Ocean Alexander diversifies globally with unique model

by Jeni Bone on 2 Jul 2012 Taiwan-born, Australian educated, Johnny Chueh heads up Ocean Alexander, the company his father founded in 1978. Compared to his fellow Taiwan Yacht Industry Association members, his business model is unique.

'We are no longer solely a boat manufacturer. We are a brand that extends beyond yachts to everything and anything on water,' he explains.

With a background in finance, he took over the company in 1999, when Chueh implemented a paradigm shift.
'In 1999, we bought out our international dealerships and created our own factory stores that are locally run. Retail is the largest side of our business – all factory owned. Now, 80% of our revenue is internal. Today, we build our own boats, have an alliance with Christensen for the larger yachts, we have an insurance and financial arm, own marina berths and we run the marketing and sales arm of the Tiara brand on the US west coast.'

The advantages of this diversified model are having 'multiple levers' the company can activate when market forces impact on each strand. 'From a business perspective, with marinas, service, factory, brokerage, insurance and finance, we have more levers to adjust our interests and better control and sustain our P&L through the ups and downs. It doesn’t mean we aren’t impacted, but it means we can adjust early and have a better cushion.

'The Ocean Alexander brand equity is expanded to other avenues – still marine – but it means we can manipulate the levers in each area and remain competitive.'

The other advantage is 'not being at the beck and call of a sales force', according to Chueh. 'We have freedom because we have our own distribution.'

With three factories in Kaohsiung, Ocean Alexander still produces yachts, positioning itself at the larger end of the spectrum. 'We are focusing on producing larger yachts and complementing the range with other brands. We are working with Christensen on the 160ft+ yachts, but to our specs and with our tooling, brand and distribution. It is an alliance which does deliver cachet for us, particularly in the US which is our major market. But the synergy is fruitful on both sides – their design and our engineering and distribution channels.'

There is freedom in design and production as well, says Chueh. The company is able to evaluate who is doing the best work and commission them. 'There is no ‘sacred cow’ operating procedure,' explains Chueh. 'On every project we take stock to get the best result. On the new Ocean Alexander 112ft Tri-Level Motoryacht, which is truly be world-class in its category, we collaborated with designer Evan K. Marshall and engineer Gregory C. Marshall. We see who is building and who is the most capable. We utilise the best resources available.'

The Tiara brand fills a niche in the company’s offering. 'Tiara makes boats to 58ft, and the Ocean Alexander range starts at 62ft. There is not much product overlap, but there is customer demographic overlap with people feeding up and down between the two.'

After pulling out of Australian marina operations which it held with D’Albora, Ocean Alexander is in discussions with an Australian company to carry its brand once more.

'We are also looking at some other brands on the east coast of the US,' Chueh adds. 'We are very open to investing in other brands. Our dealers can sell at every level, whereas from a factory perspective, we have to focus on doing one thing and doing it well, otherwise it could harm our brand.'

The company had an ill-fated relationship with Italian marque, Azimut which lasted just four months. 'There are many opportunities out there. The challenge is where to place our investment.'

The US accounts for 70% of sales. Since 2010, Ocean Alexander has opened four offices in China.
With its population of over one billion people and rising affluence, China’s yachting potential is growing from a small base, the US is 'surprisingly strong' and the market in Europe, he observes 'is in the doldrums'.

Referring to the Taiwan International Boat Show, scheduled for April 2014, Chueh is blunt. 'It won’t do anything for us,' he declares.

'In my opinion, the show will attract two types of buyers: those looking for custom yachts and those looking for a cheaper price. We don’t build custom at all. We offer set beam, steering and length. Our boats cost 30% more than Taiwan-builds. When it comes to our brand, nobody asks where it’s made. They are buying the brand and the designer expertise.

'Our focus is the US and China. We occupy our own niche. Our buyers don’t look at Sunseeker and Azimut. They aren’t looking for speed. Our boats are beamy and have king size beds!'

While China does tempt with its massive market of millionaires – one million of them in 2012, according to Bloomberg – Chueh is realistic. 'The yachting market is so far not that big. Yachting, which is showing off to people with your yacht will take off in China where there are a billion people to impress. Boating, which is having fun on the water will not.

'In Taiwan which has a small population of just 20 million, it’s almost non-existent. As far as the recreational market in Taiwan goes, I am pessimistic. There is no infrastructure, there are no marinas, no small yachts for people to enter the market, people don’t like the sun as a rule and they can’t swim.

'Hopefully, I am wrong. But I will take a ‘wait and see’ approach.'

Ocean Alexander will promote the 120 and 112 models at Fort Lauderdale International Boat Show, 'both to be built here', he confirms. Designed, engineered and constructed to be approved for RINA classed chartering, the new 112 will provide state-of-the-art construction along with safety measures commonly found on much larger vessels.

More at www.oceanalexander.com