Cheoy Lee Shipyard: Rising With the New China - 02/10/2010
For the last decade or so Cheoy Lee has been a sleeper among the world’s large yacht builders, content to sell a dozen or so fiberglass motoryachts each year and to build one or two megayachts. After all, the yard has its order book full of commercial work. In fact, half of the boats you see in Hong Kong Harbor were built by Cheoy Lee. But as manufacturing and building most anything moves to China, and as the Chinese people themselves develop into a yacht-buying market – last year there were 825,000 Chinese with a net worth of over $10 million and 51,000 with assets over $100 million – the country could become the largest yacht-owning nation in the world. Already the Chinese are developing Asia’s version of the French Riviera on Hainan Island, with yacht clubs and large marinas planned.
Article by Jeff Hammond, Editor, BoatTEST.com
Cheoy Lee Back Story
The company was founded in 1870 in Shanghai by the Lo family. In 1936 when the Japanese Imperial Army crossed the Marco Polo bridge in northern China, the yard was moved to British-controlled Hong Kong, where the Lo family thought the yard would be safe. But the Japanese took over Hong Kong, too, and the Lo family fled to Chinese the hinterland. During the next four years the occupying army carted off everything made of metal in the yard. When the oldest son of the Lo family returned in 1946 he found nothing left. He began building his first post-war boat with his own two hands. His name is Lo To.
Cheoy Lee’s business grew and soon Lo To had dozens of workers building commercial vessels for the harbor in wood. In the early 1950s he began experimenting in fiberglass and Cheoy Lee was one of the first yards in the world to use the new material. (Ten years later it would become the world’s marine pioneer in composite sandwich fiberglass construction.)
Yacht-Building Hay Day
Its yard in Hong Kong (Kowloon side), soon became too small so Cheoy Lee bought some cheap property for a second yard in a quiet, sparsely uninhabited bay on Lantau Island a few miles away by ferry.
In the 1960s and ‘70s it was building sailboats from 36’ to 63’ and sold hundreds all over the world. 90% of the yard's production at that time was recreational boats, all for export, and most going to the U.S. market. When I visited the yard 1982, it was building all sorts of powerboats, including trawlers, cruisers and sportfishermen designed by such greats as Jack Hargrave, Charles Wittholz and Tom Fexas. At the time, yacht construction was fully 50% of the yard's business because large commercial orders began coming in as well.
The Mouse that Roared
In the mid 1990s Hong Kong’s airport was relocated to Lantau Island. About the same time the Walt Disney Company decided that they wanted to build a theme park near the Cheoy Lee yard and its waterfront real estate would make an excellent venue for hotels and other infrastructure. Lo To sold his property for an amount in nine digits, making it immediately one of the best capitalized mid-sized shipyards in the world.
With the money from the Mouse, Cheoy Lee relocated its yard in the Pearl River delta and it immediately became equipped with state-of-the-art equipment allowing it to build in steel, fiberglass and aluminum. Numerous buildings were put up along with a long dock and special launching facilities. Today Cheoy Lee has over 30 gantry cranes, its own CAD-CAMs, and five-axis routers among everything else needed. The yard has grown to over 1,000 employees and it has no debt – something that sets it apart from most large shipyards everywhere in the world.
Twenty-eight years ago when I visited the Cheoy Lee Shipyard it was the occasion of the building of its 4,000th boat. Last year when I visited, Cheoy Lee was building its 5,000th vessel. The fact that it built 1,000 vessels in 28 years give you some idea of the size of the boats that Cheoy Lee makes.
For the last 20 years or so, Cheoy Lee has been run by four brothers who are the fourth generation of the Lo family. All are western-educated and they have degrees in engineering, naval architecture and business administration. Three of the brothers are in the engineering offices or on the factory floors all of the time, all day long. And, like the hourly workers, they live at the yard.
The fourth brother, who has an MBA from Stanford Univ., heads up the recreational yacht division and is also the company’s CFO. His name is Lo But Yang (aka B.Y.) and he is the family member that yachtsmen are most likely to meet at boat shows where there are Cheoy Lee exhibits.
One or more of these four men are intimately involved with every detail with every boat being built in the yard. The yard is their life and their passion.
Cheoy Lee’s Current Builds
With the boom going on in China it is not surprising that 90% of its business is now commercial and only 10% is recreational. Cheoy Lee is building 50 huge tug boats for the Panama Canal, 180’ vessels to assist offshore oil rigs in the Persian Gulf, well has high speed ferries for China and elsewhere. No job under 250’ is beyond the scope of Cheoy Lee.
On the recreational side, Cheoy Lee builds 15 models in three distinctively different powerboat lines: There are eight models in the Bravo Series running from 65’ to 95’. These boats are conventional motoryachts, that are semi-displacement. The Serenity Series has four models, from 59’ to 90’. And these boats are all heavy displacement vessels designed for long range cruising. Lastly, is the Global Series, which are large custom megayachts that range from 100’ to 128’.
Currently the largest pleasure boat being built at the yard – and its 5,000th build --is the totally custom 147’ Ron Holland-designed Marco Polo II. She is a remarkable vessel, powered by only a single engine, with an industrial-strength bow thruster for her get home power. She has a steel hull and a fiberglass superstructure.
Incredible Fuel Efficiency
Marco Polo II is a boat that you are going to be hearing a lot about once she is launched later this year. From records compiled in over 30,000 miles of use of the first Marco Polo (also built by Cheoy Lee), the yacht’s owner reports that at 10.7 knots the boat burned 100 Liters per hour (26 gph) and at 12 knots burned 150 lph (39 gph).
These are remarkably low fuel consumption figures for a 473 gross metric ton vessel. For example, a typical 116,000-lb. (53,000 kg.) 70’ convertible burns 35 gph (133 lph) at 11.7 knots. In other words, the 70-footer burns about the same amount of fuel as does Marco Polo which weighs 900% more!
Both Marco Polo and Marco Polo II are for sale by the company that had them built to its specifications, Maritime Construction and Concepts (MCC). The price for each is north of $20 million
Cheoy Lee’s Future
From where I sit, things look very good for Cheoy Lee. As China builds marinas on its river systems and along its coast, the country’s wealthy class will certainly fill them rapidly with yachts. Anticipating this development, some years ago Brunswick built a Sea Ray factory in China with the intention of building boats not for export, but for the local market.
Cheoy Lee with its extensive background in all kinds of recreational boats will undoubtedly be a leader in yacht construction there. Its Bravo line is ideal for the new yacht owners who will be frequenting the new Chinese Riviera on Hainan Island, as well as along the Thai coast.
It is well-known that Cheoy Lee’s motoryacht prices are quite competitive with boats built anywhere else in the world, and in my opinion represent one of the best values available anywhere. But once the Chinese yacht market gets rolling, and Cheoy Lee’s capacity is maxed out, one wonders how long its boats will be so attractively priced.