When Chinese industrial conglomerate Weichai Group snapped up cash-strapped Italian luxury yacht builder Ferretti in 2012, the deal looked like a match made in heaven.
Debt-laden Ferretti, known for the elegant Riva speedboats favoured by film star Sophia Loren, was the world’s top maker of large motor yachts and cash-rich Weichai saw an opportunity to offer luxury leisure to the growing ranks of Chinese billionaires.
Three years on, wealthy Chinese are yet to fully embrace the appeal of messing about in boats and Ferretti, which has since slipped to No. 3 among global superyacht builders according to an annual order book survey by industry publisher Boat International, is still loss-making.
“The market is not that big, the market is not that fast,” said Fabiomassimo Discoli, a Hong Kong-based sales manager for Ferretti, adding that the company had found it needed to adapt its boats to the different tastes of Asian owners, especially mainland Chinese.
“They don’t sleep on board and just use the boats for entertainment purposes,” said Discoli, speaking at the Singapore Yacht Show aboard a 21-metre (69 ft) Ferretti Yachts 690 that carried a 3 million euro price tag. “They bring their customers… do karaoke … and smoke cigars.”
The example of Ferretti underscores the difficulties Chinese buyers face in extracting quick returns from a global brand at a time when they are gobbling up Western assets as never before.
The weak euro is making companies in countries such as Italy or Portugal attractive, as the March purchase of tyremaker Pirelli by China National Chemical Corp shows. Chinese buyers poured US$18.8 billion into European assets in 2014, the highest since 2008, and topped that figure in the first half of 2015 alone, Thomson Reuters data shows.
But financial muscle alone is not enough to master a brand, and question marks hang over the ability of many Chinese buyers to leverage exports into their home market in times of slow growth.
Ferretti Chief Executive Alberto Galassi, appointed by Weichai in May last year to try to revive the Italian group’s fortunes, expects the company to return to net profit in 2017. Weichai’s original Ferretti management team had envisaged the firm breaking even by the end of 2013.
Read more at South China Morning Post.