Life of Taiwan's blog

I've been writing web content and marketing materials for Life of Taiwan since the British-owned tour company was established in 2011, and at a the end of last month I took on a new responsibility. I now provide content for the company's just-launched blog. I expect to write a mix of seasonally relevant and 'evergreen' content, the former sometimes answering questions we've received from people contemplating a trip to Taiwan ('Is autumn a good season for visiting Taiwan?'), the latter highlighting intriguing facets of the country's culture, history and natural splendour. The blog will also feature occasional interviews with travel writers, photographers and others who have interesting things to say about Taiwan, and we're open to ideas for guest posts.

Navigating Rough Waters: Taiwan’s Yacht Industry (Taiwan Business Topics)

Taiwan has long been an important producer of yachts and sailboats, though it is only recently that recreational boating has finally begun to catch on. One in every three new yachts sold in the United States between 1977 and 1981 was made in Taiwan. In 1987, the island exported 1,755 vessels worth US$190.8 million. Over 100 yacht-builders operated in Taiwan during that period, even though regulations initiated in the martial-law era made it illegal for Taiwan residents to own leisure craft until 2010.

After the initial boom came two busts. Between 1986 and 1992, the NT dollar appreciated 58% against the US dollar, substantially raising the cost of Taiwanese vessels in their most important market. At the beginning of 1990, in addition, the U.S. government imposed a luxury tax on yachts and private airplanes. And like other manufacturing enterprises in Taiwan, boat builders faced rising land and labor costs. By 1994, dozens of boatyards had gone out of business.

Taiwan’s yacht sales rebounded to US$323.5 million in 2008. But exports crashed in the wake of the global financial crisis, bottoming out at US$144 million in 2010. Since then, the industry has clawed its way to slightly better health.

According to U.S.-based yacht magazine ShowBoats International, in 2015 Taiwan was the no. 6 builder of yachts in the world, behind Italy, the Netherlands, Turkey, Britain, and the United States. In 2014 – when Taiwan’s exports totaled US$172 million – the country ranked no. 7. Two Taiwanese companies appeared on the magazine’s 2015 list of the world’s 30 leading yacht builders. Ranked according to total length of new builds the previous year, the Horizon Group was no. 10 (up one spot from 2014), while Ocean Alexander was no. 14 (up from no. 22).

“These rankings show the quality and technology of Taiwan’s yacht manufacturers has gained international recognition,” says Hsueh Po-yuan, chief of the Marine Industries Section of the Kaohsiung City Government Marine Bureau. Both Horizon and Ocean Alexander are based in Kaohsiung.

Yet many of the 39 yacht-building member companies of the Taiwan Yacht Industry Association (TYIA) continue to struggle. “There’s been a shakeout in Taiwan,” says Johnny Chueh, head of sales at Ocean Alexander, which does business in the United States as Alexander Marine International. “Two companies – we’re one, Horizon is the other – generate 80% of Taiwan’s yacht-building revenue. The smaller yacht makers are fighting over the other 20%.”

Chueh argues that if Taiwan’s yacht builders are to thrive in the face of rising costs, they must build ever-larger yachts. “As you go upmarket, your track record and brand become increasingly important,” he says. “Price isn’t the main factor determining purchasing decisions.”

He attributes Ocean Alexander’s success to never having built yachts for other companies. “From day one, we worked on our own brand. That has given us a deep understanding of customers’ needs and trends. Also, we’ve been among the first in the world to introduce certain technologies to yachts, such as resin vacuum infusion, aerospace electrical systems, and aerospace-grade paints.”

In 1980, Ocean Alexander sold 29 yachts with an average length of 45 feet. In 2000, it built 25 yachts averaging 62 feet each, and in 2010 the output was 10 yachts averaging 74 feet. The number of boats sold in 2015 was the same as 2010, but the average size had increased to 92 feet. “We’ve seen a reduction in units, but a steady growth in revenue,” says Chueh, whose father, the late Alex Chueh, founded the company in 1977. “For the price of a single 90-foot yacht, you can buy 20 45-foot vessels.”

Longer boats are invariably wider and taller, and larger boats tend to have more expensive fittings, he points out. “In recent years, none of our boats have gone to Taiwan customers. Most of our sales have been to the U.S., with 10% to 20% going to Europe.”

When Boat International Media Ltd. published its 2016 Global Order Book in late 2015, Ocean Alexander was working on 35 yachts, the largest being a 155-foot vessel for delivery in 2018. The smallest were 85-foot boats. According to the same source, Horizon was building 21 yachts. Only one other Taiwanese company had more than three projects underway: Kha Shing Enterprises Co. Ltd., with seven orders. Kha Shing, which trades as KSE / Monte Fino Yachts, was the world’s no. 9 yacht builder in 2004. As recently as 2013, it ranked no. 17. Kha Shing, which like Horizon and Ocean Alexander is based in Kaohsiung, also renovates old yachts.

Whereas Ocean Alexander has continued to focus on the U.S. market, Horizon responded to the challenges of the late 1980s by seeking customers in other parts of the world. “After 1989, we started to target the European, Australian, and Asian markets,” explains John Lu, Horizon’s CEO. “During the early 1990s, more than half Horizon’s output went to Europe, but sales to Australia and Asia have increased steadily since 2010,” says Lu. “In 2015, the U.S. accounted for over 60% of our sales volume, with Australia being the second largest market. Since our establishment, about one in three orders have come from repeat customers...”

To read the rest of this lengthy article, go to Taiwan Business Topics' webpages here, or to the version posted on The News Lens. The photos are courtesy of Horizon Group.