People who live on small islands tend to spend a lot of time staring across the water, assessing the world around them — especially when those people are boatbuilders. And when Taiwan’s marine industry looks around these days, it sees a lot of welcoming sights.

Taiwan has long been the little island that could. Despite an area of roughly 14,000 square miles (about the size of Maryland) and a population of around 24 million people (a little more than Florida), Taiwan’s economy ranks 21st globally by gross domestic product, according to the International Monetary Fund. The boatbuilding industry has been a major contributor to the total since Taiwan emerged as a player in the international market in the early 1980s, when companies such as Ocean Alexander, Hargrave, Horizon and others made inroads selling Taiwan-built boats to U.S. and European consumers.

“Taiwan had a reputation as ‘The Kingdom of Yachts’ back in the 1980s,” says John Kung, deputy general manager of Kha Shing Enterprise Co., which builds its own Monte Fino Yachts brand plus models for Belize Motor Yachts, Hargrave Custom Yachts, Offshore Yachts and Outback Yachts. “Back then there were more than 300 yacht- manufacturing-related companies generating annual revenues of over $200 million while building production motor- and sailing yachts between 30 and 40 feet.”

In addition to its own Monte Fino brand, Kha Shing builds boats for Belize, Hargrave, Offshore and Outback.

In addition to its own Monte Fino brand, Kha Shing builds boats for Belize, Hargrave, Offshore and Outback.

The good times didn’t last. By the late ’80s, the Taiwanese dollar appreciated almost 58 percent against the U.S. dollar, according to Kung, a shift that jacked up the cost of building boats. At the same time, a luxury tax in the United States killed demand. Many yards went out of business, and those that survived transformed their operations to manufacture semicustom or custom yachts, or higher-end, larger yachts.

“We believe it is this consolidation, over the past 40 years, that has allowed Taiwan to go from a low-cost boatbuilding nation to one that is recognized for consistent quality,” says Sally Doleski, Ocean Alexander’s vice president of marketing. “Taiwan’s challenge going forward will be one of innovations and continued investment in its boatbuilding skills.”

To her point, the remade industry is stronger than ever. In 2018, there were 33 boatbuilders in Taiwan that employed 9,800 people and generated $2.5 billion in economic output, according to TAITRA, a Taiwanese industry association. Taiwan is the most prolific boatbuilder in Asia, annually turning out 100 to 150 vessels between 50 and 250 feet, and about 90 percent of those boats are exported. In 2018, Boat International ranked Taiwan as the world’s fourth-largest exporter of boats larger than 85 feet.

“The superior quality and craftsmanship, as well as relatively lower production costs compared with U.S. or European countries, have made Taiwan an important boatbuilding nation,” says Emily Yen, sales and marketing manager of Dyna Craft.

Both Kung and Yen say that when they talk about Taiwan’s export market, they’re largely talking about the largest yacht market in the world: North America. “In recent years, we have invested most of our resources in the U.S.,” Yen says. “We have displayed boats there, we participate in major boat shows every year, we are working with dealers with the largest sales network in the U.S., and we use various marketing approaches. We expect that our brand awareness and sales will gradually increase in the U.S. market in the next few years because of that.”

Kung says his company’s biggest market is the United States, where he sees future growth tied to the global economy. He also says that while there’s no evidence that the trade war between China and the United States provides an advantage to Taiwanese boatbuilders, “yachts made in [mainland] China are at least 25 percent more expensive than yachts made in Taiwan due to the tariffs.”

“Superior quality and craftsmanship, as well as lower production costs, have made Taiwan an important boatbuilding nation.”
Emily Yen, Dyna Craft

“Superior quality and craftsmanship, as well as lower production costs, have made Taiwan an important boatbuilding nation.” Emily Yen, Dyna Craft

That advantage may be short-lived, which is why Taiwan’s boatbuilders are also pursuing other opportunities. “Currently, about 10 percent of our production is for non-USA markets; however, we see this growing significantly in the future,” Doleski says, citing growth in Europe and the company’s new outboard-powered Divergence fishing boats, 30 percent of which are selling outside the United States. Overall, she says, non-U.S. sales should reach 20 percent of revenue in the next 12 months.

Other Taiwanese builders are looking closer to home for sales. “We see the Australian market offering big growth potential if their dollar starts to strengthen again,” Kung says. Yen sees Southeast Asia as an emerging market with “lots of potential.”

A key way of connecting with those regional markets is the Taiwan International Boat Show, held every March for the past few years in Kaohsiung City, the heart of Taiwan’s yacht industry. The show features power- and sailboats, accessories and equipment, maintenance services, recreational water activities, tourism interests, professional seminars and more. TAITRA uses the show to attract builders and suppliers from other boating industries to Taiwan. “If you’re a boat equipment supplier, we welcome you to join us at the boat show,” says Andrea Lou, a TAITRA project manager.

Yen says that if the show can “attract and invite the buyers or dealers from nearby countries, it will help the shipyards with more exposure in the Southeast Asia region and may help us to develop these markets.”

The show also serves another purpose: developing a moribund domestic boating market by promoting maritime culture. “The promotion of boating and lifestyle through the last three Taiwan International Boat Shows helped to educate and attract locals to try and experience this new activity and lifestyle,” Kung says.

Private boating has long been limited by government restrictions to harbor access and waterfront development. Taiwan has 973 miles of coastline but only four private and four public marinas, and 483 private slips. In all, there are roughly 2,100 private boats registered, compared to 440,000 in Japan.

In the past five years, though, the Taiwanese government has loosened restrictions. According to Kung, there are at least 12 marinas under construction that will add another 400 slips. Kung’s company is developing one called Pier 22, which will offer dockage for 25 yachts, including some berths up to 164 feet, service facilities, and new and used yacht sales. More important, it will be the first private marina with shops, restaurants and public access, allowing Taiwanese people another chance to experience waterfront life.

Horizon City Marina was built by Horizon Group as Taiwan’s first private marina, but the country still has a shortage of boating infrastructure.

Horizon City Marina was built by Horizon Group as Taiwan’s first private marina, but the country still has a shortage of boating infrastructure.

Internationally known builders, including Azimut, Fairline, Ferretti and Princess, have set up dealerships in Taiwan, Yen says, indicating how much promise the market holds. Still, no one expects the tide to rise too quickly and without resistance. “For domestic sales, the growth of this market still depends on many aspects, like infrastructure, regulations,” she says. “It counts on every party’s efforts to create a more friendly environment for boating. We reckon that the domestic market will continue to grow, but with a stable and slow path.”

In an ironic twist, the current collection of Taiwan-based boatbuilders focused on larger yachts might be ill-positioned to capitalize on the growth, which will require more of the midsize cruisers that put the island on the boatbuilding map, as well as runabouts and fishing boats. “Our market will continue to grow in the next five years if our government will keep up with demands by opening up more locations to develop proper marinas with recreational facilities that are not too far from the cities,” Kung says. “But it will start from smaller boats that most of the Taiwan yacht builders are not building.”

Expect the industry to once again shift with the times. Kha Shing, Kung says, “is talking with other manufacturers to offer entry-level boats and yachts for domestic markets.” 

This article originally appeared in the February 2020 issue.


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