The continuing boom in China’s expanding economy is creating an upper-class population with more disposable cash than ever before and more leisure time in which to spend that cash. That could spell opportunity for Maine’s boat builders, who are looking to the Far East as a potential market for high-end boats built in the U.S.

A delegation organized by the U.S. Department of Commerce, which included Maine boat builders and representatives from the state and Maine’s marine trades industry, recently attended the 12th annual China International Boat Show in Shanghai.

The trip last month not only gave them an opportunity to meet with top officials of China’s government-backed boating industry, but also to introduce them to Maine-built boats.

“We got to talk about Maine boats,” said Paul Rich, president of Maine Built Boats, a nonprofit company formed to market Maine boats. “That was one of the best things. And we hope to bring some folks from China over here to see our boats and that they can go back and generate some interest in the future.”

‘A wonderful opportunity’

“Future” seems to be the key word. No one from the Maine delegation is pretending that a market for Maine boats currently exists in China. It doesn’t. The recreational boating market there is not even in its infancy, according to John Kachmar, president of Wilbur Yachts in Southwest Harbor, who, with his wife and business partner, Ingrid, was part of the delegation. “It’s still in the conception stage,” he said.

“There’s a wonderful opportunity there if you want to move to China. But I’m a Maine boat builder. I’m not looking to go to China,” Kachmar said. “I want to export our boats to different parts of the world and create opportunities here in Maine.”

The market potential is there, he said, and in five or 10 years, China will have a recreational boat industry and there will be opportunities to sell Maine-built boats in that country.

China has had one of the most robust economies in the world during the past decade, sustaining double-digit growth over the past 15 years, according to Chen Ferguson, a professor of international business at the University of Miami in Ohio and a consultant to the Commerce Department who was part of the delegation to Shanghai. The Chinese government also has invested heavily in building the infrastructure to support the growing economy, which has increased the speed of its economic development, Ferguson said.

“That has made China more attractive to investors,” Ferguson said recently. “Of the Fortune 500, 490 of those companies are now investing in China and doing business in China.”

The growth in the economy is creating a new affluent class in China, people who now are looking for ways to spend their new-found disposable income. More and more they are indulging in recreational activities and in luxury items – such as larger homes and expensive cars – that will highlight their status.

They are also creating a market for high-end boats that could become a new export market for Maine boat builders. The high quality of craftsmanship and technology and the state’s long tradition of boat building are attributes that will appeal to Chinese buyers. Although Maine-built boats are relatively high-priced, affluent Chinese buyers are willing to pay the extra money to show their status, Ferguson said.

“Maine boats are beautiful, and that fits in with Chinese traditions,” she said. “Chinese people love beautiful things and beautiful craftsmanship. They love wood and fine woodworking. That could be a very strong point in selling Maine boats in China.”

While the potential exists, China lacks the infrastructure to support recreational boating, according to Rich. There are few recreational marinas in the country and most of the existing infrastructure is geared toward commercial shipping, he said.

That is about to change.

The Chinese government is committed to developing a recreational boating industry, Rich said, and officials are definitely “ramping up” their efforts to build a boating infrastructure, particularly in preparation for the Summer Olympics in 2008 and the World’s Fair in 2010, both of which will have boating venues.

“What they are planning is breathtaking in scope,” he said.

Right now there are 54 marinas under development in China, according to Ferguson,

“China is developing a boating economy,” she said. “With the boating economy comes a lot of related services. Marinas in China are different than in the U.S. and generally include a five star hotel, an office complex and other amenities.”

It’s all in the details

The physical infrastructure is one thing, but a lot more has to happen in China if it hopes to develop as a recreational boating market, according to Kachmar.

“They’ve got a good understanding of the macro picture; they need to get the micro picture figured out,” he said. “They know what they want to do and they know what they want it to look like. It’s the details. They need to plan it and get the details down.”

According to Kachmar, China will have to look at its existing tariff structure, which now is not favorable to exporting boats there.

“There needs to be a dealership network, and they need to figure out who’s going to take care of the boats we build,” he said. “And there has to be some education for the customers. You can’t just jump on a 40-foot boat without some understanding of what you need to do with it.”

Maine also will face challenges to meet the demands of a developing Far East market, including developing the necessary work force.

“If all of a sudden we had a market in China and a dealership network marketing for us, it would be difficult to get the work force we needed here in Maine,” Kachmar said. “We provide good pay and good benefits, but we still have difficulty finding qualified workers.”

It is a positive step for the state of Maine to be in China at the early stages of this development, Ferguson said. But, she noted, Maine’s is not the only boat-building delegation to take an interest in China, nor is it the first. France had a pavilion at the Shanghai boat show, as did Italy and other major boat-building countries, she said.

Maine will have to adapt itself to a global economy if it hopes to create a competitive advantage in the Chinese market, she said.

While Maine’s presence was small in comparison to others, it was well-received by Chinese organizers, according to Elaine Scott of the Maine Department of Economic and Community Development. The trip positioned Maine as a leader in the boating and yacht industry to government officials and business leaders in China, Scott said.

The delegates met with Yang Xingfa, deputy secretary-general of the China shipbuilding industry, the man in charge of building the country’s marine industry. Yang invited the Maine representatives to participate in the opening ceremonies and to make a presentation at the show’s seminar. They also were seated at the head table with Chinese leaders during the main reception of the boat show.

The Maine delegation also visited several marinas that are being developed in and around Shanghai, including FengXian Yacht Industry Park, which covers an area of 40 square kilometers and is expected to become the largest yachting industrial base for Shanghai.

“The contacts we made and the knowledge we gained will be invaluable,” Scott said. “And we were there to see it firsthand; it wasn’t someone else telling us about it.”

Business in China is based on relationships, Scott said, and the presence of Americans at the boat show may have helped to build initial relationships that will grow as the boating industry grows.

“This was the right time for us to be there,” she said. “We have an opportunity to export boats to China and create jobs here in Maine.”

Maine’s presence at the boat show, Rich added, is essentially “priming the pump.” While that market could take a decade to develop, the trip to China has put Maine in on the ground floor.

“If the market looks like it’s going to be right, we can put together a plan that supports that market effort,” he said.

Maine’s boat-building industry is already looking elsewhere overseas to expand potential markets for the boats built in the state. Recent efforts have included trade trips to Europe in an effort to break into the market there. China, Rich said, represents another, potentially large market for Maine boats.

“There are 1.3 million people in Maine, and 1.3 billion in China,” he said. “If we can create the same sort of demand for our boats as there is in the U.S., well, … you just add zeros to the numbers of people. That’s a worthwhile market.”

PHOTO COUTESY OF ELAINE SCOTT

Timothy Hodgdon (center) of Hodgdon Yachts in East Boothbay examines materials last month at the 12th annual China International Boat Show in Shanghai. With him are Chen Ferguson (left), a consultant to the U.S. Commerce Department, and Yang Xingfa (right), the man in charge of building China’s marine industry.