Golf And Leisure Industry Players Could Score Aces In China Over The Next Few Years
China"s golf industry is expected to grow exponentially in the next few years and help boost tourism and real estate development along the way
. Even though China is the world"s second largest source of golf equipment today, the country only has about 500 golf courses, compared to approximately 18,000 in the United States and 6,000 in Europe. This huge "handicap" may soon be lowered, with the expiry of a six-year-old government ban on new course development from 2004.The playing field for China"s golf industry is about to change drastically "" both in nature and in size.
Up until recently, China"s golf industry was exclusively export-oriented, as the sport itself had yet to find a broad base of domestic players.
As one of the main suppliers for golf apparel and equipment, China is expected to continue to ride on the growing popularity of golf around the world and to attract foreign investment in this area. Leading golf companies, mostly from the United States, have been moving their manufacturing bases to China to cut costs and to gain some first-mover advantage in a developing market.
When it comes to infrastructure on the other hand, China still depends heavily on imports. In the last five years, 400 golf courses were developed mostly with equipment and technologies brought from the U.S., Taiwan and Japan.
As a result, nearly half of China's golf courses are currently running a deficit, as they combat soaring real estate prices and rely heavily on imported technology, course equipment and talent within a relatively immature market. These imports and the low number of players have made China one of the most expensive countries to play golf in. Club memberships are extremely expensive; often at premiums that are much higher than European and American clubs. Tee-off fees and all other golf related fees are also tremendously costly in China.
Fortunately, several powerful forces are at work that will improve the game of golf in China."
Budding domestic market"
In the last five years, Chinese consumers seem to have developed a strong interest in golf, which has in turn, opened up an entirely new market that is attractive not only for local companies, but for the rest of the world"s golf manufacturers and service providers as well.
Golf is synonymous with success within the business world in China. China"s golf players today are mostly made up of businessmen, public servants, foreigners and die-hard enthusiasts. A few Chinese universities, including Peking and Xiamen University, proposed in 2006 to make golf compulsory for business majors. This provoked a public outcry against elitism but also underscores the perception that golf is an essential business skill.
The population of regular golf players in China has already doubled since 2001, to three million. Made up mostly of men, it is estimated that one million tee off regularly, around 2,000 are competitive amateurs and about 300 are professionals. It is anticipated that the number of golf courses will also double in the near future, thanks to the expiry of the current ban on golf course development.
The China Golf Association predicts that China will have 20 million local golfers by 2020 and rely less on foreigner golfers, such as South Korean and Japanese golfers who formerly made up a majority of Southern China"s business in the sport before the recent financial crisis."
Growing grassroots support
"To build up the next generation of golf enthusiasts, the China Golf Association has a youth development strategy, which aims to encourage clubs to make any of their spare resources available for youth development programs and provide opportunities for youth at the provincial level to learn the game of golf for free.
Local governments and enterprises, who consider golf courses to be very desirable as they help boost employment and revenue, have even managed to bypass the construction ban to create local courses."
More sponsorships and exposure"
Golf is often viewed as a prestigious game and a good way to build contacts and close deals. This drives corporate and club sponsorship as well as demand for the game. More and more foreign golf tours and tournament sponsors continue to invest in China. Today, Shanghai, Beijing and Guangdong host premier golfing competitions. The most prestigious tournament, the US$7 million HSBC Champions in Shanghai, is also the richest in Asia.
All this leads to increased media exposure of golf competitions, further popularizing the sport."
A more accessible but still elite sport"
As the number of golf players increases, the economics of golf courses will balance out positively and golf will slowly become a more affordable sport. However, golf will remain an elitist sport in China for a few more years and foreign, well-established brands should take advantage of it while it lasts. Chinese golf players today prefer foreign brands to domestic ones, but that can change fast.
In addition, the decision to include golf in the Olympics from 2014 onwards may have just rekindled the state-run sport system"s interest in it. "
Demand for residential developments
"Developers are also building more properties with golf courses, in response to demand for top quality housing and living environments, particularly for the rising number of wealthy households in China.
All this is good news for complementary industries as well. Golf in China is developing as in other part of the world: closely related to the leisure, tourism and real estate development. As more golf courses and driving ranges are built in China to accommodate the 20 million players expected by China Golf Association in 10 years time, new hotels, restaurants, club houses, shops, health clubs, pools and country houses for example, will start sprouting up.
Golf and leisure industry players should start improving their game plans now, in preparation for "holes in one" in the future.
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