Golf in China: To putt or not to putt

Things may not be so rosy for course developers

The latest destination for world golf seems to be China. Over the last few weeks, so much has happened that soon we will see a spate of events in the world's most populated country where golf was introduced only about 20 years ago. New courses, and invitation to the prestigious Masters for China's top golfer, a plethora of new events.

Yet, ironically, while the world is queuing up to go to China, things are not so rosy for golf course developers and real estate managers in China. Last week, the construction of golf courses on farmland across China was stopped following a government crackdown on land abuse which has also led to the arrest of some officials who were in collusion with golf course developers in eastern Shandong province.

On the positive side, a few weeks ago, the European PGA Tour announced its intention of having another co-sanctioned event in China with the announcement of the million-dollar BMW Asian Open. That apart, there will be the million-dollar Volvo China Open tournament later in the year.

Last week, amidst much controversy, officials of the US Masters announced that they have decided to invite Chinese player Zhang Lian-wei for the event. That caused a lot of heart-burn for other Asian stars. Clearly inviting Zhang was a move to open doors to the Chinese market.

Now the latest is that China will also be hosting yet another event, the inaugural Volkswagen Masters in Beijing from April 28 to May 2. It will be a $300,000-Asian Tour event, which will see Swede Fredrik Jacobson and Scotland's Colin Montgomerie among others. All this points to how the sport is growing vis-a-vis China.

Considering golf is hugely popular in Taiwan, it is possible that the Chinese government, too, at some point looked at snatching away some of that tourist market as also top-end business with regards to golf equipment manufacturing "" since labour is cheap in China "" and of course real estate investments from outside. It is said that soon a thousand golf courses will dot China. Golfing industry might rub its hands in glee as designers, equipment makers and players all get ready to board the flight to Beijing.

But inside China, there is a lot of trouble brewing with regards to the number of golf courses coming up so rapidly. Chinese media, of late, has been focusing on the problems created by new courses. Most of these golf courses are not approved by the state. And the land being used for it is farmland, which is bought secretly and through wrong methods.

China is said to have just under 200 golf clubs currently, but another 900 are being built or will open soon. In fact that number, too, is unofficial, for scholars estimate that the figure might be off by as much 20 to 30 per cent. A golf course covers an area of at least 1,200 hectares, so a 1,000 courses means at least 1,20,000 ha of land. The Beijing Golf Association thinks the figure is more likely to be 1,80,000ha, which roughly means the same as about 26 Singapore islands.

The Chinese government is now aware of the problem since golf courses sit on fertile land collectively owned by farmers which has been taken away, without adequate compensation, by local governments and developers, who are in league with them.

Chinese and Singaporean media have reported that the Ministry of Land Resources discovered in a study that the local authorities often sold off the land at below market rates to developers. In some cases, local government even gave developers subsidies to take the land, believing that golf courses might lure big spenders and foster tourism and then bring in high-end businesses and investments.

But in the past few years, many golf clubs have lost money and recovered none of their initial investments. Investment in a golf course in China is around $40 million and about $4 million is needed for annual upkeep.

More than the investment losses, the biggest worry is the threat to food requirements. Recent studies show that China's arable land can produce about 400 million tonnes of grain, which is 640 million tonnes less than what will be needed by 2030 to feed an estimated 1.6 billion people.

With such a huge furore against rapid emergence of so many golf courses, construction of golf courses on farmland across China was halted earlier this month. Corruption scandals have come to the fore and there have been lots of arrests.

According to Chinese officials, quoted in the newspapers, the ministry says there are 176 golf courses, but only 10 are endorsed as fit for business. Unofficially, experts put the total number of golf courses, including those under construction or soon to be built between 900 and 1,000.

Over the past year, angry farmers have filed more than 4,000 complaints and petitions to the land ministry, which is more than a 50-per cent increase as compared to 2002.

Beijing has now decided that golf courses currently under construction but lacking authorisation will be banned and those already approved officially will be closely supervised in terms of land occupation, water consumption and environmental protection.

Local media has reported that Beijing alone has 19 golf courses, with an additional 10 under construction, but eight of them do not have government approval. The 29 courses between them are said to occupy 3,708 hectares of land and possess 540 holes.

Many of the local governments have flouted the procedure before granting permission for new golf projects. They have designated golf courses as "image projects" saying they are necessary for a good investment environment to attract foreign investors. But if things continue like this, the grass-root level Chinese may not have enough to eat, but will have a lot of golf courses to play on.