recreational boat industry in China has the
  five necessary conditions, the last condition of
  administrative policies is not only necessary for
  the industry to take off, but also Chinese
  government policies are going to dictate the
  development mode of the Chinese recreational boat
  industry.
• ????????????????????,?????????????????????????,??
  ,?????????????????

?
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• ????????
• Industrial Policies of the Chinese Recreational
  Boat Industry
• ????????,???????, ???????,??????????????
• The policies, especial the tax policies, in
  certain degree are going to dictate the
  development mode.
• 1. ???????, Export Oriented
• 2. ????????????????
• Develop Chinese domestic recreational boat
  market segments

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• ??????????????
• The tremendous impact of the Chinese tax policies
  and their dictating effect on the development
  mode of the industry
• ????????????
• Macro example the tax policies in the SEZ
• ???????????????
• Micro example the Chinese automotive part
  industry

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Stages in the Industry Life Cycle????????
Figure 5.3
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• ??????
• Demands of Recreational Boats in China
• In the U.S., one of every four people have a
  boat.
• China and the U.S. share similar water resources.
  As Chinas economy further develops, Chinas 1.3
  billion populations would have a demand of 182
  million boats based on the U.S. boat per person
  ratio.

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• Conclusions ??
• China has already maintained the 5 of the 6
  necessary conditions for the recreational boat
  industry to take-off.
• ?????????????????????
• Chinese governments industry policies, especial
  the tax policies are going to be the crucial
  necessary condition for the boat industry to
  experience high growth. Furthermore, it is going
  to dictate the development mode.
• ?????????,????????????????????????????,??,???????
  ????????????

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• Conclusions ??
• Considering that the Chinese recreational boat
  industry is still at the birth stage, the Chinese
  recreational boat industry should not be taxed as
  the same level as other luxurious items in more
  mature industries.
• ???????????????,??????????????????????
• Considering Chinas economic status, water
  resources and potentials of creating more
  employment and GDP from all kinds of services,
  which associate with the recreational boat
  industry, China should not lead the recreational
  boat industry into the low cost manufacturing
  only development mode, Instead, China should be
  better-off to develop domestic recreational boat
  markets for the long term.
• ??????????,?????????????????????????????????????,
  ????????????????????????????????,
  ??????????????,????????????????