During the financial crisis that eroded international yacht orders, shipbuilder Zhangzhou Yihong Yacht Industrial Co Ltd turned adversity into advantage by transforming itself from an original equipment manufacturer (OEM) for an Italian yacht brand into a manufacturer of its own brand, the Sea Stella.

"Our overseas orders are falling sharply, but this crisis also gives us more time to make a strategic shift. In the way of building up our own brand, we are trying to provide a custom-made design to our clients, and this is proving effective," said Ren Hongting, general manager of Yihong Shanghai Experience Center.

Amid the international financial crisis, global yacht sales tumbled 45 percent in 2009, and 80 percent of yacht manufacturers were forced to suspend or shut down their operations.

Most Chinese yacht makers are export-oriented, and were affected by the global decline. A report released by the China Association of the National Shipbuilding Industry (CANSI) showed that China's shipbuilders exported a total of 1.77 million yachts and ships in 2009, worth $170 million, a sharp decline from 2.16 million yachts in the previous year.

But at the same time, shipbuilders like Yihong sense a yacht boom in the domestic market, and they are taking the global economic downturn as an opportunity to expand their domestic market share and build up their own brands.

According to Ren, unlike foreign-branded yachts, which have similar styles and decor, Chinese yacht builders are more flexible.

"We add many entertainment facilities into the yachts according to the preferences of Chinese customers, such as karaoke rooms, and mahjong tables. Our custom-made products have attracted some orders from domestic buyers," she said.

Another yacht maker, Shanghai Double Happiness Yacht Co Ltd, met the same challenge. "The toughest time started in late 2008, when our overseas demand ground to a halt. No new orders came and the market was deadly quiet," said Zhao Lina, marketing manager of Double Happiness.

In order to play down the negative effect of the financial crunch, Double Happiness paid special efforts to technological upgrading and product innovation. The strategic move soon paid dividends. Last year, the company received more than 20 yacht orders, and its sales revenue grew nearly 20 percent year-on-year.

The promising outlook for China's yacht market has absorbed a lot of investment. Hong Kong-based Tongtec Yachts set up a plant in Shanghai in 2005, and now it only has some ship maintenance facilities left in Hong Kong.

"Our yachts are cheaper in price, and we provide clients with better after-sales service. Domestic purchasers can have their yachts repaired or maintained in Shanghai, and this is our advantage over other imported yachts," said Ren Chanyu, assistant to the general manager of Tongtec.

Millennium Marine Ltd is a subsidiary of Zhejiang Aluminum Industries Group. Eyeing the growing market, its parent company gives solid financial support to the yacht maker.

"Yacht making is a sunrise industry in China, and we have a sufficient capital flow," said Xu Lian, assistant to the chairman of Millennium Marine.

Founded in 2008, the yacht making company provides European-standard yachts for both the domestic and international market. In November 2009, Millennium Marine spent 100 million yuan to purchase Italian luxury yacht brand Dalla Pieta.

The bustling yacht exhibition currently under way in Shanghai shows the buoyant sentiment of the domestic yacht building industry. The 15th China International Boat Show (CIBS), running from Thursday to Sunday, is showcasing more than 200 yachts.

"There is a misleading concept that yachting is only a leisure activity for the super-rich. Of the 17 million yachts in the US, 80 percent are medium- and small-sized worth less than $50,000. In Europe, 84 percent of the yachts are worth below 50,000 euros," said Yang Xinfa, deputy secretary-general of CANSI. "We are trying to correct the wrong impression and make yachting an affordable pastime to middle-class people," he said.