Fairtheworld’s South China Yacht Industry Observation (2): Jet-Tern Marine Adjusts to Cope With Financial Crisis
On July 28th, Fairtheworld.com visited Jet-Tern Marine in Pingsha, Zhuhai and interviewed its Chief Executive, Mr. Howard Chen. This session was one of Fairtheworld.com's Pingsha Industry Park visits, which aim to report the latest pulses of companies here to the outside world and introduce Fairtheworld, a new 3D e-commerce empire, to enterprises' interviewees.
Mr. Howard Chen is quite interested in Fairtheworld and arranged for a next meeting, hoping to learn more about Fairtheworld's 3D virtual expo services. Fairtheworld reporters Bob Li and Jerry Wu were invited to the maiden voyage of Selene -- a luxury yacht -- accompanied by Jet-Tern staff, and gained first-hand experience about the shipbuilding craft. Later, they took a scooter to cruise around the entire Pingsha Industry Park.
When asked about the impact of the global slump on Jet-Tern, Mr. Howard Chen noted that the financial meltdown has had great impact on the yacht industry, especially on European and US brands. While Chinese yacht makers have been less exposed to the crisis because of the fact that China's yacht industry is still in its infancy, its current yacht makers were originally shipbuilders of various vessels. A reliable domestic market and increasing demand have put these companies on a stable footing, enabling them to maintain yacht R&D using revenues from other vessel sales.
Jet-Tern's current brand, Selene, mainly focuses on below-75-feet American Expedition Yachts. These are middle and medium sized vessels catering high-income buyers. However, the customers are mainly working-age people and are sensitive to economic volatility. When a recession hits, most of them will drop their yacht purchasing plans due to financial restrictions. Therefore, Jet-Tern adjusted their product positions: while preserving their original production line, it further seeks to develop above-85-feet, large luxury yachts. Compared with middle and medium sized yachts, these vessels command higher prices and a more sophisticated craft, therefore it is reserved for the super-rich, who are less exposed to the recession. This shift in strategy has enriched Jet-Tern's variety of products, boosted its revenues, and reduced market risks on the whole.
Mr. Howard Chen also responded to reporter's request to comment on China's market. He said that China's yacht market is still a green shoot, the new wealthy people have yet to learn about yachts. Furthermore, in China, yachts have to go through very complex approval procedures before setting off. These factors have combined to curb, at least for the moment, demands in the yacht market. However, it is foreseeable that China's yacht market has an extraordinarily bright prospect once the market is mature enough and supporting policies and facilities are in place.
To seize opportunities and reduce market risks, Jet-Tern has adopted a combined strategy focusing on both onshore and offshore sales as well as featuring diversified development. It has observed that domestic yacht consumers lack cruising experiences and have a penchant for a speedy race, therefore, Jet-Tern is developing vessels accordingly. Jet-Tern is incubating a new brand focused primarily on 46-feet or so European speedboat designed for domestic sales.
In addition, Jet-Tern will leverage on its extensive experience in yacht-building to develop business vessels, cruise boats and other FRP (Fiberglass Reinforced Plastic) boats, aiming at the vast domestic market. Jet-Tern even went so far to infuse its composite material technologies gained from yacht making into the manufacturing of racing car parts. Such a diversified development strategy will help Jet-Tern explore domestic markets, accumulate funds, and avoid risks from an overly narrow production line and market.
Jet-Tern has been committed to expanding sales channels, and each year a large portion of funds are devoted to ship expositions, noted Ms. Candy Wang, project manager of Jet-Turn. On a yearly basis, Jet-Tern attends nearly 20 ship expositions around the world. In addition, Jet-Tern has attached great importance to on-line marketing such as expanding sales networks via Yachtworld, a vertical e-commerce website.
On the same day, Fairtheworld also talked with an American dealer, Kevin, who was accompanying customers to inspect ships. He noted that online marking has generated good results for yacht sales; they prefer to market products though search engines, e-commerce webs and sector journals. Compared with expensive adverts, online marketing is cheaper and faster. When Bob Li mentioned the "online 3D virtual expo" services under the flagship of Fairtheworld Limited, Kevin was quite surprised and said he never heard about this; it was unbelievable. He added that if 3D e-commerce marketing is introduced to this sector, strength of both ship expositions and e-commerce will be fused. Furthermore, customers can view vessels in a full 3D environment. This will greatly enrich customer experience and serve as a complement to graphic websites and short-lived expositions.