Golf in Xinjiang: An Elite Sport in a Poor Province

A short distance south of Xinjiang’s capital of Urumqi there is a portion of beautiful land known as Nanshan, or “South Mountains”. For years tourist and locals have traveled away from the noisy, polluted city life seeking the peaceful scenery that Nanshan provides, but soon they will have an entirely different reason to visit: a new luxury golf course.

A Growing Golf Market in Xinjiang?

Of course, very few people I met in Xinjiang know how to play golf – much less can afford to – but that’s beside the point. The worldwide image of golf as an elite, rich-man’s sport has somehow enticed developers in one of China’s poorer provinces to begin building golf courses.

Nanshan partially bulldozed for new luxury golf course. Photo by Zara Arshad

It should be noted that golf won’t be the first sport to entertain visitors of Nanshan. As you can see from the picture, skiing has become quite popular among the Xinjiang middle class as well (note the ski lift). Ski resorts have popped up everywhere around Urumqi and a few other wealthier Xinjiang cities.

Skiing, however, is affordable. Golf is not. So the question remains: if you build it, will they come?

Golfing in the Middle of Nowhere

Karamay is a small, young city by China standards (pop: 200,000, 50 yrs old). It is located in northern Xinjiang about 4 hours away from Urumqi and boasts one of the highest standards of living anywhere in China thanks to the booming oil industry.

An empty golf course in Karamay, Xinjiang

Part of the excess money that has poured into the city thanks to oil has been spent on a million-dollar city park, incredible water attractions, and – now – a golf course. Every day people young and old flock to the park and every evening hundreds gather to watch the water and light show along the man-made river.

Not once in four years did I ever see anybody play on that golf course.

The course is beautiful, well-kept and dotted with lovely fake oil rigs. I was quite interested to play a round of golf there but unfortunately I could find no person to play with me. The cost was too high for my Chinese and Uyghur friends and they didn’t even know how to play.

The State of Golf in China

Dan Washburn, a Shanghai-based writer, teamed up with photographer Ryan Pyle earlier this year for a Financial Times story about a secret new golf course in China’s Hainan province.

In the article Dan dives into the world of golf in China and how, despite a moratorium on golf course construction, developers are working to finish the largest collection of golf courses in the world. How then, can these courses in Hainan be built? How can Xinjiang be constructing new courses if it’s against the law? Dan’s answer:

There’s an answer to these questions, too, and it is also China. In the years since the government announced its supposed golf course moratorium, the number of courses has nearly trebled to an estimated 600 or so. In China, there is always a way.

Naturally all the money spent on golf raises concerns of corruption. Last week government officials in Wenzhou were given an ultimatum: either quit a new golf association or take part in a “self-criticism”. Needless to say, most of them chose the former.

Why Golf?

Despite the moratorium on course construction, despite the government frowning on golf association memberships, despite the few people in Xinjiang who can afford to play – construction of the Nanshan golf course continues.

But why?

Maybe it’s the internationally-promoted image of golf as representative of a developed country or city. Tourism literature like what you see on the left boasts high-class facilities available to businessmen and foreign visitors.

Maybe the upper-class Chinese really do enjoy golf and are a market ready to be tapped. Whatever the reason, it has the potential to further divide Xinjiang’s rich and poor in a way that can’t easily be overlooked.

Interesting how luxury golf courses are being built in an area that is receiving trillions of dollars in government aid, don’t you think?

Article written by: Xinjiangfarwestchina.com

PGA Tour commissioner Tim Finchem hints at more events in Asia

By Doug Ferguson (CP) – 1 day ago

NEWTOWN SQUARE, Pa. — The PGA Tour already has the West Coast Swing, the Florida Swing and now the Texas Swing. It might not be long before it has an Asian Swing after the FedEx Cup portion of the season is over.

In two years, the PGA Tour already has grown to two events there. It returns to Shanghai on Nov. 4-7 for a World Golf Championship, this time treating the HSBC Champions as an official victory if a tour member is holding the trophy. A week earlier is the inaugural Asia Pacific Classic in Malaysia, which is co-sanctioned with the Asian Tour and offers a $6 million purse.

And after that? Stay tuned.

"We're looking at possibilities in Japan, Korea, China," PGA Tour commissioner Tim Finchem said. "I'm not saying we will, but we may very well do a short series over there in the fall in the next two or three years. If we're going to get serious about a presence in Asia, it would probably argue for a short series."

The Malaysia event was not a critical building block in such a series. It has a short field — the top 25 players available from the FedEx Cup standings to fill a 40-man field at The Mines Resort and Golf Club — and Finchem said the Asian Pacific Classic "pre-dated what might developing into a serious strategy."

"If it continues, it will be part of it (an Asia series) in some fashion," he said.

Finchem, who took an 18-day working vacation through Asia last fall, said he will be returning this year. However, Finchem didn't make it sound like any series was around the corner. Asked if the tour was close to arranging an event in Japan, he flatly replied, "no."

"I don't see us announcing any details on that by the end of the year," he said.

China' Mission Hills Boosts Hainan Spending on Tourism Demand

By Wing-Gar Cheng
May 27 (Bloomberg) -- Mission Hills Group, owner of the world’s largest golf club, will boost investment sixfold in a golfing complex on China’s Hainan island as the nation’s economic rebound spurs a tourism and property boom.
Mission Hills, based in Shenzhen, the southern city adjacent to Hong Kong, is to spend a further 25 billion yuan ($3.7 billion) by adding more golfing, retail and community facilities at its 5 billion-yuan club in Haikou, in the island’s north, Vice Chairman Ken Chu said in an interview in Hong Kong.
“We have confidence in the rise in Chinese consumption and them having a holiday mentality,” Chu said yesterday. “We see the growth of the game and we see the growth of this business sector.”
Economic growth increased the number of millionaires in China to 875,000 in 2009, according to Hurun Research Institute, helping boost tourism and property development on tropical, beach-fringed Hainan. Mission Hills is switching its focus from foreigners to Chinese golfers as the nation’s newly wealthy seek aspirational leisure pursuits, Chu said.
China’s approval of Hainan, a southern province, as an international tourism hub in January sent property prices soaring. They rose 50.5 percent in the provincial capital Haikou in February, and 49.3 percent in the southern resort city of Sanya, according to government data. In April, prices jumped 53.3 percent in Haikou and 52.3 percent in Sanya.
The designation allows for the construction of resorts, expansion of facilities to cater to exhibitions and conventions, and eventually the opening of duty-free shopping.
‘More Gains’
“There might be more gains, especially as the people who buy homes are the rich mainland ones who want to invest in or buy properties for their holidays,” Wang Ren, a Hong Kong-based property analyst at CCB International Holding Ltd., said in a phone interview. “As there are more and more rich Chinese, golf will become more popular.”
Mission Hills opened a 12-course club, the world’s largest, in 1992 in the southern province of Guangdong, catering mostly to foreign golfers, who made up 80 percent of its customers. It is now targeting Chinese players who have grown rich in an economic boom that sent annual urban wages 64 percent higher to 17,175 yuan in the five years to 2009.
The Hainan club, built on top of a volcano, opened in March offering an initial six courses, according to company data. The group is operating it as a public, rather than a members-only, facility to attract more golfers, Chu said.
30 Courses
When fully completed, the Hainan club will feature 10 courses, according to the company, and will be similar in size to the Shenzhen complex, which spreads across 20 square kilometers (5,000 acres), or equivalent to the combined size of six Central Parks in New York City. The Hainan government, meanwhile, suggests on its website that the development may eventually have 30 courses.
Southern China, particularly the Pearl River Delta region and Hainan, will remain Mission Hills’ core investment area in China, Chu said. The group has about 6,000 corporate and individual members at its Shenzhen club, which has 10,000 employees, he said. The Hainan club currently has 2,000 staff.
Since golf was added to the Olympics program in October, the number of people playing the game has risen to 5 million from 3 million, according to China Golf Association. China topped the gold-medal standings at the Beijing Olympics in 2008.
“The country will be spending money to promote the game, to build the younger generation to participate in the sport,” Chu said. “There’s a chance for them to win a gold medal and golf is a game in which the Chinese can excel.”
--With assistance from Chia-Peck Wong in Hong Kong. Editors: Mark McCord, Garry Smith.
To contact the reporter on this story: Wing-Gar Cheng in Hong Kong at wgcheng@bloomberg.net.
To contact the editor responsible for this story: Frank Longid at flongid@bloomberg.net.

Golf in China: Targeting 3 Million Players

The Wall Street Journal

China is one of the few places globally still building golf courses. As Dow Jones Investment Banker reports, potential sand traps and water hazards mean this may provide an opportunity for buyout firms and course-management companies that cut their teeth turning around busted courses in places such as the U.S. and Japan.

Growth potential for the game does exist in China, but it’s too expensive for most people; stir in a potential golf-course building glut–in the holiday island of Hainan, at least–and returns could get clobbered, pushing weak operators to the wall.

Getting accurate statistics on Chinese golf is difficult. The China Golf Association, for example, thinks there are around 500 courses; KPMG believes it was nearer 300 at end-2008. Muddying the water is a widely flouted 2004 moratorium on new golf-course construction.

Meanwhile, estimates for the number of golfers range from 300,000 to three million! KPMG thinks the number of club members who play regularly is nearer 300,000, partly due to national average initial membership fees being an eye-watering $50,000–4.5 times the level in Spain–and average weekend green fees that weigh in at $150. Depending which statistics you use, there could be as few as 600 players per course in China, suggesting heavy oversupply resulting in around one-sixth the amount of players on China’s fairways compared with in Japan, or an equally extreme dearth of courses, with 10,000 players per course, or 5.3 times more players teeing off on a typical Chinese course than on its American equivalent.

Granted even the three million golfer figure — just 0.2% of China’s population–suggests plenty of room for expansion before the game’s popularity approached what it is in, say, Japan, where it is played by roughly 7% of the population.

China’s courses are concentrated mainly in the wealthy or temperate eastern and southern provinces, such as Beijing, Jiangsu, Guangdong and Hainan.

Hainan, interestingly, is exempt from the 2004 new-course ban, as part of efforts to build out the tourism industry and cater to an expected influx of tourists wielding their five-irons.

The island currently has 21 courses, according to the 2009-2010 Golf Course Guide to China, and quite how many more courses it intends to build is unclear. Some reports put a long-term goal of 100 courses on the island, while others talk of 50 new courses within three years. One Asian golf course operator told Dow Jones Investment Banker that he believed the number would be nearer to 30 new courses over the coming decade.

None of the Chinese golf club operators is listed, so it’s hard to know financial positions and breakeven points. But Japanese operators Accordia Golf Co. Ltd. and Pacific Golf Group International Holdings K.K. make good operating profits from about 150 rounds per day being played at their 130-odd courses each. A former course manager in China told us those levels would be equivalent to peak seasonal play in China, however.

Assuming 350,000 Chinese players today–slightly more than KPMG’s figure–and that the number grows at a rude 10% annual clip gives 900,000 players by 2020. If 40% of those players came to Hainan for a five-day break to play 7-8 rounds, that yields about 1,000 local players per day playing a total 2.7 million rounds for the year. At 152 rounds per day per course that implies the island could support 50 courses by 2020 based on quite rosy domestic demand assumptions and allow the courses to be EBIT profitable assuming a cost structure similar to the listed Japanese plays. Still, the assumptions underpinning that are quite bullish.

Clearly 80-100 courses over the next decade means the island is either going to need to attract a lot more foreign players, or operators will need to change their business model from a luxury service to a mass-market approach in order to create the volume to generate necessary cash flows, or many of those courses will either never be built or some operators will need to go under. What’s more likely is that some combination of the above needs to occur.

When a shake-out happens, it could prove an opportunity for investment funds and savvy course operators too. In Japan, Goldman Sachs and Lone Star made names for themselves through buying up bankrupt courses in the wake of the real-estate bust there, and in the U.S., KSL Capital Partners bought out ClubCorp Inc. in 2006.

Japan’s Accordia Golf paid an average 1.67 billion yen for Ebitda of 0.2 billion yen for acquisitions in 2009, according to Macquarie, which equates to a going-in cap-rate of 12% for courses from mainly distressed sellers.

That could be a benchmark rate if Hainan overshoots in its golf course roll-out.


-Jamie Miyazaki
Dow Jones Investment Banker,
Golf,
Jamie Miyazaki

Asian Tour Chief believes China could follow Korea

By Martin Parry (AFP) – 1 day ago
SINGAPORE — Asian Tour chief Kyi Hla Han believes Chinese players could follow their South Korean counterparts out of the OneAsia Tour, which on Wednesday sought to salvage a boycott of its events.
OneAsia, which was established last year by bringing together tours from China, South Korea and Australia to rival the Asian Tour, was dealt a heavy blow on Tuesday when Korean golfers voted to pull out of its tournaments.
In a statement issued on behalf of 110 Korea Professional Golfers' Association players, they claimed OneAsia was not working on their behalf.
They were unhappy at the number of places available to locals at next week's Maekyung Open and the SK Telecom Open as well as OneAsia simply absorbing existing tournaments and offering nothing new.
Concern was also voiced that it was being dictated by commercial, and not player, interests.
In an open letter, OneAsia chairman Sang Y. Chun and chief executive Ben Sellenger urged them to rethink.
"The Korean Golf Tour and its members are very important to the development and success of OneAsia in developing Korean champions," the letter said.
It warned that if the boycott was carried out at the Maekyung Open next week, KGT eligibility for all remaining OneAsia events would be removed.
"This is obviously the last resort and one which we would like to avoid at all cost."
It said more than 90 positions would be made available to Koreans at the Maekyung tournament and 70 at the SK Telecom.
OneAsia also stressed it was not commercially owned.
"OneAsia is founded by the KPGA, the KGA, China Golf Association and PGA of Australia and has no commercial ownership," it said.
"The object of OneAsia is to maximise elite playing opportunities of the leading golfers from across the region."
Kyi Hla Han said OneAsia was becoming "a laughing stock" and made clear he would welcome Korean players and events back onto the Asian Tour.
"We hope they come back to the Asian Tour," he told AFP, adding that he had been talking to sponsors in Korea who were interested.
The Asian Tour used to host both the Maekyung and SK Telecom events.
"We have been talking to a lot of sponsors in Korea and have been getting a good response," he said.
"We're working on our 2011 schedule already. Sponsors are very interested.
"We just do what other tours like the European Tour do and they are successful. I think the Koreans now realise that."
With most Korean players vowing to skip the remaining nine events on the OneAsia calendar, held mostly in China and Australia, Kyi Hla Han suggested that Chinese golfers would be watching developments very closely.
Asked if they could follow suit, he said: "I was talking to a few Chinese players last week and they feel that too many places (in OneAsia events) are being taken by Australians.
"That could follow Korea. Some players have already shown dissent."
China is a different proposition though, with the China Golf Association a government organisation which has aligned itself with OneAsia and squeezed out the Asian Tour. There is no player representative body, or PGA, in China.
Kyi Hla Han said he was open to further talks with the CGA.
"I think the opportunities for Chinese players have lessened," he said.
"I hope to work with China again. I'd like to hold talks and see if what we have is attractive to them. We can bring tournaments in."
Copyright © 2010 AFP. All rights reserved. More »

Return on investment: China's wealthy embrace junior golf

CHENGDU, China (Reuters Life!) - China's wealthy have no qualms about spending on luxury lifestyles, but one sport has got them especially excited due to its potential investment returns: golf lessons for the kids.
From the tee to the green, golf is an expensive affair in China and one that is seen as a status symbol. But those who can afford it are signing up their children in droves, hoping to transform them into the next Tiger Woods.
"Many parents and children are becoming engaged in the sport. In the past, golf reached a relatively small group of people, but now it's becoming more and more widespread," said Cui Zhiqiang, vice-president of the China Golf Association.
"The prospects are looking very good, with more people getting involved in junior golf, which is gaining greater public attention and recognition in society."
Once considered bourgeois, golf was banned by China's Communist Party, and the country's first golf course was only built in 1984.
But with an explosion of interest in recent years, some parents are now prepared to fork out around 300,000 yuan ($43,940) year on lessons for the children.
Last weekend, the country's future golf stars teed off in the fourth China Junior Golf Open Tournament held in Chengdu, capital of China's southwestern Sichuan province.
Organised by the China Golf Association with high-profile sponsorship, the tournament costs each participant more than 10,000 yuan, almost 10 times the monthly income of an average Chinese factory worker.
Though statistically less than one percent of China's population play golf today, more courses and rising incomes mean the sport is becoming more accessible to the elite. Yang Manlixiang, 7, has been playing golf for over three years and wants to become a professional golfer. For her, it's more than just a sport.
"Playing golf can earn me a lot of money," Yang said.
Yang's father, Yang Quan, is also prepared to pay big money to train his daughter to go professional in the future.
"I have not carefully calculated the cost of training my daughter to play golf. But I think I need to invest at least four or five million yuan altogether. I need to keep her training and attending tournaments," he said.
While many junior golfers, especially teenagers, dream of going pro, for many more, golf is just a little more than a after-school pursuit akin to piano-playing.
China, where golf was once labelled 'green opium' because it was seen as expensive and elitist, only has around 500 courses, compared to 18,000 courses in the U.S. and an estimated 6,000 in Europe.
While China's state sport system pays for the training of professional athletes in most sports, golf is one of the few in which individuals must cover all the training expenses.
But last year's decision to add golf to the Olympic programme from 2014 has helped further spark interest in developing the sport, and its inclusion will see more government funding for the sport.
When the country's formidable Soviet-style sports system joins wealthy parents in pushing young golfers, China could be a golfing force to be reckoned with in the future.

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www.parforchina.com