Who is sourcing entire boats in China?

In analyzing some of the trade commerce trends in China, including the advancement of better quality standards, a new sector of the sourcing market will be geared toward higher-end and more complex products. The manufacturing of recreational boats is but one of these areas for growth that can be adapted to the USA manufacturing and sales business model. This week we will explore some of the challenges faced by integrating an overseas manufacturing model for boats, analysis of costs and margins, Chinese boating industry progress and a leading Shenzhen manufacturer interview and commentary.

Sourcejuice recently had the opportunity to interview the Chairman Director of HSB, Shi Jun, to discuss the factory's capabilities, industry involvement and recent trends in the market. Shenzhen HiSpeed Boats Tech. & Development  (HSB) is one of the leading boat manufacturing companies in Shenzhen. The company was established over 50 years ago as a state-owned business building ships for the Chinese government. In 1999 the focus changed to the commercial market, converting to a private company.




SOURCEJUICE:  What are the types of marine vessels manufactured at this facility and who are your typical customers?
Shi Jun: HSB specializes in the complete construction of speed boats, sailboats, yachts and semi-military marine vessels. Some of the primary customers are the Chinese Coast Guard, Customs, China Marine Safety Administration (MSA) and recreational boating entheuisists. Most of our customers are from the Chinese domestic market, but through the use of a trading company or entity with an export license, our marine vessels can be exported anywhere in the world.

SOURCEJUICE: What problems might you foresee in exporting boats?
Shi Jun: Unlike some of the typical Chinese exports, marine vessels are a highly complex product. Consider mechanical, hydralic and electric components, taking into account  quality assurance, servicing, maintenance, parts, etc after the customer takes possession.

SOURCEJUICE: If a marine manufacturer was evaluating HSB as a potential supplier, what sets HSB apart from other companies in China?
Shi Jun: We have an established standing in the industry, over 50 years of experience and are head of the Marine Chamber of Commerce here in Shenzhen. HSB leverages its own and joint engineering initiatives with cooperations from Dalian Marine University to stay on the cutting edge. HSB was the first and possibly only manufacturer in China to utilize such high-end materials such as Kevlar and carbon fiber for hull construction. These materials are used on boats traveling at upwards of 70 knots per hour. We are also working with the Shenzhen governement on a yachting and cruise plan for citizens here in Shenzhen to enjoy.

SOURCEJUICE: Do you know of any marine companies already manufacturing in China?
Shi Jun: Brunswick

SOURCEJUICE: What is the comparison in cost from a boat manufactured in the USA vs. China?
Shi Jun: This depends entirely on the type, motor, size, and trim of the boat, however the cost savings can be between 3 and 5 times the cost. It's an incredible number.

SOURCEJUICE: Which is the most expensive part of the manufacturing process?
Shi Jun: On super-yachts the material and on recreational boats, the labor.

Challenges
Much of the cost associated with the construction of recreational boats is in the labor and raw materials during assembly. Many manufacturers will fabricate the fiberglass hulls state-side and then import all the components, from overseas suppliers, piecing them together in a USA warehouse for later distribution.

There are many challenges to manufacturing an entire boat in China for direct importation into the USA:
•QA testing of the boats prior to distribution
•Service and maintenance
•Weight, size and packaging of boats relative to logistics
•Parts replacement for defective equipment prior to sales

Cost Benefits
Here is the breakdown for cost savings with China domestic manufacturing:
•Assembly cost
•Raw material cost
•Electronics, wires and parts cost

You will of course have some new costs that will affect your landed cost:
•Customs Import Duties
•Logistics Cost



Shipping Boats
This seems like one of the largest obstacles in exporting boats from China. The place is over 10,000 miles away, right? How many companies could there possibly be that can handle shipping boats, yachts, etc across the world? Apparently, there are more than a few! Those in boat sales already know that foreign buyers that have boats shipped back to their home country is a common practice.

Yacht Path Intl - serving 3 continents, they have even developed their own "time-tested cradling system to transport yachts up to 250 metric
tons."

Complete Freight - these guys look like they can do it all: huge ships dismantled and shipped in pieces, speed boats mounted on top of containers, American Cup sailboat racing, etc. Check out some of the pictures near the end of the article.

According to AutoShippers there are several ways to ship a boat or yacht worldwide:

Flat Rack Shipping The flat rack shipping method utilizes 40ft containers without sides or top. The container is loaded by crane into a cradle at the shipping facility.	Roll on, Roll off Shipping This method is the most common form of logistics for boats and is suitable for marine vessels on trailers. Boats are towed into the ship and stowed below deck. Upon arrival, the boat is towed from within the ship to the port facility.

Container Shipping for Boats
Marine vessels that are small enough can be loaded into a standard 20ft or 40ft shipping container and transported the same as any other container.

It is important to note that these companies are specialized in the care and preparation of shipping boats on a large scale. The same techniques can likely be used with your current forwarding and logistics company.



During my research for this article I did come across some great boats:

Changzhou F.R.P. Shipyard


Changzhou F.R.P. Shipyard


Changzhou F.R.P. Shipyard

... and some incredible ways of shipping them:
CompleteFreight.com


CompleteFreight.com

CompleteFreight.com

CompleteFreight.com


CompleteFreight.com


CompleteFreight.com

Here are some great links which are relative to sourcing entire boats in China.
•InfoMarine Online - complete list of ship building and repair yards in China.
•Yacht Forums - Some discussions about ship builders in Asia.

What are some of the USA import costs for boats?
Here is the section of the Harmonized Tariff Schedule of the United States for the importation of boats of different types.



The Harmonized Tariff Schedule for Boating can be found in its entirety here.

It seems that either for mass production and sales in the USA or the extremely rich custom design, producing boats in China is an applicable options. So who is doing it already? We want to know.

For more information on importing boats from China or HSB, contact us.


dylan@sourcejuice.com // Dylan Blankenship