ZHUHAI, China — Qualms about the made-in-China label grow with every new headline: Recent recalls of infant formula containing an industrial additive; toys coated with lead paint; tires missing a key safety feature.
So when David Adams, senior vice president of Florida-based Tricon Marine, talks with potential customers about the million-dollar yachts he builds, he eases into the fact that they are manufactured in this southern Chinese city.
"I've come across people who refuse to buy something made in China because they thought that it wasn't good enough quality," Adams said at the shipyard his company runs here. "But the yachts we build can be as good as any in the United States.
China's combination of low-cost labor and land and its burgeoning middle-class market have long attracted Western manufacturers.
But as Chinese workers have become more technically skilled and Beijing more welcoming to foreign companies, high-end manufacturers have also begun to shift production to China, though often with little fanfare.
Luxury brands, including Armani, Coach and Paul Smith recently have shifted production to China.
Last month, European aircraft maker Airbus began assembling passenger planes at a new factory near Beijing. Intel announced last year that it would build a $2.5 billion factory in northern China to fabricate sophisticated computer chips, the company's first major production site in Asia.
"The perception that China produces just for the low-end is not true any more," said Pinakin Patel, a client portfolio manager for financial firm J.P. Morgan.
Tricon Marine advertises itself as the "first and only" North American owned and operated shipyard in China. Together with a Canadian venture capitalist, Adams invested "in excess of $10 million" to buy 12 acres of land and build a yacht factory set to officially open later this month.
Adams, 49, of North Palm Beach, Fla., estimates that average labor costs at his factory in Zhuhai are one-eighth those in the United States and one-third of labor costs in Taiwan, where many luxury yachts are built.
Because top-dollar yachts are built largely by hand, some 400,000 hours of work can be required to build a 168-foot vessel, Adams said. Tricon can pass the cost-savings along to customers, offering a yacht at roughly half the price of a comparable U.S.-made yacht, he said.
Overhead is also low in China. Land generally sells for a fraction of costs in the United States and local governments frequently give tax breaks to companies willing to invest.
But rising skill levels among Chinese workers has been more important in attracting high-end manufacturers, experts said.
"We've had a decade or more of industrial development that has created more skills in the workforce," said Arthur Kroeber, managing director of Beijing-based consulting firm Dragonomics. "The range of things that it's possible to do in China is continuously expanding."
In the yacht-building industry, Adams helped to foster that transition. After he opened Palm Beach-based Premier Yacht and Ship, a company selling new and used yachts, in the mid-80s, he began traveling to China to source ships from a Taiwanese-owned builder. To ensure the quality of boats he sold, he traveled frequently to China and often showed employees of the Taiwanese company ways to improve their work.
After he founded Tricon Marine in 2005, he hired away some of the carpenters, welders and fiberglass specialists he had helped train.
"The way to keep workers is to give them some pride in what they do and to give them a better place to live," Adams said.
Manufacturers working to produce goods with few defects still face higher training costs in China than in the United States, some experts said.
Bill Macnab, an American project manager working for Tricon Marine in Zhuhai, said that despite their experience, the company's laborers have "only 70 percent" of the necessary skills.
"I have to spend a lot of time on the floor making sure things are done well," said Macnab, who previously worked for a boat-builder in Vancouver, Canada.
The company has faced other problems in China.
Adams lost about $25,000 when a land deal fell through and he figures mistakes by his locally hired architect have cost the company $300,000. The contractor he hired to build the new facility is six months behind schedule, forcing him to rent a temporary facility.
But the benefits of working in China are worth the costs, he said.
Recently showing a visitor around a yacht under construction — the first to be built by the company — he rubbed his hand over a smooth white wall.
"One way we can take advantage of the labor advantage in China is that we can polish all the surfaces," something that many yacht builders avoid to cut costs, he said.
"I expect to be profitable in two or three years," he said. "We plan to be known sometime after that as the global yacht-building facility of choice."
Craig Simons' e-mail address is csimons@coxnews.com.