Yacht Building Success in China

That's where reputation comes into play. Like I tell a friend who does some jobs for me and hates to charge: "What I expect from a friend is a job done for a fair price, done to the best of his ability". The fact that I've known him for 30 years assures me that I'll get that. A new guy may or may not give me that, but it's less likely because he has no reputation to protect and his start-up costs to recoup.

Guys guys guys,

I'm only 6 years in China but all time producing several items.

But 99% of all your thoughts I do understand and indeed are based on what China delivered to the west last 20 years.

But again....you have to be here when you want to build whatever. Sorta say 24/7 with your nose on top. Then 100% sure can build top quality.

I've shown to many Dutch and others Chinese yards where I know they can build top and all said the same....open mouth and surprised what happens here.

Point is only that is 1% of what happens here...other 99% is still crap or little better but that's it.

And they cannot build faster then in Holland? Then ask in Holland a top skilled man earning E 3500 or even more a month to work 250 hours a month.

Here they beg you if they are allowed to work 250 a month for you to earn good life. And these are people with skills that will surprise you.

Again, I do understand you but it is the same as in LED lighting, 2 years ago I'll never would have it in my house while 5 years ago everybody was crazy about it....now? We're still developing a lot but would you build a boat without LED inside? And it is still developing fast....

I would advice everybody in whatever they do to look for China but NEVER do it on your own or take few years of veeeeerry expensive lessons.

I don't agree with you here. Japanese are innovative, creative, out of the box thinkers. They improved what we invented in the West. They also have taste for esteatics.
I have never met a Chinese who came up with an original idea and that's why they are always copying everything.
The few Chinese designed boats I have seen were 'inspired' by western design but could go IMO straight to the roques file.

I don't see that China will ever be able to produce and export their own designs. Their role will be limited to production only.

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Like I said before....understand this thinking but is 99% right.

I meet not a lot of them but I do....impressive designs in everything. That is the 1% and that will expand.

With yachts till now I'm with you but when they can do in other things they will 100% sure come with their own designs in yachting as well.

And for what Japan goes....we talked the same about them as we now talk about China 25 years ago.

And not forget the designs come from European people for cars. I dare to say they still copy. And Philips joins them a lot for which they till today even base their biggest successes on.

I know, they already do. And I hope I'll never be asked to perform a valuation survey on them. I might just be tight up with other stuff that particular period...

So apparently that they can build (or will be capable of fine quality soon enough) is not questioned anymore, question is can they design. Well they can hire westerners for that!

Anyways, my only real worry about china as a business location is their all-encompassing culture of trickery. The only way to have contracts been followed through on is to literally oversee each bolt and nut. The bolt and nut you hadn't checked will certainly be a discount one of inferior quality.

Now it's possible to manage (let's be frank, russian business style is not too much different), but it's very taxing and often crosses the line as a man of western business culture would imagine it. Might be a national sport or something - if they not cheat you on something, they aren't happy with the business. I worked for a company that outsourced production to China - witnessed some totally hilarious anecdotes. You choose a factory, you bring them 1m$/month contract (which is very good in that industry), first month you stay there and supervise each bolt, and it's perfect, second month you still there but more relaxed, and it's still perfect - okay, you think and fly back home, third month's shipments arrive and they are of straight-to-the-bin quality. Now, there is no point in talking to factory management - they would be in total denial, down to the point of calling black "white" looking you in the eyes. Literally, if first shipment were baked cookies and other one came out as sliced doodoo, you gonna hear it's "absolutely the same". So, you tell them to screw themselves and find another factory. 3 months, rinse, repeat. The difference is, buy the time you're finished with second factory, first one already went bankrupt! So you tell second guys: "here, look, don't do that routine on us, you're gonna loose our business - here's an example". Effect? Zero.
I myself tried to explain some basic business logic to chinese factory managers on that: "see, guys, you earn X monthly on our contract. You'll earn Y on one-two "cost-cut" production batches, where Y = X / 5 or less. Then we'll find out, unevitably because we know of this BS already and do solid incoming QC, and you loose X." - "yes, yes, we understand". O rly. That guys started supplying crap about a month after the dialogue above. I should've probably used soldering iron, not logic.

Well bottom line, abovementioned company is currently building own plant... in Malaysia. I figure there are some changes to Chinese business culture necessary, after all

ArcanisX, the amount of times I've heard a story like that .

This is why things have to change. If I'm paying millions for a boat, I want the builders working on the boat to have vast, or at least a decent amount of knowledge in there respected fields.

If the builders (farmers from the rice fields) were put through a 4 year apprenticeship, with experience in all forms of construction, and than worked under a builder who has been doing it for years... well there's a start. Then they can start on not taking ones design. A decent pay check would be good as well.

Far

I know these stories and even faced them self.

That's why I made the choice:

Either forget business with or in China or second:

Go there, live there and check each nut and bolt.

Cost me some to find out but it works.

However the one I work with for yachts found it out by itself 12 years ago when they started. Otherwise they were not still growing.

Must be marked that it is owned and managed by Taiwanese in China.

And after all, the successful companies in China are mainly partial or wholly foreign owned and above all managed by foreigners.

Willight,
I am not saying it can't be done. There's many succesful examples of shipbuilding in China (a.o. the Damen Shipyard groups builds fast catamarans there).
I'm just weary if a relatively new yard comes up in China and says for example "we can build the same quality in half the time because we have so much cheap labour and workers doing 60-70 hours per week".
There's only so many people you can have working simultaneously on a 40-50 m yacht. Put on more, and people start to be a lot less productive (waiting for another one to finish, letting people pass, damages to another ones work,...).

Repairing a shoddy job on a boat is far more costly than doing it properly from the first time. Consider a superyacht as a furniture piece with seven layers of varnish. A small mistake in the finishing of the piece or in even one of the 7 layers and you're looking at an immense amount of rework.

Far, as I said, that's not a story, that's a system. Pretty much everyone doing business in China speaks the same.

There is a certain point when additional costs of supervision, reworks and other consequences of sloppy/cheaty culture eat the supposed cheapness dry. Which is just too bad, because those are absolutely unproductive costs that shouldn't be there.

But then again, what is left of western industry should probably thank that effect, because without it there wouldn't be one single thing not made in China around already.

What some owners - in search of the best possible deal - fail to attach the proper value to is their own time and peace of mind.
Many owners spend more time dealing with their boats during the build than in several years of using it after delivery. This involves meetings with the designers, visits to the yards, walking though mock-ups, etc.

For a real superyacht (which ultimately is still a pleasure craft), the build period should be as enjoyable (if not more) than actually using the yacht. Having a very troublesome build will undoubtedly cast a shadow on the enjoyment of the yacht after delivery. It's essential that there's a good match between owner and yard because you're basically entering a marriage for two to three years. Also in Holland, it's fascinating to see the difference in culture between various yards, even if the end result is comparable in terms of quality and cost (take Vitters and Royal Huisman for example).

Bruno

That is so true.
With one company in particular I withnessed that at every single launch of their new-builds the owners were so pissed off with the builder -after being hassled for the entire duration of the construction- that commisioning the boat became a complete nightmare.

Arcanix you are spot on with your comments. Western logic does not apply when working with uneducated workers from a (former) communistic regime. Our way of reasoning doesn't apply to them and their way of reasoning doesn't apply to us.
I've seen workers saturating honey-comb with resin because that would make the partitions stronger.

It takes years of hard practise to be able to work with them and come to a satisfying end result.

Another problem I find is the fact that experience doesn't get passed on. Older and more experienced workers will not train younger staff because they are afraid that by doing so they will digg their own grave. Also it's extremely difficult to create teamwork because everybody is competing with everybody else.
The fact that workers have their own side-business is also one thing I had to get used to. It used to make me paranoid because I knew that something was going on but couldn't find out the how and what of it. Better was to leave it and try not to lose oneself in the smaller details provided that the end result is good. A Chinaman will never work for you, he works for himself and you just contract him (and sometimes their entire family).

Creating more loyalty to the company by way of providing free (English) classes, setting up a team and building a basketball court plus painting the dormitories also didn't help. They are happy to live in slums when they can take that little extra money home.

I started with a rewarding scheme: there were prices (money) for the best team player, the best mentor etc. The workers were asked to vote for their favorite. It worked until I found out that they eventually had rigged my whole scheme and good intentions. They decided on forehand who to choose and demanded their share of the price money.

Nowadays I don't manage staff anymore but if I had to I would leave it to a Chinese senior and purely focus on the end result.

The sad thing is "focusing on end result" often means constant monitoring, for the costly rework problem described above. Which in turn defeats the whole point of appointing local senior - you gonna need "your own" supervisor anyways.

Not sure the problem is in education - high-class Chinese businessmen from educated and cultured environment tend to behave the same way. Communism - probably yes, seeing how "no steal - no deal" culture seems to prevail in formerly communist countries.

People do get results from bonus and rewards schemes in China as long as it's run by an outsider, too.

ArcanisX, sorry, I wasn't saying you were making the story up. My point was I've heard comments from builders and Nav Archs who have spent some time over there, there comments were very similar to yours and a lot of other member's comments.... I'm agreeing with you

tirekicker11, Innomare, both your comments and experiences are also very interesting to say the least.

All these troubles seems to be with a lot of the smaller boat companies, the big guys like Sea Ray etc, probably wouldn't see much of it.

Far

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Oh yes, this is so true,

Even as yard I think you should be wise to turn down with all respect a client in case you do not feel the click to be married for 1 1/2 up to 3 years.

The client for sure has to have the click as well and not come to China only for fast production and few % cheaper.

Why would it be different with Sea Ray? With a conglomerate the size of Brunswick it's amazing who many things can walk out the door and how many corners can be cut before anybody of any consequence notices and can do anything about it, and how many boats can come off the line in that time. It's not like the owner's son is shoulder to shoulder with the craftsmen.

Unfortunately, those days are over.
Take about 6 months as a minimum to have a general arrangement, specification, naval architecture, basic interior design and structural drawings ready for production and I think you'll find many yards in Northern Europe ready to start right away.

Actually, right now may be the perfect moment to start. Wait another two years and some yards will be fully booked again while others may be out of business.
There's little left of any "brand surplus" on top of the labour & materials' costs and even hourly rates have dropped significantly compared to 3 years ago.

So, if you'd ask me if I would go to China to build at the same price, but potentially half a year faster, I'd really think long and hard before taking such a risk. There are other and better reasons to build there (e.g. cost saving, client is Chinese, etc...), but purely time saving would not be a very good motivation in my opinion.

LOL, "the click" is the exact word that came to my mind as well. I thought we only say that in Dutch, so I changed it to "match".

If the client is Chinese and he can afford himself a yacht he probaply prefers to have it build in the West. I know of a yacht owner from Shanghai who only employs caucasians on his boat. The crew is always dragged from party to party because the owner likes to show off to his friends and business partners.

I guess 'click' was used in a Dutch way. Willight and myself are both Dutch.