Yacht building taking off

Nestled on the banks of the Tamsui River just north of Taipei City sit three giant, but seemingly deserted factory buildings. To the casual observer, they could have been the industrial legacy of Taiwan's low-end manufacturing industry that has long since decamped to China.

But a quick peek behind the closed gates sheds light on what is emerging as a one of the nation's most lucrative and cutting-edge export industries: luxury motor yacht building.

The meteoric rise of Taiwan's family-owned yards has propelled the nation into one of the world's most important places in the global yacht manufacturing business, just behind the master boat makers in the US, Italy, Holland and the UK.

The Ta Chou Ship Building Co (大舟企業) in Tamsui is one such yard that has benefited from this fast-growing industry.

Started in 1919, Ta Chou has moved slowly from making small wooden boats to become a specialist in custom-built 23m to 40m motor yachts for the well-heeled in Asia and Europe.

One of its latest boats was an 24m motor yacht for a Japanese businessman in the Pachinko gambling business in Osaka.

"Taiwan has transformed itself into a luxury motor yacht hub," says 55-year-old Jack Chen (陳朝南), chairman of the Taiwan Yacht Industry Association (台灣遊艇工業公會). "It [Taiwan] will become the mega-yacht center for Asia and the rest of the world in the very near future."

Statistics from the association show yacht exports last year were worth almost US$200 million and that next year could see Taiwan ranked number three in the world in terms of units of super yachts built if current trends continue.

The trend nowadays is to build fewer, but bigger and more expensive boats with multimillion-dollar price tags.

Twenty years ago, Taiwan was one of the top places in the world for the mass manufacturing and exporting of small, cheap pleasure boats.

But competition from China and rising costs forced two-thirds of boat yards into bankruptcy.

The survivors began to focus on building bigger and better yachts for export that the Chinese are so far not skilled enough to replicate.

According to Taiwan's Yacht Industry Association, skilled laborers can achieve around four or five times the productivity of their Chinese counterparts.

It's a sentiment echoed by big yard owner Johnny Chueh (闕慶承), owner of Ocean Alexander from Taiwan, which has facilities in Kaohsiung and in China.

His yard specializes in building a dozen boat styles and customizing each to the client's requirements.

"We have a yard for building smaller 15m motor yachts in Shanghai but still need Taiwanese workers in key positions to maintain quality standards," he says.

"The mainland Chinese don't realize that every detail on a luxury yacht makes a difference."

It certainly does since a 15m yacht from Ocean Alexander can cost around US$500,000 while a 30m boat would command a US$7 million price tag, and take up to one year to complete.

"Customers can be very demanding and expect the best with those prices," he adds.

This is why Taiwan is staking a claim by moving to a higher end product and allowing China to soak up the less prestigious and demanding pleasure boat business.

In fact, the yards and the government are so intent on making the nation the number one place for luxury yacht manufacturing that they are holding the first Taiwan International Boat and Watersports Show at the Taipei World Trade Center through Sunday.