Business Monday

Chinese luxury yacht builder has its U.S. base in Fort Lauderdale

When Cheoy Lee Shipyards, the luxury Hong Kong-based yacht manufacturer, wanted to open its headquarters in the United States in 1995, the Chinese company chose Fort Lauderdale.

“The United States is our largest market,” said B.Y. Lo, one of the eight brothers who own and operate Cheoy Lee, which was started by the Lo family as a boat repair yard in 1870.

“Fort Lauderdale is the country’s yachting capital and our biggest U.S. market,” said Lo, who was born in Hong Kong and now splits time between Fort Lauderdale and China.

For more than 150 years, Cheoy Lee has built commercial vessels, including such 20th century builds as a 1954 cargo coaster for the government of Sarawak, a fleet of 1950s trawlers for the U.N. Korean Reconstruction Agency and a series of ferries and tugs for concerns from Brunei to Malaysia. The company began building recreational boats after World War II, selling sailboats to British expatriates in what was then the British colony of Hong Kong.

“We made our first yachts in the 1950s and began selling them in the United States in the late ’50s and early ’60s,” said Lo, who went to high school in Lenox, Massachusetts, earned a degree in mechanical engineering at Cornell and an MBA at Stanford.

Europe is second in sales. Though China has many millionaires and billionaires, as a yachting market it lags far behind; the country lacks the infrastructure needed to spur more interest in yachts and generate greater sales among wealthy Chinese, Lo said.

Cheoy Lee, which in English means a “profitable, smooth-running enterprise,” has 12 employees in Fort Lauderdale, its headquarter for direct sales of Cheoy Lee yachts in North, Central and South America and the Caribbean. The company also has a distributor in Seattle, though only about 10 percent of its U.S. sales go to the West Coast. Its recreational division today makes only yachts but accepts custom orders for high-end sailboats — a market that has shrunk severely in recent decades, Lo said.

Cheoy Lee yachts are held in “high regard” because of their beauty, design and craftsmanship, said Michael Moore, a Coral Gables-based attorney specializing in maritime, art and aviation law. The advanced designs they developed years ago “paved the way for other yards,” he said.

Famous owners have included singer Jimmy Buffett, Herb Dow of Dow Chemicals, Al Merck of Merck Pharmaceuticals and Don McGraw of McGraw-Hill.

Like the rest of the global economy, the yacht business suffered during the Great Recession, and though the family-held company does not release sales, Lo said the U.S. market is improving. Cheoy Lee has its own design team but typically uses famous designers. “Clients recognize their names and their work and that inspires more confidence,” Lo said.

Cheoy Lee makes four series of yachts — Alpha, Bravo, Explorer and Serenity — ranging from $2million for a 68-foot Bravo or Serenity model to about $30million for a 150-foot Explorer series. It typically produces 20 to 30 yachts per year, Lo said; to date, the firm has delivered 5,100 yachts to customers.

The boats are manufactured at the company’s high-tech shipyard in Hong Kong, but all the equipment and parts – engines, electronics, air conditioning, appliances, furniture, plumbing, fabrics, hose clamps — are purchased from suppliers in the U.S. and shipped to China for installation, said Gene Weeks, manager of the Alpha Express Yachts Division. Some components — such as leather or fabrics — may be imported, but they are all available in the U.S.

“This means that owners of Cheoy Lee yachts can find replacement parts and any equipment they need at boat supply stores here,” said Weeks, who previously worked with producers of high-performance boats here and spent two years in China assisting in the design of the fast, innovative yachts in the new Alpha series.

Aside from sleek, arresting designs, Cheoy Lee innovation appears in the light, strong materials it develops at its high-tech plant to make yachts more efficient. For example, Cheoy Lee slims marble into thin slices that provide lighter yet beautiful surfaces. It also uses honeycomb technology on wood furniture and aluminum sections, thus adding strength, reducing weight and improving fuel economy.

Cheoy Lee has a warehouse in Fort Lauderdale to store all the motors, parts and other items used in building each yacht and sends containers to the shipyard in China every month. The completed vessels are then transported to clients on special, heavy-lift ships. Buyers can purchase a Cheoy Lee yacht in Fort Lauderdale, or order a model from China. From the time a new yacht is ordered, it takes from seven to 24 months for delivery, depending on the complexity of the order.

“Americans often think of China as producing low-cost items,” said Lo, who is in the fifth generation of Cheoy Lee’s family owners. “Our yachts show that China also is making some of the finest luxury products in the world.”

Cheoy Lee Shipyards

Business: Manufactures luxury yachts and commercial vessels (tugboats, utility boats, patrol boats, ferries, etc.) in Hong Kong and sells them worldwide. The Fort Lauderdale office is headquarters for all sales in the U.S., Latin America and the Caribbean. The U.S. is Cheoy Lee’s largest market.

World headquarters: Hong Kong.

Headquarters for U.S. sales: 2955 W. State Road 84, Fort Lauderdale.

History: Company was founded in 1870 by the Lo family. Fort Lauderdale office opened in 1995 but Cheoy Lee began selling yachts in the U.S. in the late 1950s.

Owners: The Hong Kong-based Lo family.

U.S. executive team: B.Y. Lo, director of the parent company and one of the owners; Gene Weeks, manager of the Alpha Express Yachts Division; and Panu Virtanen, vice president of Cheoy Lee.

Employees: 12 in Fort Lauderdale.

Price range: From $2million for a 38-footer to about $30million for a 150-foot yacht.

Website: www.cheoylee.com.

Source: Cheoy Lee Shipyards

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