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Taiwan's transition: Is a local yacht market finally developing?

For decades, Taiwan has held an outsized place in the world of yacht building. Can the island finally become a boating destination and market for its own yachts? Amid a surge of interest from local buyers, headwinds are slowly becoming tailwinds

author icon By Ryan Swift | 21 September 2021

Yachts gathered in a secluded bay in the Penghu Islands, Taiwan

Yachts gathered in a secluded bay in the Penghu Islands

Forty years ago, Taiwan’s prodigious and numerous yacht builders were producing thousands of yachts for the United States. In the process, Kaohsiung, the southern commercial capital of Taiwan and a major shipping centre, became a global yachting building hub that one industry insider compared to Viareggio, Italy.

The yacht-building industry is shrinking from its glory days, according to Andy Huang, the third generation of his family to manage the Hylas yacht brand. “I was chatting with my dad and his friends, also boat builders. About 40 years ago, there were between 200 and 300 boat builders producing maybe two or three thousand boats a year,” Huang says. “Now, in terms of registered builders, there are maybe 30 or 40. But the people who are actually building boats – you can count them on your hand.”

Some of Taiwan’s yacht builders have developed globally recognised brands, most notably Horizon, Ocean Alexander, Hylas and Monte Fino, which is built by the Kha Shing yard. Other well-known brands, such as Fleming and Nordhavn, are still built at Taiwanese shipyards. Together, these brands are responsible for a huge trade in recreational boats.

Data from the Observatory of Economic Complexity, a data visualisation project from the Massachusetts Institute of Technology, shows that, as of 2019, the value of Taiwan’s yacht exports is greater than Turkey’s. Yet, that statistic masks the grand downturn in Taiwan’s yacht-building sector since the Global Financial Crisis. In 2009, Taiwan shipped over US$300 million in recreational boats. In 2010, that number dropped by a third and it has never fully recovered.

And yet, the question that has lingered over Taiwan’s yachting scene has always been: when will a local yachting market develop?

The Argo Yacht Club in Anping, Taiwan, is planning a major expansion of berths

The Argo Yacht Club in Anping, Taiwan, is planning a major expansion of berths

Coast guard ID regulations are often enforced, with yachts boarded for ID checks, according to Virginia Chuang, an executive of Kha Shing and with the Taiwan Yachting Industry Association.

As with Hong Kong, the restrictions on travel due to Covid-19 have been a boon for yacht dealers and builders in Taiwan, as potential clients begin discovering the yachting possibilities in their “backyard”, rather than venturing overseas on vacations and charter trips, according to several dealers interviewed for this story.

About 40 years ago, there were between 200 and 300 boat builders producing maybe two or three thousand boats a year. Now, the people who are building boats – you can count them on your hand – Andy Huang

“Taiwan is like a virgin destination for boating,” says Tee Tzer Yu, managing director of Amal Yachting, which distributes Ferretti Yachts in Taiwan. “Most people don’t know that we have many small islands to explore that are quite beautiful. For many, the pandemic was the first time they visited Penghu (Islands), and not overseas.” Tee reckons that, among local tycoons, the experience of Covid-19 restrictions on travel may have created a permanent shift towards yachting in their home waters.

Amal Yachting got the distribution rights for Ferretti, Pershing and Riva in October 2019, months before Covid-19 swept the world. Since then, Amal has sold three Ferretti Yachts and is now in discussions on a new 30-metre yacht.

Simpson Marine, which has had a presence in Taiwan for decades, reports six yachts sold in the past year into Taiwan.

Despite cumbersome regulations, all the people interviewed for this story agreed that there is a need for more marinas to meet growing demand. The most talked-about marina is the Argo Yacht Club, which caters to owners seeking a glitzier lifestyle. Founded in 2014, the Argo Yacht Club opened a clubhouse in Kaohsiung in 2015, later opening a marina in Anping District, Tainan City.

Jiang Jun Port, site of a proposed superyacht refit facility in Taiwan

Jiang Jun Port, site of a proposed superyacht refit facility

Tainan is a small but picturesque and historic port area just north of Kaohsiung along Taiwan’s west coast. The Anping area is the site of the original 17th-century Dutch fortifications, later commanded by legendary figure Koxinga, a Ming-dynasty admiral who resisted the Qing Dynasty’s takeover of China from his base in Anping. To this day, the Anping district is known for traditional architecture and pretty seascapes.

The municipal government is reported to be friendly to the yachting industry and in developing leisure marine activity. The mayor himself has even appeared as a brand ambassador for the Argo Yacht Club, according to Tee. The Argo Yacht Club has 62 berths, and the club’s management has plans to expand to 190 berths.

The development of leisure boating in Anping looks set to continue.

In July, The Liberty Times, a Taiwanese business publication, reported that the Taiwan International Ports Corporation, the government-owned operator of Taiwan’s biggest ports, selected Nan Ren Lake Company to take over a large waterfront area in Anping to develop a mixed-use project called the Anping Port Waterside Recreation Zone.

The development site covers 13.5 hectares of land and 2.8 hectares of water area, close to Tainan City’s Phase-V Urban Redevelopment Zone. It is adjacent to Argo Yacht Club, which was established in a similar bidding process with the Taiwan International Port Corporation.

The Liberty Times report said that land zoning for the site includes provision for yacht piers, villas, hotels, shopping centres, conference centres and offices. The company confirmed to Asia-Pacific Boating that it will invest NT$10 billion (approx. US$360 million) in the project in a five-phase programme. The lease has been granted on the property for 50 years.

Kha Shing’s Pier 22 in Taiwan

Kha Shing’s Pier 22

Nan Ren Lake Company was founded in 1989 by a Tainan businessman, and it currently owns and operates recreational and resort properties throughout Taiwan. Tee Tzer Yu compared the development plans to Hong Kong’s Gold Coast Yacht and Country Club.

Just a few kilometres south of Anping at an old fishing harbour named Hsinta, Kha Shing, one of Taiwan’s biggest yacht builders, is planning a new marina. The company already owns and operates Pier 22, a marina in Kaohsiung harbour, which it uses to help showcase its own yachts.

Virginia Chuang, the marina manager for Pier 22, says Kha Shing is currently in talks with government authorities to get approval for its plans. The plans, which include berths for 100 yachts and refit facilities for yachts up to 100 feet on a five-year timeline, have been drafted and are with relevant authorities for approval.

“If discussions conclude, then Kha Shing will do it. We have all the plans submitted and all drawings. We are just waiting (for approval).” Chuang adds that Kha Shing is already looking at the types of cranes required for its proposed refit facility.

Yet, even with local government support, potential marina developers find plenty of obstacles. Chuang says that Kha Shing was approached by the Kaohsiung city government to build a 300-berth marina at the mouth of the Love River, which empties into Kaohsiung harbour. It is a prime location that has been used by visiting superyachts for years and is in the heart of the city’s entertainment districts.

A new yacht refit yard

The terms offered by the government have been less than attractive, and Kha Shing has decided to stay away from the project. Chuang says that the company was approached by Taiwan’s central government in early 2021 but found that the leasehold terms were simply not suited to a marina development.

Kha Shing is also eager to expand on its existing marina, Pier 22, which is next door to Horizon Yachts’ own marina. Chuang reports that Kha Shing wants to expand its Pier 22 operations to an adjacent brownfield space, but says that working with multiple jurisdictions has simply been too challenging. The Kaohsiung local government may be keen on such projects, but dealing with the central government, which owns the shorefront space, has been difficult.

Taiwan is full of harbours built for its fishing fleet that dot its varied and amazing coastline. But the fishing industry is ageing, and potential marina and property developers are eyeing seaside lifestyle and yacht berthing facilities, according to numerous industry insiders.

“There are a lot of places that could be converted to leisure use,” says Huang of Hylas. He points to the power of the fishermen’s unions in keeping fishing harbours preserved for fishermen’s use. “It’s a much bigger industry than what the government sees in yachting. They can’t see how yachting benefits the whole island or each city.”

The Taiwan government set up the Ocean Affairs Council to try and coordinate the use of the island’s seaside and ocean resources. But the council is staffed with people from the navy or shipping industries, and yachting is still far from key to the discussion. It has also failed to get competing government agencies to work together, says Paul Brackley, a yacht captain and partner in Hong Kong-based yacht consultancy Central Partners.

Founded in 2014, the Argo Yacht Club opened a clubhouse in Kaohsiung in 2015, later opening a marina in Anping District, Tainan City

The Argo Yacht Club has opened a marina in Anping District, Tainan City

“The various government agencies are very tribal and unwilling to cooperate,” Brackley says. “Most developments require the cooperation of at least three difference bureaus, each with their own agenda.” In response, Brackley and some Taiwanese industry associates formed an organisation, the Kaohsiung International Marinas Development Association (KIMDA) in 2019, to persuade government officials of the virtues of having more marinas to help the burgeoning industry.

Even within the yachting industry, not everyone agrees on what marinas may be useful or successful. For example, the area around the Love River was earmarked for a marina catering to local yacht owners with a large number of berths. However, Brackley sees more potential for creating a space targeting visiting superyachts.

Brackley is working on a project with a yacht builder out of Taiwan’s northeast to develop a refit facility for very large superyachts by the end of 2022, with a Syncrolift capable of handling yachts up to 100 metres and five refit sheds.

Another refit facility is being planned for Jiang Jun port, which is about 15 kilometres north of Tainan. International Ocean Group (IOG), an offshore wind industry services firm, plans to open the new superyacht refit facility as part of a new service yard for its fleet of support vessels, company officials said. The company is leasing an 18 square kilometre waterfront area in the well-protected port with a large breakwater and a large brownfield site area.

Taiwanese have a love of travel and holidaying, yet the local tourism industry is tiny. The travel restrictions should be an open goal to tempt locals on to yachts – Paul Brackley

Phase one of the project will create berths for crew transfer vessels and eight berths for superyachts of up to 40 metres in length. Construction is due to begin this September, with facilities in place to welcome yachts by the summer of 2022. A second phase to allow refit work is to be ready by 2023.

Successful marinas also require other facilities around the berths, and traditional fishing harbours have multiple jurisdictions looking after various parts of the harbours. There is developer interest, Huang says, but it will take time to overcome hurdles. The central government, Huang says, may simply not care. The Taiwan government’s focus on developing its tourism industry was always more focused on bringing in people to go shopping.

That may soon change.

It has long been an axiom of the yachting industry that the way to cultivate a yacht buyer is through charter. If that’s true, Taiwan may only just be at the starting point of a potential yacht buying frenzy, as the local charter market has taken off thanks to Covid-19.

“Taiwanese have a love of travel and holidaying, yet the local tourism industry is tiny,” says Brackley, who says that “with travel restrictions (due to Covid-19), it should be an open goal to tempt locals on to yachts.”

The charter and sale market is booming in Taiwan

All the dealers and insiders interviewed for this article agreed that yacht and boat charter had benefited massively from Covid travel restrictions. Lawrence Lim of Supreme Yachts, the dealer for Azimut Yachts in Taiwan, says he has two types of customers: people buying yachts for the activities and freedom, and clients wanting to rent yachts for charter. “This is booming,” Lim says.

So far, the industry is characterised by relatively cheap operators. “Charter parties and operators like to fill up cheap boats with dozens of guests,” Lim says, adding that some operators treat their boats like buses.

Though Taiwan’s coastline can be starkly beautiful, with verdant green mountains facing the open Pacific on the east coast and beaches on the west coast, the weather is not conducive to year-round activity. Typhoons can hit the island from the east during summer and the winter monsoon generates powerful winds from the northeast, making the areas around the north challenging at best.

But Taiwan does have treasures to explore. Turtle Island, which is just six or seven nautical miles offshore from Taiwan’s northeast coast, is a popular spot for day charters. The Penghu Islands, about 25 nautical miles off Taiwan’s west coast, are also a new chartering hotspot. Liuqiu Island, just a few miles south of Kaohsiung, offers visitors a chance to glimpse sea turtles. And for the more adventurous, there is Orchid Island, lying about 30 nautical miles off Taiwan’s southeast coast, offering diving and swimming.

While the majority of yacht charter may be of the mass-market type, dealers and builders are trying to introduce higher-end yacht charter to the market. The Argo Yacht Club has a marina facility in the Penghu Islands, located amid the docks for fishing boats. The club has established the Penghu Yachting Life Festival to help introduce members to the beauty of boating in the Penghu Islands.

Kha Shing offers its own yacht charter service through its own brand Monte Fino Yachts. The company provides older models for private charters that align more closely with a European yacht charter style. Chuang of Kha Shing says that the charter operation had a 50% rise in business after Covid-19 restrictions set in and reckons that Monte Fino sold two yachts on the back of its growing charter business.

Taiwan’s transition from yacht builder to yacht market and destination will continue to be slow and halting. But thanks to a boost in interest from local buyers stuck at home going to local destinations, the tide may finally be turning.