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Business Seminar

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Lecture topic, Knowing YACHT Story about Taiwan Yacht Industry & Horizon Group
The history shows that the yacht sailing starts from Ming Dynasty “Zheng He's Expedition”. The business Flow of yacht industry as below,Boat show→Contract/Spec. Negotiation→Simple Sketch drawing→Manufacturing→Shipping/delivering→After sale service. At class, I was thinking the high price of buying a yacht so I raised a question “The yacht price is high, is the payment term important for your company? What is the payment term between you and your most customers? Also compare to your western customers, is there any difficulty to negotiate the payment term with Chinese as you now will be focusing your new market in China? ” James Fwu indicates that pay in advance is very important. Normally when signing the sales contract, 10% deposit is required. And each step of manufacturing the yacht will require 10% payment as well. Previously, most customers will agree on this payment, however, as globally bad economy which makes the negotiation becomes harder. Some customers decline to pay after they indeed see the finished product. Horizon will try to insist the 10% advanced payment because each yacht’s high cost relating to investors fund, not Horizon group only. We need to be responsible to our investors. The 2nd question I raised “You mentioned the shipping/delivering yachts need to be very careful and it requires high insurance fee, how is the shipping term to ship your yachts? FOB/ IF/Others? Does this matter your business a lot? Also for the Super Yacht & Gigo Yacht, will you go by normal shipping? Or you will sail the yacht to your customers directly? I am wondering how you ship such a huge yacht overseas." James Fwu replied that Horizon set delivery term as FAS (free alone side) as standard, and stick to it as possible. It gives the least risk of transportation (damage by lashing, storm, air pollution, pirate…etc.) “Shipping plus Insurance (during transportation)”, sometime could cost up to 3-5% of boat price. A term must take care upon negotiation. To Euro or USA, most will by shipment while to Japan or Australia, even 70ft+ small yacht, relative easy & safe to deliver on its own keel. My personal finding is that the FAS term is popular in the break-bulk shipments and with the importing countries using their own vessels. In my opinion, the yacht is a choice of life style. Buying a small yacht can be affordable for most people and then enjoy the leisure time on the yacht. However, it is not a popular outdoor activity for Asians. My personal thoughts as below,
a. Most Asians are influenced by Confucius concepts. Working hard and saving money are most important. Besides, there is no further sailing after “Zheng He's Expedition” in old days and people are unfamiliar with this activity.
b. People consider that having a yacht is like having a luxury to show off your richness unless you are a fisherman or a man running a small yacht business at tourist area (place like Sun Moon Lake).
c. Asians get sea sick easily, example like I can get sea sick easily which I discovered from the trip to Green Island. Since then, I prefer to have my foot being on the ground instead of taking any yacht and ferry. Even thought James Fwu explains that a yacht is like a floating moving house which might help on survival while tsunami comes. It is not that convincing because we all watched the movie “Titanic” and learnt that a huge ship can sink…….This also recall my memory of reading the book “寰海尋奇” which reveals many mystery of Bermuda Triangle. What’s more is that there are many “Jaws” movies which are scaring and frightening.As a result, I will try to stay away from the sea/ocean to be safe. Get back to the business topic. I discovered the news saying that Horizon’s got a large order from American and Australian customers and will take 5 to 13 months to complete the order. It shows that manufacturing a yacht is like building a land house. No wonder the payment term is important and customers will be required to pay 10% at each manufacturing step because Horizon also gets a huge burden of raw material/labor force costs.
The news link as below, http://tw.news.yahoo.com/%E5%98%89%E9%B4%BB-%E5%96%9C%E7%8D%B26%E5%84%84%E9%81%8A%E8%89%87%E5%A4%A7%E5%96%AE-213000525.html For the shipping concerns, I’d like to bring one example to show how logistics affects a lot as checked with some friends who are working in shipping industry. Delivering fresh fruit and its limitations as below,
a. No insurance company would like to insure the quality of fresh fruit. Can you against nature?
b. Must go direct air flight to avoid lose fruit cool temperature, or the fruit will ripe very soon especially being exposed to the sultry environment.
c. No CFS (Container Freight Station)/ LCL(Less than Container Load) is accepted by the ocean freight company because each fruit’s got different fixed temperature.
d. It’s very time consuming for fresh fruit as the fresher the better, so the arrival time is also very important. Better not to arrive on Friday night and weekends because Custom is off.
e. Must use cold containers and temperature controlled flights.

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