HONG KONG -
The golf bug has bitten China in a big way, but despite
its popularity, exorbitant green fees exclude
lower-income players from taking to the fairways. That
hasn't stopped rampant construction of new courses,
however, and with more than it needs, and many more than
it can financially support, the dollars China hoped to
rake in from its courses have, instead, been buried in
an increasing number of financial sand traps. Golf in
China just isn't up to par.
Critics call golf
"green opium" as it ruins green fields that should be
used for agriculture.
Almost half of China's
more than 200 courses are running a deficit, as hasty
golf course development, coupled with the country's
immature market, have led to blind land requisition and
unbalanced consumption.
Still, two decades after
the birth of the country's first golf course in 1984,
China now ranks fifth in the world and second in Asia in
terms of the number of courses. In addition to the
country's more than 200 operational golf links, 500 to
1,000 more are already under construction.
Many
investors jumped into the market in search of cheap
land, which they then developed into expensive villas
and golf clubs in the hope of pulling in huge returns.
But as unnecessary upper-class flats and housing
developments continue to pop up, critics say that such
rapid development could lead to the destruction of the
country's cultivated land. And the public worries that
the mania might further stimulate golf-related
corruption among communist party officers and other
political magnates, who have wallowed in golf with
public funds in the past.
Thus, China may have
known a money maker - golf - when it saw one, but its
grand plans have not lived up to expectations. Now
course owners are finding it hard to overcome their
financial straits, and players complain that charges for
a round of golf are just too high.
Golf fever
favors a small few Since undergoing economic
reform and financial opening up more than two decades
ago, golf courses have mushroomed in all of China's
major cities, fanning a golf fever that has grown over
the years.
"China has reported over 200 courses
right now, with an annual increase of 20-30 percent," an
industry insider told Asia Times Online. "But actually,
players are limited to entrepreneurs, public servants,
foreigners and aficionados. Extortionate charges are the
major cause of the unpopularity [and] a bottleneck to
the industry's development."
Therein lies the
problem. Rising demand has led to rising prices,
resulting in fewer, not greater numbers of players, and
causing many courses to lose revenue. Moreover, China's
inexperience in the market has limited golf to a wealthy
few, including celebrities, thereby glazing the sport
with an aristocratic gloss.
One golf course
staff member said his course "is deserted, with only a
few visitors around every day. The earnings can hardly
cover the maintenance costs, not to mention making
profit," he said. "It is the same everywhere in China."
But despite dismal attendance, these loss makers
are still puffing themselves up, according to Global
Sources Chief Executive China, a best-selling managerial
magazine. As a result, China turns out looking like a
novice among others in the golf market when compared
with South Korea, Japan, Malaysia and Thailand.
In Malaysia, a long history of golf and the
pleasant climate have led to the construction of 256
courses, outnumbering South Korea, the joint
second-largest market in the region along with China and
Thailand. While golf has become very popular in
Malaysia, it remains relatively inexpensive - a game of
golf there costs nearly three times less than it does in
China: only 198 yuan (US$24) for a round during the
week, and 296 yuan ($35) per round on holidays.
And aside from the cost to individual players,
scant attendance plus towering land rental rates also
have increased the expense of golf course operations in
China. The investment price for an 18-hole course now
averages 153 million yuan ($18.4 million). While in its
first year of operation, a golf course requires a budget
of up to 300 million yuan, including staff remuneration
and the costs of construction, facilities and
maintenance, according to an industry player in Beijing.
Tomson Golf Club, one of the leading golf clubs
in Shanghai, is a case in point. Its annual revenue from
membership fees, golf fees and relevant catering income
only reaches around 20 million yuan, indicating a tight
margin for profits, or even loss. In addition to an
enormous land tax, a 20 percent business tax and
equipment costs, the club has to spend another big sum
of money on maintenance.
Amid the maintenance
costs, the most expensive item is grass preservation,
which involves fertilizing, spraying chemicals, such as
pesticides, and, most importantly, watering. Water is
expensive and chemical sprays many times have hurt the
local environment. Both of these factors impose a huge
cost on any golf course, a cost that is usually paid by
taxpayers.
At the same time, existing golf clubs
depend heavily on imports when it comes to technology,
equipment and even professional golfing talent. This
contributes to massive operational costs, which include
the planning and design of courses, equipment purchases
and routine management.
Gradually, an
oversupplied market takes shape. China's southernmost
province of Guangdong, for instance, boasts more than 60
golf courses with an average attendance rate of less
than 60 percent. The same is true elsewhere in the
country, and the trend is giving rise to a vicious
cycle. Short of members, golf clubs are unable to cut
prices to a level that is affordable for the majority of
the public.
Members only? At the
moment, most golf clubs run on a membership system.
Annual membership fees cost up to 300,000 yuan, five to
six times greater than a white-collar worker's annual
income. When compared to the annual salaries of the
people in rural areas, which is only about 2,000 yuan,
or the annual income of resident in Beijing, about
14,000 yuan, membership fees ranging from tens of
thousands of yuan to hundreds of thousands of yuan
impose an enormously high threshold for membership,
thwarting the development of the courses and restricting
the golfing patrons.
If the threshold could be
lowered, however, golf courses might prove an economic
asset.
In Southeast Asia, where golf is priced
moderately, the sport has become an ideal form of
recreation. As a result, it has successfully become both
a game and a means of doing business among corporate
executives.
In countries such as Malaysia and
Thailand, golf courses have become a prime arena for
business circles to conduct public relations, and many
multinational offices organize regular golf outings to
strengthen ties with their clients. Some companies in
Taiwan, South Korea and Japan even arrange business
tournaments at golf resorts for their clients and
employees. Generally, it costs between 65,384 yuan and
108,974 yuan to sponsor a commercial match, with all
expenditures included.
China's booming tourism
industry also could benefit from golf's rising
popularity, provided that owners and developers work
toward creating a healthy environment for the market
with a focus on services.
Critics, however, have
denounced golf as a reckless venture, holding that
China's economy is still not comparable to that of
developed countries, where the objective of a golf club
is to popularize the game, while the promotion of
membership crowns it with an aristocratic halo. In
China, critics argue, the number of people who can
afford to play golf regularly are an extreme minority,
making this objective moot. And since 50 percent of the
country's golf clubs are experiencing losses, what's the
point of building new ones?
A mad rush for
land "Actually, golf links are not what
developers want; the land is," an industry figure said.
"With ample land, they [developers] can build villas and
develop realty in that name."
The latter in
particular holds the biggest attraction to investors,
who pump large amounts of investment into villas and
golf clubs, establishing a new trend among property
developers. Increasingly, golf courses in China boast
unnecessary villas or high-class flats covering areas
around 50,000 square kilometers. Housing developments
centered around these courses also are popping up.
In general, real estate surrounding a golf
course is priced much higher than elsewhere, and most
course developers by-produce villas, hoping the two will
complement each other: while the former boosts sales of
the latter, the latter returns huge costs for the
former. At least, that's the theory.
According
to Spencer Robinson, publisher of Singapore-based Asian
Golf Monthly, which has a large circulation throughout
Asia, "[Chinese] developers thought that building golf
courses was a license to print money; they have been
very badly burned."
Still, two decades after the
birth of the country's first golf course in 1984, China
now ranks fifth in the world and second in Asia in terms
of the number of golf courses. In addition to the
country's more than 200 operational golf links, 500 to
1,000 more already are under construction, Fan Bin, vice
chairman of the Beijing Golf Association said during an
interview with the International Herald Leader last
December.
Apart from profit-seeking investors,
governments also have an inescapable responsibility for
the nationwide golf fever. When it comes to project
authorizations, golf course construction easily gets the
green light. In city planning, it takes top priority,
too.
The official Xinhua news agency recently
reported that a 142 kilometer stretch of highway was
flanked with at least four golf courses, estimated to
occupy at least 83.33 acres - an obvious sign that
course-building mania is raging outside China's cities
as well. Golf courses can now be found in many small
cities in Yunnan, Hebei, Hunan, Shandong and other
provinces.
Golf links: another step on the
political ladder Some authorities at the local
level believe that large-scale golf courses of good
quality elevate a city's image, create a friendly
atmosphere for businesses, and most important, help
local politicians climb up the political ladder.
This worries the public, many of whom say the
mania might further stimulate golf-related corruption
among communist party officers. Over the past few years,
news has emerged that venal officials have wallowed in
golf with public funds despite moves by former premier
Zhu Rongji, who once sent out a specific order banning
such fairway misconduct.
Li Zheng, secretary of
a communist party county committee in Hunan province,
died on a golf course last November while, according to
the authorities, he was engaged in an investment
negotiation with some potential investors.
Because it was a Saturday, a supposed public
holiday for Chinese civil servants, the explanation left
the public wondering why Li would have held a business
negotiation at a golf club. Was he on public duty, many
wondered, or just enjoying his vacation with taxpayers'
money? The answer, it seems, points to another instance
of golf-related misconduct among China's civil servants.
Moreover, many critics have denounced the fever
behind China's rampant golf course development as "green
opium", luring bureaucrats to ruin tillage and scarce
land that should be used for growing food.
Beijing, however, has been quick to respond.
When addressing a national meeting on agriculture and
food supply last October, Premier Wen Jiabao vowed to
implement a strict tillage protection system; one of his
measures was designated to protect cultivated land from
the invasion of golf.
Then, on November 16, the
Ministry of Land and Resources announced that five
high-profile cases of illegal land requisition were
under investigation. One of them involves a 46.6-acre
tract of land that was illegally expropriated for golf
clubs and villas in Eastern China's Shandong Province.
The day after the cases were announced, the
ministry issued a circular outlining measures to
preserve farmland, which read: "Villas and golf course
projects that are against national guidelines and not in
accordance with the country's current situation shall be
denied land requisition."
Thus, it seems that
Beijing has had a taste of the possible catastrophic
outcome of the overheated and unregulated golfing craze
and has teed-off in the right direction, with the hope
of cooling the market, improving the environment and
restoring some rules to the game.
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2004 Asia Times Online Ltd. All rights reserved. Please
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