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usinesswww.biztechreport.comChinese-Made Luxury Yachtsare the Newest Status SymbolBy Yashika DhingraChina’s industrial confidenceis brimmingover nowadays, andthe best illustration of thisis the setting up of luxuryyacht-building companiessuch as Xiamen Hangsheng,Kingship Marine Ltd, andseveral others in Hong Kong.Continued from Page 22a joint statement calling for “peace, stability,safety and freedom of navigation” -- andsettlement of “disputes in the South ChinaSea” through diplomacy, not “use of force.”The Chinese try to sidestep controversywhile making no real concessions as muchas possible. They deny the reports about thetwo MiGs and avoid discussion of reportsthat Chinese forces have been seen on sixatolls, reefs, and shoals. A top Chinese official,Jiang Shusheng, vice chairman of thestanding committee of the 11th NationalPeople’s Congress, said in a visit to Manilathat the issue “should not be a hindrance toour special relations”—the same term thatUS officials use to describe US-Philippinerelations. He dismissed as “mere incidents”These Chinese yacht makers are todayeyeing the global luxury boat and yachtsegment. The luxury market for yachts inChina itself is booming, due to the increasein the number of Chinese billionaires.Chinese yachts not only ooze style butalso are high value, status tag products. Asalmost all of the yacht builders use the bestinternational designers, so the whoompfactor is optimized. While luxury and pollutiontaxes spiral upwards for high-ticketitems like jets and yachts, the Chinesemadeyachts give a better ROI for the nouveauriche Chinese.Considering that this is an emerging industryin China, its phenomenal growth inless than a year, with a turnover of close toa billion dollars, is worthy of a second look.The region now has more than six yachtbuilders competing such as Azimut Yachts,Ferretti Yachts, Princess Yachts International,and Brunswick Corp. These luxury yachtbuilders are reputed to build the most complexmachines with an emphasis on precisionengineering as well as great aestheticdesign concepts. Most are ready to investheavily in quality designers and pay higherwages.Sunbird, one such builder, uses internationaldesigners such as Brian Holland, andis currently building a 70-foot yacht for anItalian market to be displayed at Genoa,Italy. Hansheng, another Chinese yachtbuilder, has its boats designed by Bill Dixon,a reputed designer from the UK. QingdaoNauticstar Marine Co. Ltd paid over 13.8reports about the MiG overflights and Chineseforces on some of the reefs.Although China sees the entire SouthChina Sea as within its sphere of influence,the sense is that the contest for the islandswill not erupt in a serious shooting war untilor unless huge deposits of oil, gas, andother minerals are found there. Barry Riddell,a long-time diplomatic and politicalanalyst in Manila, believes that China doesnot want to “provoke any kind of confrontation.”Yes, he told me during a recent visit,“China wants to keep alive the claims, tokeep acting.” Yes, he said, “Some oil explorationis going on” -- and “will keep on goingfor a long time.” No, he seemed confident,the Chinese “will not do much more unlessthey find oil down there.”Typhoonski | Dreamstime.commillion euros to pick the best designer inthe industry, Cantieri Navali di Lavagna.On average, Chinese yacht building staff,who lack the skills of their proficient Italiancounterparts, are paid close to 2,000 yuaneach month, while skilled, certified electriciansand carpenters are paid almost threetimes more at 6,000 yuan per month. Thisis twice the average in Chinese wages, butbuilders are nevertheless able to maintainforeign competitiveness.For the Chinese, these Yachtsare more like Status SymbolsSignificantly, Chinese are restricted fromyachting, as they require travel permits toenter provincial waters. Therefore, there isgreater emphasis on the specialized natureof use and customization to meet local demand.Spending quality time or entertainingon yachts with mah-jong salons, karaokelounges, and bowling alleys, the billionairehost’s status shoots higher with every novelfeature on his high-end yacht.These large Chinese sloops are thus primarilyused for entertainment and shortweekend trips, and with their state-of-thearttechnology, these sea-going gadget museumsrepresent the changing tastes of therich and the famous. Chinese-made yachtsare no longer just luxury items but are fastbecoming status symbols as well. A-PBesides oil, of course, the brouhaha isabout the environment, marine life, resorts,and fishing rights. What really fuelsit, though, is whatever is beneath the shallowocean floor around the atolls. A retiredPhilippine navy captain, Rex Robles, didnot hide his anger over Chinese expansionism.“You see somebody in your back yard,”he said. “He says, ‘Let’s talk this over,’ buthe refuses to leave.” Robles had no doubtsabout the underlying issue. “It is a primeoil and natural gas area,” he said. ArturoCarlos, a former member of the board of aPhilippine oil company, told me during avisit to Palawan some years ago that “waterintrusion in the oil” has impeded exploration.Nonetheless, he assured me, “There isblack gold underneath.” A-PImplicationsof the Droughtin ChinaBy Yashika DhingraChina‘s freshwaterresources representabout 6 percent ofthe total global availableamount.However, the Yangzte River basin,around the middle and lower parts of thevast country, has remained parched for severalmonths now. The drought continues tobe a grim reminder of the unscientific overuseof limited water resources that has fedChina’s growth in the past century.Early Warning Signs of DroughtThere have been indicators forecastingthe worst Chinese drought in several years.Weather changes, declining coastlines, andthe quick rate at which several vital feederlakes such as Lake Honghu disappeared andwere replaced by fields and fish farms, allportended drastic drought conditions.The Danjinagkou Dam, which is oneof the largest water reservoirs slated tofeed one of the largest water projects inthe country, has been consistently dryingup over the last decade. The consequentlyparched northern cities, including Beijing,are thus being fed by water diverted fromthe Yangtze.The Three Gorges Dam, which is one ofthe largest hydroelectric power projects inthe world, is again shrinking by millimeterseach day. Lakes in Central Hubei provinceare known to have shrunk to 207sq km ofwater from their earlier 348 sq km, despitethis being the time of year when waterneeds to be at maximum capacity.“I’m 70 and it’s never been this bad. Youcan walk across and it only comes up toZhaoyineptune | Dreamstime.comyour knees. We used to always worry aboutfloods, not droughts, not ones as bad asthis,” says Xiao, one of the residents aroundthe lake.Yangtze Feeds China’s Farmsand Industrial HubsOne of the country’s biggest rivers isthe Yangtze, which acts as a lifeline alongwherever it flows. It represents almost onethirdof the total water resources availablein China. With one-fifth of the world’spopulation, China has been in the throes ofdrought over the past year, especially in certainkey regions that have affected the entireproduction and availability of producefor domestic consumption and export.The Yangtze feeds farmlands as well asindustrial hinterlands, especially along themiddle and eastern course of the river. Thisregion too now suffers from severe drought,possibly the worst in the last 50 years. Rainfallin the region has fallen by over 40 to 60percent annually and has created additionalpressure on the localized water resources ofthe region.There are several worst-case scenariosoccurring around Lake Honghu, where innumerablefarmers are losing crops, fishfarms, and will soon lose drinking water aswell. The once lush green fields are todayparched patches in colors of barren yellow.Once hot-spots of aquatic culture, thesefields and ponds are now without their richsources of fish, shrimp, or crab. The landscapeinstead has wilted into dwindling drylotus ponds.The Yangtze region is not facing such anextreme a case as this in other parts, andwith the coming rains, it is expected to regainits full capacity. However, the warningsigns are now being sounded for possibilitiesof floods to occur.Lessons to be Learned from theDroughtHydrologists at the Chinese Academy ofSciences in Beijing are a highly worried lotnowadays. This year’s drought has truly sentthese environmentalists to read the biggerlessons behind the tenacious dry spell. SaysXia Jun, a hydrologist at the institute, “Therehave been even worse droughts before, butnow these episodes can be increasingly serious,because economic development isbringing increasing pressure on water resources,and the effects of disaster spreadout wider and are felt in more ways.”Experts are of the opinion that thesedroughts will give rise to further droughtsin the future, which will continue to wreakhavoc on the overall balance of the ecosystemof the region. A prominent water expertat the Chinese Academy of Sciences,Liu Changming, says, “The accelerated extinctionof such lakes in recent decades hasdeprived areas along the Yangtze of a naturalbuffer against drought and flood.”The situation calls for planned and properaction, as close to 1,000, or one third, ofnatural Chinese lakes are disappearing, andthis will impact the production of severalfood crops, including the all-important ricecrop.“A single drought this year won’t lead tothe collapse of China’s economy, but thiswill have an impact, one that shows thethreat that China faces from water stress,”said Xia.Implications of the Drought onChina and the GlobeThat Chinese exports influence globalconsumption has been conclusively provenyet again with the slowing down of its grainsoutput. The seriousness of the drought isbetter understood when statistics show thatover 35 million people from close to fiveprovinces in the central and lower parts ofthe Yangzte river basin have been economicallyaffected. The direct impact in financiallosses comes to the tune of 15 billion yuan,or US$2.3 billion.Government officials claim price cropswill be sustained at the national level, butthese five provinces cover half the total acerageof rice production in the country. HeXuefeng, director of the China Rural GovernanceResearch Center at Huazhong Universityof Science and Technology in Wuhan,capital of Hubei, says, “Our estimate is thatthe affected area would amount to no morethan 10 percent of Hubei’s total acreage,and even these areas will be able to plantlater crops if rains come.”Food and trade analysts say that decreasedproduction in rice may be sustainedat the national level of common food cropssuch as rice, but it is corn consumption thatwill be most affected, and close to 1.5 milliontons will have to be imported from theUS alone to sustain the country’s demands.Other food grains too are continually beingsourced from lesser-priced countries suchas Argentina, as a food reserve alternativeto the US.Drought will Impact DomesticPowerOne of the immediate effects of droughtis hydroelectricity production. The loweredproduction levels have seriously impactedthe quantity of electricity available for distributionby the government authorities.By late May of this year, the Three GorgesDam, one of the largest hydroelectric power-generatingstations in the world, had fallenfrom a water level of 152.7 meters, andwas expected to reach close to 145 metersby June 10. The period of May to October isthe peak period of electricity production inContinued on Page 3530 | A-P BUSINESS & TECHNOLOGY REPORTA-P BUSINESS & TECHNOLOGY REPORT | 31