China: A Golf Giant in Waiting
Golf in China is exploding. That was the word at the recently concluded PGA Merchandise Show in Orlando.
But who stands to benefit could be the 64 dollar question.
Zhang Xiaoning, who is the vice-chairman of the China Golf Association, told a Golf in China forum at the trade show that since 1984, 350 courses have been constructed and that a further 150 will be finished in the next three years.
But the real punch comes in the sheer numbers – always the story in any discussion about China as an economic force.
Attendees to the Forum heard that golf in China is worth 7 billion dollars a year and that by 2020 roughly 700 million Chinese will enter what they refer to as the "consumer class".
Zhang also told the audience that China would love to tap into American expertise.
Frankly, much of the equipment we buy today already comes from the Far East, if not China itself; labor costs are so low that it makes no economic sense to have clubs made in the United States or any other industrialized country for that matter.
Other than Nickent, there isn't a single club manufacturer of size that has its own foundry to make club heads; before Nickent was Nickent, it was a club head foundry. Nearly all club head production is done in the Far East, usually Taiwan. But for how long?
China's economists, the best and brightest of whom work for the government, know that an economy thrives on two elements: domestic consumption of economic output and exports.
Domestically, China is set so long as those projections of an enormous consumer class are realized. There is plenty of growth for golf within the country's borders. And that is going to push Chinese foundries to go after club head business.
They will use pricing as their lever.
American manufacturers with global reputations like Nike, Callaway, Titleist and others may start shifting production away from Taiwan to China to realize greater profit margins. They will also be right in the living rooms of that massive consumer class.
Who cares if recreational golf levels off or even begins to decline in North America? China more than makes up for any slack.
Who else can benefit from the emergence of such a powerful money-making machine? You may think of the golf aftermarket.
Imagine the sales of swing instruction DVDs and all those swing aids advertised in lengthy infomercials on The Golf Channel.
Many of the swing aids are already being made in China.
And let me add a note of warning here. China is a pirate's paradise. It is the world's center of DVD piracy (as Hollywood knows only too well), pharmaceutical piracy (bought any phony Viagra lately?) and even manufacturing piracy. Both BMW and Mercedes recently launched separate lawsuits against the same Chinese car maker for copying designs of the Smart FourTwo and the BMW X5.
Despite the central government's promises of crackdowns on piracy, the practice remains rampant.
So, while the numbers are staggering and the market is potentially massive, there are many, many minefields that foreign companies must tip-toe through.
But there are some who are making money right now. The golf course architects. Intellectual property of that type is hard to steal and copy.
Wow. Red square. I was there in 1985! Golf in china would be interesting.
You’re right, Tony! A round or two in China would be very interesting. And I’ll play my rounds at Mission Hills!!