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.
For
media inquiries, send an email to media(at)globalintelligence.com.
Download any of our Industries White Papers.
More About GIA Industry Practices Automotive | Chemicals | Construction & Property Development | Consumer & Retail | Energy, Resources & Environment | Financial services | Private Equity | Logistics & Transportation | Manufacturing & Industrial | Pharmaceuticals & Healthcare | Telecommunication, Technology & Media
More About GIA Functional Practices World
Class Market Intelligence
| MI
for Strategic Planning
| MI
for Marketing & Sales
| MI
for Product & Innovation Management | MI
for Supply Chain Management
| M&A
and Partnering
More About GIA Services Monitoring Services | Strategic Analysis | Rapid Research | Intelligence Software | Intelligence Best Practices
More About GIA How we
work | Expertise
| Clients
| Case
Studies | Global
Locations | FAQ
About
Global Intelligence Alliance
Global Intelligence Alliance (GIA) is a strategic market intelligence and advisory group. GIA was formed in 1995 when a team of market intelligence specialists, management consultants, industry analysts and technology experts came together to build a powerful suite of customized solutions ranging from outsourced market monitoring services and software, to strategic analysis and advisory.
Today, we are the preferred partner for organizations seeking to understand, compete and grow in international markets. Our industry expertise and coverage of over 100 countries enables our customers to make better informed decisions worldwide.
