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Lifestyle April 10, 2012 | 0 Comments

Chinese SOE Acquires Italian Luxury Yacht Brand

A yacht owned by Norberto Ferretti, President and founder of the Ferretti Group

A yacht owned by Norberto Ferretti, President and founder of the Ferretti Group | Source: rocketvox

Shandong Heavy Industry Group, a Chinese state-owned enterprise, agreed to invest EU 178 million (USD 234 million) in Ferretti Luxury Yachts in exchange for a 75% stake in the company. The deal will allow Ferretti, which owns Pershing, Bertram and CRN, to avoid bankruptcy and gain better exposure to the lucrative Chinese market. Beyond the initial investment, Shandong Heavy will extend Ferretti EU 196 million in credit lines.

A luxury Yacht brand may seem out of place among Shandong Heavy’s other fare, which consists mostly of construction and agricultural machinery. The deal highlights the scale of opportunities emerging within China’s high-luxury markets, and the desire of SOE’s to capitalize on such opportunities. Earlier this week, the Wall Street Journal pointed out that, of the 63,500 Chinese citizens with assets over 100 million yuan (USD 16 million), only 100 currently own yachts longer than 60 ft.

The luxury car industry offers some evidence of the Chinese love for upgrading: An article from last year on China’s luxury-car boom cited Ian Robertson, CEO of Rolls-Royce and BMW’s sales and marketing board member, describing an automotive hierarchy in China that is much stronger than in Europe or North America. According to Robertson, while the difference between a 5 and 7 series BMW in the more developed markets denotes a difference in lifestyle, in China it serve as a “class difference” – therefore consumers aspire to spring to the next level once an option presents itself. This logic seems to extend to Yachts as well, and a growing number of Chinese are prepared to spring for these luxurious status-symbols.

Ferretti and Shandong Heavy, who plan to keep Yacht-production in Italy for now. They appear optimistic about their future in China and will be producing more varieties of boats, from 25-foot crafts in the low-million-dollar range to 250-foot super-yachts that sell for more than USD 100 million. They are also considering a new line that will be produced in China and cater to the local market.

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