Three years ago, I filmed a first-hand account of a tourist business on Australia’s Barrier Reef, building a super-yacht with one of China’s oldest military shipyards. What could possibly go wrong? Pretty well everything, if you believe some of the comments on The Diplomat’s YouTube channel.
But some things went right, and as many countries recalibrate their trade relationship with China it’s worth asking how a seemingly high-risk joint venture on both sides – one that literally threatened to sink at least one of its partners – turned into a workable relationship.
By the end of China’s civil war in 1949, Beng Bu’s shipyard in central China’s Anhui Province had already been producing war materiel for a decade. Seventy-nine years later, it was time to diversify into foreign civilian markets. They tested the water with 80 tugs for Singapore, built to survey for one of the world’s busiest ports. Given Beng Bu’s history, putting together the yard’s first-ever luxury catamaran should have been a piece of cake, even if it was commissioned by first-time visitors to China who barely spoke a word of Mandarin.
What the Australian visitors did know was that the 30,000 tourists a year diving the Great Barrier Reef from their old boat were jumping ship to competitors’ faster boats, which offered more dive-time on the coral and less time getting there. They needed to upgrade fast.
Designing Alan’s new boat was straightforward. Years on the water and the expertise of a savvy Australian naval architect saw to that. Finding a local yard that could build for Alan’s price wasn’t so easy though. Australian yards build world-class boats – but mostly for government contracts. Alan’s private finance quickly narrowed his choices to cheaper offshore producers.
As a one-off build, the boat came with a lot of Australian compliance specifications, but lower than optimal oversight, even with repeated site visits. Alan’s task was cycling backwards from “simple” execution to “complicated” expert negotiation, if we classify the task’s shifting dynamic, according to Dave Snowden’s Cynefin analytic frame prepared for IBM in 1999.
As the project wore on, it took twice as long to fix the boat in Australia as to build in China. Snowden might have said the boat had clocked backwards even further from “complicated” knowns to “complex” unknowns, where every fix could wickedly cause new problems. The yard’s response was practical – the boat was a prototype for all parties; it maybe left their yard too early for the client’s own good reasons, but once shipped it was hard for Beng Bu to make repairs in Australia that happen to most boats on delivery anyway.
The project’s parameters were daunting: haul and feed 120 people daily on a 60-mile round trip to the reef, seven days a week, and keep doing it 51 weeks a year. Toilets had to flush right, hundreds of times a day. The diesel-generated electricity powering everything from scuba air fillers to tropical air conditioning and fridges just had to work.
Calculating how to outrun the competition at lower cost was tricky. With hulls designed to be just slippery enough to match engines at peak efficiency, the magic cruise speed was 16 knots. Any slower would cost dive-time; any faster would cost fuel. Even antifouling paint that makes boats resistant to marine-growth drag but adds weight had to be rethought. Instead, specialist divers could polish the hulls in the water every few weeks to keep them free of algae. On paper, at least, it was all possible.
As a part of Li Keqiang’s “Made in China” 2025 plan, the Beng Bu shipyard had already started building a new computerized manufacturing plant to replace its venerable pre-1949 lathes and presses. The foreign ferry market looked good to feed the yard’s exponentially increased production capacity and diversify into civilian markets. Alan’s boat could be a fine prototype. Beng Bu priced low, and Alan signed.
It’s even possible Alan unwittingly signed with one of the first ballpoint pens completely made in China – a seemingly humble but prescient advance. The hardest part of making a ballpoint is making the ball in the tip round. It needs near-perfect manufacturing to write smoothly. Europe and the United States had been making ballpoints since 1946; China’s first came in 2017. And perhaps unconsciously, the same boot-strapping drive to catch up made Alan’s next four visits to the Beng Bu shipyard an enthusiastically shared mission as the vessel took shape.
But as the build developed, time pressures increased, and the boat was shipped in a near-finished state to Australia for final rigging and detailing. That’s when the results of some technical miscommunications became clearer. Contractors on both sides started to blame each other, sometimes grasping at stereotypes for explanations of different work practices.
But even under pressure neither Alan nor his opposites in Beng Bu get angry with each other. As one hull fills with water in a storm at sea at night on the boat’s delivery run to Cairns, you can almost hear Snowden’s analytic clock ticking backwards to “chaos,” yet somehow, the main actors manage to push the needle back to merely “complicated.” Phone cameras help too when language is not enough.
In practice Alan’s boat takes more effort than both sides estimated, but even with repairs it has a cost advantage over building in a more expensive yard used to similar projects.
In China, the range of expensive foreign joint-ventures that have failed is legion. Diplomat readers will be only too familiar with them, and the apparent fortunes hoped for then lost when corporate and state cultures collide.
Over months of filming, neither Alan nor the Beng Bu crew mention or seem to aspire to getting rich through the venture. Each make mistakes, but each side’s actions consistently demonstrate a shared commitment to the project’s success.
When Beng Bu’s executives come to the Reef on completion of their shared handiwork (while a new starter motor is found quickly to start the boat), the enthusiasm of both sides is real and personal.
Multi-jurisdictional contracts may reassure bureaucracies if things go wrong, but if failure is not an option, civility works better. No matter whose pen you start with.