Conspicuous Consumption Watch: Justifying Yacht Ownership

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Not A Luxury Item

This is not exactly breaking news, but it does relate to my favorite topic: income inequality and China economic growth. This fun little story in China Daily today caught my eye :

In the eyes of most Chinese, yachts are luxuries associated with an ostentatious life of leisure. Insiders, however, think differently.

“Do you really believe the rich are buying yachts to burn money? It’s quite the contrary,” Wang Huaiyong told China Daily aboard his boat at a marina in Dalian, Liaoning province.

Yes, you read that correctly. Everyone who thinks that yachts are ostentatious luxuries are completely misinformed. We are missing out on the big picture.

Before we get to the explanation, let’s cogitate a moment on what these folks are doing with these yachts that makes these purchases so important. Hmm. Here are a few possibilities:

1. Rents in Dalian are so high that these people are living on the boats. Doubtful. Slip fees and related costs are about RMB 2,000 per day, so this is probably not the case.

2. These CEOs are supplementing their incomes by fishing in their spare time. Possible, but I don’t think these sport fishing boats are suitable for the job. Doesn’t explain the sail boats either.

No, Wait, I Can Explain All This

3. Floating brothels? My guess is that although these boats frequently have hookers on board, the owners are not hosting them for profit.

4. Ocean is safer place for trap and skeet shooting. Yes, society benefits from avoiding accidental shooting deaths.

5. “Marine driving ranges” obviate the need to confiscate farmland for golf courses. Again, this is a decent explanation. Hitting golf balls off your yacht into the sea is better for the environment (in most cases) than stealing land from farmers to convert into the more conventional type of driving range.

Some intriguing possibilities. Let’s turn back to the video tape China Daily to find out how we did:

“The bosses are buying yachts to help earn more money,” said Wang, who has been working the marina at Xinghai Bay since it opened in 2005. The marina, with its 79 berths, is now home to more than 70 yachts.

Wang said the yachts are status symbols that also offer privacy for their owners who sometimes entertain friends and business partners aboard with parties, fishing expeditions or simply trips to enjoy the sea view.

But among the most important results of these meetings, Wang noted, are the business deals that can be negotiated in these agreeable environments.

Ah, I didn’t see that one coming. Of course that makes sense. Everyone knows that there aren’t any decent seafood restaurants in Dalian with private rooms suitable for entertaining business associates. Moreover, the Japanese and Koreans have monopolized all the karaoke bars up there, and obviously you can’t do business in an office {gasp}.

Merely A Business Expense

These poor executives are, in a sense, homeless. There just aren’t any available business venues, so they have to trudge out to the nasty old marina to meet with clients.

This is obviously not a luxury but a business necessity. Indeed, I assume that the tax code allows for a full write-off of any boat-related expense, including the original purchase, against corporate revenue. That’s the least we can do for these poor businessmen who are forced to conduct their affairs {cough} in these cramped mobile offices due to inadequate land-based facilities.

Hats off to China Daily. I feel as though a veil has been lifted from my eyes. I am ashamed that I used to see these boat owners as selfish assholes. My sincere apologies to all intrepid corporate mariners out there.

Update: China Daily also ran a story today on rich people and private jets. (I am not making this up.)

5 responses on “Conspicuous Consumption Watch: Justifying Yacht Ownership

  1. G.E. Anderson

    Just speculating as to why China Daily would write these fluff pieces justifying rich peoples’ conspicuous consumption…

    The CCP and the wealthy have forged pretty strong bonds since Jiang’s introduction of “three represents”. Since the wealthy could potentially be the strongest threat to CCP rule, co-opting them made complete sense.

    Though the Hu/Wen has talked a lot about spreading some of the prosperity toward the little folks who were left behind — and even occasionally has to make examples of corrupt rich people — they know on which side their bread is buttered.

    1. Stan Post author

      Explanation for media coverage: payola? Or perhaps the editors thought that the topic was interesting and that readers were interested in the lifestyles of the rich and famous.

  2. Dan

    Reminds me of when my old firm defended a guy who had claimed his $15+ million plus yacht as a tax deductible business expense. I believe we lost on that.

    1. Stan Post author

      I’m not yet that successful. At the moment, my budget only allows for a rubber duck that I can play with in the bathtub. Does that count?