Most non-golfers are puzzled at the appeal of a sport
often played in tartan trousers and pastel-coloured sweaters.
But makers of those garments have every reason to
smile. Golf is taking off in China, the world's most populous country, where its
appeal rests on its image as a sport for corporate achievers.
"China is the biggest market for golf course
development right now," says Mark Adams, in charge of course building in
Asia for sports event giant IMG, where he is a senior vice-president.
Board room image
A roster of world class players have designed courses
in China, including Colin Montgomerie, Nick Faldo and Ernie Els.
China is also beginning to produce top professionals,
like Zhang Lianwei, who beat Ernie Els on the last hole of the 2003 Calpex
Singapore Masters and once saw off seven-times European No.1 Colin Montgomerie.
"For Chinese white-collar people it is very
important to play golf because it means you're rich," says Domenico
Palumbo, business development manager at swanky Luhu Golf & Country Club in
the southern city of Guangzhou.
Being rich is essential to join Mission Hills, where
individual membership costs from $315,000 (£185,700), though the club
thoughtfully offers loan finance.
Luhu is so exclusive that memberships were sold out
before it opened in 1996. Members trade them privately.
But China's new middle class is keen to play.
"It's just starting to really take hold and become more of a popular
pastime," says Ian Stirling, Client Manager at IMG's Asian Golf Division.
Chequered past
Golf was not always acceptable to China's ruling
Communist Party, which ran media campaigns against it to discourage officials
from bunking off work on public funds.
"It's a game that consumes a lot of money to
play...and, second, it's a game that consumes a lot of your time," explains
Mr Stirling.
As a result, golf was limited to expatriate business
people, middle class Hong Kongers and holidaying Asian millionaires.
China remains a golfing newcomer compared to Asian
nations with much smaller populations like South Korea, Thailand or Japan.
China has only 198 course nationwide - about 60 of
them under construction - and 30,000 club members, according to China Golf
Association (CGA) figures.
But many observers think there are closer to 100,000
players if weekend club memberships and driving range rentals are included. TV
golf highlights can pull in up to three million viewers.
Even now, about 70% of China's golf courses are in
Guangdong province, bordering Hong Kong.
Driving range day trippers
But the balance is shifting, geographically and
socially.
New clubs are springing up around other wealthy
cities, particularly Beijing, and Shanghai. Golf remains a sport for the rich,
but it is no longer confined to the super-rich.
"What you're seeing is the first wave of mainland
Chinese, that's the key to the whole success of this wave of projects,"
says IMG's Mr Adams.
The traditional view of golf was that "If you
have to ask (how much), you can't afford it," says Mr Palumbo.
At Luhu, even life members must fork out fees every
time they play - caddy fees, buggy fees, monthly fees and a daily fee. And
joining for the weekend costs 1,380 yuan ($166; £98).
But there are cheaper options. Guangzhou city official
Francis goes to a development zone an hour's drive away, where one day's play
costs 200 yuan.
Cheapest of all is hiring a bucket of balls for an
hour on the driving range. Even Luhu offers that for 30 yuan.
It is a popular choice. "They want to be able to
hit the ball. They may never have the chance to play on a course," says
Luhu course superintendent Keith Pegg.
Cars and country clubs
Guangdong's oversupplied market is forcing many clubs
to drop their prices, says Spencer Robinson, publisher of Asian Golf Monthly.
"Developers thought that building golf courses
was a licence to print money; they have been very badly burned," he says.
Golf is set to expand in China as urban living
standards improve. "Automobiles seem to be the first thing that mainland
Chinese are aspiring to make as their first big purchase, and owning their own
flat," says IMG's Mr Stirling.
With private car ownership growing fast, many new
drivers are heading straight to their nearest golf course.
"This is where you're going to find an absolutely
pristine environment. The grass is green, there's no pollution," says Mr
Pegg.
Going professional
China suffers serious shortages of agricultural land
and, in some provinces, water. But developers do not fear an official backlash
against golf for these reasons.
"They've seen it as a viable business...this is
revenue stream for the government," says Mr Stirling.
Companies are increasingly willing to sponsor golf
too, raising prospects of more tournaments and a better professional circuit.
China's biggest domestic mobile phone maker TCL put
its name to a new tournament last year.
With prize money of $1m, the TCL Open - which was won
by Colin Montgomerie - is now the most lucrative tournament on the Asian PGA
circuit, worth 10% of total winnings.
"The potential for expansion is enormous, we're
exploring all sorts of opportunities," says Simon Wilson, a spokesman for
the Asian Professional Golfers Association (PGA). - 2004
November 3 BBC
News Online
Golf in China Becomes `Green Opium' Amid
Boom in Development
From Heilongjiang province, bordering Russia in the northeast, to Yunnan
province, next to Vietnam in the southwest, developers are
poised to double the number of golf courses in the world's most populous nation
to 400 next year.
``This is just the start,'' says David
Chu, developer, owner and chairman of Mission Hills Golf Club in Guangdong, who
commissioned Annika Sorenstam, the world's
No. 1-ranked woman golfer, to design her first course on his land near Hong
Kong. ``Golf has more growth potential in China than in any other part of the
world.''
That's partly because China's economy
is growing at an annual rate of 8.5 percent and a rising percentage of China's
1.3 billion people have become smitten with a game that some historians say was
first played on Holland's frozen canals
in the 13th century.
Today, golf is China's ``green opium,'' says
Ye Hong, owner of the BeautifulPines club in Beijing. Developers
already have spent $4 billion during the past 20 years to make China
the fifth- biggest golf-playing nation behind the U.S., Japan, Canada and
the U.K., says Ramlan Haron, executive director of the Malaysia-based Asia
Professional Golfers Association.
``Everywhere I turn'' in China ``they are
just building golf courses,'' he says. Last year the U.S. had 16,095 golf
courses, the U.K. 2,579 and Japan 2,317, according to the Golf Research Group, a
golf business consultant with offices in Dallas and London.
Nike Inc. and Adidas-Salomon AG, the world's
top two sporting- goods makers, are targeting the country's domestic market even
as they manufacture clubs in China for export. China is the leading exporter of
golf equipment, accounting for $858 million of the $2 billion market last year,
Golf Research says.
Celebrity-Designed Links
Chu, a Hong Kong-born businessman, 53,
says he spent $120 million to buy 20 square
kilometers (7.7 square miles) of land for Mission Hills and $267 million to
develop it.
By next year, he plans to make the club,
which opened in 1993, the world's biggest by courses -- 180 holes on 10
celebrity- designed links. The currentleader is 107-year-old Pinehurst in North
Carolina, which has eight courses.
He's already more than halfway there.
Sorenstam visited China for the firsttime Nov. 2 to check her design, the sixth
course for Mission Hills.
``I'm very proud of the course -- super
condition and a beautifulfacility,'' Sorenstam said in Singapore last week,
where she was runner-up to Retief Goosen in the three-man, one-woman Tiger Skins
exhibition. ``Seems like golf is very popular'' in China.
Luxury Housing
The Mission Hills complexes, dotted with
luxury housing, lie between Shenzhen, the industrial boomtown that borders Hong
Kong, and its similarly robust neighbor in Guangdong province, Dongguan.
Guangdong was the No. 2 exporter after Hong Kong from China's 33 administrative
areas last year, shipping $118 billion in goods.
About 100 million people, including 7 million
in Hong Kong, live within two hours' drive of Mission Hills, says Chu. Annual
membership fees range from$45,000 to $141,000, capped at 1,500 members for each
private course.
``Property will become one of the biggest
earnings contributors,'' says Chu, who calls his course-hugging villas and
apartments ``Oriental Swiss-style living.''
About 70 percent of China's courses are in
high-income areas such as Beijing, Shanghai, Guangdong and Fujian, the province
closest to Taiwan, the China Golf Association says. China has 210,000
millionaires in U.S. dollar terms, according Cap Gemini Ernst & Young's 2003
World Wealth Report.
Average annual income in urban areas last
year was $930, and in rural areas $299.
Viewed as Decadent
Tourist destinations like the island province
of Hainan and Xian city, gateway to the terracotta warriors, are also golf
growth areas.
Course developers include Asia's richest man,
Li Ka Shing, who began making his estimated $7.8 billion fortune as a Hong Kong
property developer, and Macau gambling tycoon Stanley Ho.
Most developers are from Hong Kong and
Taiwan, often in partnership with provincial governments, says the PGA's Ramlan.
``I haven't heard of any courses owned by Americans or Europeans,'' he says.
``It's powered by the local population.''
Once viewed as decadent in communist China,
golf began to be seen as a means of attracting foreign investment after former
President Deng Xiaoping opened up the country in 1979.
A Hong Kong businessman built the first
communist-era course, designed by Arnold Palmer, in 1984 in Guangdong. Soon,
Asian businessmen added clubs to amuse their China-based workers. Tourists
followed, and more courses.
Yet as late as 2001, the Financial Times
reported that some company officials were urging their executives not to play
because the game was considered elitist.
`Social Status'
The pleas went largely unheeded. At the
Beautiful Pines club and driving range in Beijing, local Chinese account for 80
percent of customers, up from 20 percent when it opened three years ago.
Even at Chu's exclusive Mission Hills, locals make up 30 percent of members.
Hong Kong residents, for whom Chu runs a shuttle service, dominate the
membership list.
Beautiful Pines owner Ye Hong says locals
have taken to the game much faster than she expected.
``Most of the players at our club are
successful people,'' Ye says. ``Their purpose is both business and social. It's
also a social status thing.''
Zhang Wei, the manager of a building
materials factory in Shenzhen and a Mission Hills member, says a business
associate introduced him to golf three years
ago.
``I get a lot of business done on the golf
course,'' said Zhang, 43, who had just finished a midweek game. ``After all,
doing business in China is all about trust and relationships.''
Tiger Woods Clinic
International success has helped the game
prosper. Mission Hills hosted golf's World Cup in 1995. This year, a Chinese
team qualified to make its World Cup debut, though a scheduling conflict forced
it to withdraw.
Two years ago, Chu brought the game's current
icon, Tiger Woods, to China for the first time. Woods held a clinic for leading
Chinese professionals, including Zhang Lianwei.
Today, Zhang, 38, a self-taught golfer, plays
mostly on the Japan Golf Tour.
He ended 22nd on the earnings list last year
with $375,000. In January, he beat former world No. 1 Ernie Els by one stroke to
win the Singapore Masters, a European Tour event. On Sunday, he won the Asian
PGA's China Open in Shanghai.
A former javelin thrower, Zhang said in an
interview that he started playinggolf to challenge himself. ``But there are
great difficulties, including visa, language, transportation and finance,'' he
said.
``What really kicks off golf in the market is
when the country has a high-profile player of their own,'' says Colin Hegarty,
president of the Golf Research Group.
Goldman, Lone Star
Outside China, golf is stagnating. More than
900 courses were builtworldwide in 1991-1992, according to Golf Research. Last
year, less than 300 were built.
A decline in the popularity of golf in the
U.S. is forcing lower prices for courses and foreclosures, Barron's business
magazine reported in July. The number of players has shrunk by 1 million to 26
million in a decade, Golf Research says.
In Japan, where 14 million people play,
participation fell to a 13-year low this year after three recessions in a
decade, a survey by Nikkei English News found. U.S. investment companies Goldman
Sachs Group Inc. and Lone Star Funds acquired Japanese courses, owing a total of
$20 billion, at a rate of two a week last year.
Equipment makers are also affected. Spalding
Holdings Corp., a Massachusetts-based sporting goods maker, filed for bankruptcy
protection in June, listing less than $1 million in assets and $100 million in
debt.
Nicklaus, Norman, Faldo
As a result, the golf industry is heading to
China. Jack Nicklaus, Nick Faldo and Greg Norman have designed courses there.
Arnold Palmer, now designing a course in
Beijing, says China reminds him of Japan, where he's built 19 courses. ``When
the Japanese people turned to golf, they really jumped in,'' Palmer says. ``I
wouldn't be surprised if China follows that same trend.''
Robert Trent Jones II, one of the world's top
two architects, has mapped six Chinese courses. He charges $950,000 per course.
``Golf is very agricultural in nature and China is very agricultural,'' Jones
says. ``All the elements are there for steady growth.''
David Leadbetter, voted Golf Digest's best
teacher in America, has opened a golf academy in Guangdong to train a new wave
of Chinese professionals.
Scotland's Royal and Ancient Golf Club of St.
Andrews, which regulates the sport in 127 countries, has started a greenskeeper
training program. ``China has huge potential,'' said club secretary Peter
Dawson.
`Equal North America'
Nike started selling golf clubs only 18
months ago. China, and Asia overall, are important growth areas, wrote Guillermo
Salinas, the director of international business for Nike Golf, in an e-mail.
``Five or 10 years from now, this region
will equal North America from a business perspective.''
Herbert Hainer, chief executive of
Adidas-Salomon, expects the 2008 Olympics in Beijing, which may include golf, to
boost sales there. He says China will be the fastest-growing sports market over
the next five to 10 years.
Several years ago, Golf Research's Hegarty
added up the financial statements of the world's leading golf-equipment
companies going back five years.
``From the golf brand point of view, it's a
net losing business -- a bad business to be in,'' he said. ``But for the guys in
China, who are just making heads or shafts, it's a good business because they're
selling to many brands.''
`Way Below Potential'
The Mission Hills monthly magazine, a
bilingual publication in Chinese and English, carries advertisements for Audi AG
cars, Time Warner Inc.'s Chinese-language New Fortune magazine and golf
equipment like Leica Plc laser rangefinders.
It features interviews with Mission Hills
homebuyers from China, Taiwan andHong Kong. About three-quarters of
Chinese would like to own a house surrounded by green views, according to a
Beijing Forestry University survey.
``If you look at the population of
China, it's still way below its potential,'' as a golfing nation, the PGA's
Ramlan said. - 2004 November
18 Bloomberg
