A milestone in HK-Guangdong yacht travel

Backed by the exponential growth in economic links and exchanges between the Chinese mainland and Hong Kong and Macao over the years, the yachting industry is fast emerging as one of the key beneficiaries.

Yacht travel between Guangdong province and the two special administrative regions is set for substantial growth in the coming years, further boosting commercial ties among cities in the Pearl River Delta and promoting regional tourism, but a further easing of policies, plus institutional innovations, are needed to drive it, industry insiders said.

Two Hong Kong-registered yachts made their debut in Shenzhen waters in mid-December last year, while three from Shenzhen anchored at Hong Kong piers, marking a milestone in implementing a free travel scheme for yachts in Guangdong, Hong Kong and Macao.

The scheme had been jointly approved by four Chinese mainland government departments - transport, public security, customs and quality supervision, inspection and quarantine - in June. It allows yachts from Hong Kong and Macao to navigate in waters in Guangdong, but they have to berth at designated piers and be inspected at nearby checkpoints under a pilot program of the China (Guangdong) Pilot Free Trade Zone.

The first piers qualified to join the program include two in Shenzhen, two in Zhuhai and one in Guangzhou.

There is a "voracious" demand for free yacht travel between Hong Kong and Guangdong, said Ye Jialin, director and executive vice-general manager of Shenzhen Bay Marina Club, which is among the designated piers.

The yacht economy has grown rapidly in Hong Kong - one of the world's wealthiest economies with GDP per capita reaching HK$339,531 in 2016. According to the city's Marine Department, there were 9,748 Hong Kong-registered pleasure vessels as of late 2016 - up 23 percent from 7,920 in 2012. In addition, Hong Kong hosts more than 20,000 yachts from around the world.

On the mainland, the middle-class bracket has been expanding fast too, laying a solid foundation for yacht consumption. Currently, an imported yacht normally costs between 500,000 yuan and 1 million yuan ($78,995 to $160,000) which, Ye said, is no longer a distant dream for many mainland families.

He believes China's yacht economy is poised to take off and witness substantial growth in the years ahead.

"Free navigation of yachts, making cross-boundary travel more convenient, will boost both commercial and individual visits between Hong Kong and Guangdong, contributing to the growth of the regional economy," Ye told China Daily.

"From the social perspective, it may bring a change in the way people live."

The yacht travel scheme is also part of broader efforts to create a favorable working, living and travel environment in the Guangdong-Hong Kong-Macao Bay Area as a greater flow of people is expected with deeper regional integration.

Despite Hong Kong and Macao's close proximity to Guangdong, it had been basically impossible for yacht registered in the two SARs to sail into mainland waters, except for exhibition or other special purposes. Even under those circumstances, a complicated and lengthy application procedure would be inevitable. The process, in which a number of documents had to be submitted to regulators in Beijing for approval, could take several months.

Under the new policy, yachts from the two SARs can berth at designated piers in Guangdong after going through a registration process and obtaining the nod from local authorities days before their departure.

The vessels are allowed to stay for up to 90 days at any one time and for a total of 183 days at the most in a year, according to Ye.

"Contrary to some people's worries that the opening of cross-boundary free travel could deal a blow to the mainland's yacht manufacturing industry, I believe it's a big boom for the business. Just like China's entry to the World Trade Organization, it didn't hit domestic companies. Instead, it has helped them grow bigger and stronger," said Leng Xuehua, chairman of Hong Kong-based yacht manufacturing company Heysea Yacht Group.

"That's because only when the market becomes bigger can enterprises gain opportunities. On the mainland side, the opening-up could induce more people to buy yachts. From the aspect of Hong Kong, it could ease the problem of berth shortages, thereby promoting the industry's development."

Despite the lifting of regulations, industry experts have expressed concern over whether the breakthrough could make its mark, pointing to certain institutional and management problems that could hamper the industry's development.

Operators of Hong Kong and Macao yachts have to come up with a big cash deposit with the mainland customs authorities before being allowed into the mainland. "This is to preempt any move to sell the vessels on the mainland or other unexpected situations," explained Ye.

The deposit could be as high as the tax for an imported yacht, or about 43 percent of its value. For a luxury yacht worth 10 million yuan, a 4.3-million-yuan cash deposit is required.

"The huge sum of money, though refundable, could dampen people's enthusiasm for travel. We're negotiating with the government to reduce the amount to 20 percent, which is still high but better," Ye said.

Li An, an expert who has been observing the industry for years and runs a media platform for the sector, pointed out that mutual recognition of license plates and driving licenses for yachts between the mainland and Hong Kong has yet to be sorted out. "The 'free travel' is not truly free right now as Hong Kong and Macao vessels are only permitted to berth at the designated areas and not in all waters in the region."

Li suggested that yacht travel should look to that of free travel for vehicles with dual licenses. "It will take time and require efforts by the industry to make the government improve the system and open up the field further," he said.