Who are the top retailers in China that you can name from memory? Real estate agencies? Insurance companies? Jewelry and luxury products vendors? Yes, they may have made profits up to millions of yuan in their careers, but in terms of revenue, all these industries give way to a rising new occupation: private jet sellers.
According to a report in Global Times, Ji Guang, co-founder and CEO of business aviation integrated service provider Global Wings, is one of these top retailers who could earn revenue between $20 million to $70 million per order by selling private jets to Chinese billionaires “who are positioned at the tip of the wealth pyramid.”
In the past decade, demand for private jets experienced “explosive growth” in China along with the country’s economic boom, which gave birth to a group of wealthy Chinese entrepreneurs whose personal assets have exceeded US$1 billion.
In tandem with the soaring demand, Ji, along with his team, have successfully sold about 110 private jets thus far, including second-hand jets, with customers ranging from businessmen in traditional sectors such as property, food and retail, to those in newly emerging industries such as information technology and online gaming — also a mirror of how China’s economic structure has evolved.
According to a report issued by the research institute Hurun Report, a total of 114 Chinese entrepreneurs have purchased 164 private jets as of the end of 2017, up 35 from 2016. Out of the 114 Chinese billionaires who possess business jets, 78 claim assets over $1 billion.
Among the list revealed by Hurun, Chinese tycoons including Wang Jianlin, Alibaba’s founder Jack Ma Yun, Hong Kong billionaire Li Ka-shing and Tencent’s founder Pony Ma Huateng all own business aircraft.
“To be honest, all private jet retailers have a list with a handful of names: potential customers who can afford to purchase a business aircraft. Learning their demands, responding in a professional and warm manner and earning their trust are the first steps for successful sales,” Ji told the Global Times, noting that it takes at least five to 10 years in the aviation industry before being qualified as a private jet retailer.
Selling a business jet is not like “selling cabbage,” as it involves a cost between $20 million and $70 million, plus a management fee of 30 million yuan ($4.35 million) per year, the report said.
While some orders could “luckily” be completed within two months, the longest orders could last for years. Sometimes, even a disagreement concerning a small term in the contract, such as providing free training or the time zone for a payment due, could take a week or so to negotiate and settle, according to Ji.
Liao Xuefeng, CEO of private jet retailer CBA Jet, could still clearly recall an order that he had tracked for a decade during an interview with the Global Times.
In 1997, Liao talked with one client, who was also one of China’s first batch of successful entrepreneurs. The two agreed on initial purchase intent, but it was not until 2011 that Liao heard from him again. The entrepreneur explained that he had had a car accident which had severely damaged his health over the past 10 years. Upon recovery, he had immediately searched for Liao’s contact number and then in 2013, he purchased three business jets from Liao.
The case is just one example of how top retailers, based on their rich experience, have built trust with potential jet buyers, most of whom are introduced by friends or existing clients.
“What kind of business jets do China’s wealthiest want to buy? How large should the aircraft be? What are their expectations of maximum flight length? Billionaires cannot answer these questions because they’re not experts in the industry,” Ji said.
As such, some of the first enquiries he makes when meeting with potential buyers are their budget, their frequent travel destinations and their travel plans, such as the number of people that usually take a flight. Based on clients’ answers, he makes charts which show comparative data of different jets and makes recommendations accordingly.
“It is important that you talk to the billionaire on equal footing rather than simply selling an item, because it is the entrepreneur who eventually makes the decision,” Liao said. “You need to have something to talk about with the buyers, and this is extremely difficult.”
There are also common preferences among Chinese billionaires, such as luxurious interior decoration, a large space and Wi-Fi connection. Certain types of business jets, such as the Gulfstream G650, the Bombardier Global 7500, the Boeing 787 business jet and the Dassault Falcon 8X are popular among China’s wealthiest, the report said.
Potential buyers are also shifting from property and food sectors as China’s newly emerging industries, such as information technology and high tech, are creating the young superrich.
For example, the youngest clients both Ji and Liao have on their receipts are in the region of 30 years old.
“The youngest buyer I met was from the gaming industry. He worked really hard with his team for two years and encouraged his employees by telling them he would buy a business jet and take them travelling around the world after finishing a project,” Liao said.
“He kept his promise and bought the jet after successfully selling the online game to Alibaba. It took him only two weeks to pay.”