emerging markets Archives • GolfStinks

You may have read about this a few weeks ago but if not, here’s a quick recap: Basically, the Chinese government has begun destroying new golf courses (some so new they haven’t even opened yet) to enforce a ban put in place to preserve water, land and curb pollution in the country. You can read the original Reuters story here.

While the particulars of this story are all very interesting, what the Reuters piece doesn’t mention is the overall impact this will have on the golf industry in general. Golf is in its infancy in China, but its growth had looked extremely promising. The country has just 639 courses (compared to more than 17,000 in the U.S.), but nearly 50% of them have been built in the last five years.

Now consider that this growth happened all while the country is under the aforementioned ban on building new courses (which dates back to 2004). Why would developers risk fines and other penalties to build golf courses under the guise of “Sports Training Centers” and “Tourist Resorts”? Because there is money to be made – lots of money.

Golf is beginning to catch-on with the more wealthy Chinese and they are willing to pay for it – from expensive memberships to high-end golf course properties, golf is a chance to affirm their status in the community – just like it was in the U.S. years ago before the middle-class also began playing. As courses spring up in new areas, it stands to reason new golfers would also be born. The game would grow exponentially and with it, the industry as a whole – equipment, apparel, etc. – an entire golf lifestyle niche would be carved-out in the country.

Think about what 10,000 golf courses in China would do to the industry as a whole. Heck, even 5,000 courses would be an unbelievable asset to the game. No one is denying that golf courses use water and take up space – but done properly (using effluent water and minimal chemicals), they not only benefit those that play but the communities they are built in as well.

But in China, it’s just not meant to be – at least for now anyway. Though developers had been flying under the radar for nearly a decade and building new courses anyway, it appears those days are over. The Chinese government publicly announced it had not only closed but destroyed five illegal golf courses in March as a warning to developers. With only a few hundred courses, golf in China is sure to remain a minor sport enjoyed by only a small percentage of wealthy.

It’s not lost on most economists that India is an emerging market. In fact, the second largest country (based on population) is undergoing an amazing transformation – many of its citizens are about to make the leap from lower class to middle class status:

“[The middle-class] is almost a third of India’s population today, up from 8% in 1980. Since reforms in 1991, India has become the world’s second-fastest-growing economy, and the middle class is expected to become 50% by 2022.” – The Wall Street Journal

Not to completely trivialize this historic Indian development, but I couldn’t help but wonder what that would mean for golf. After all, many parts of the country were, at one time, under British control. And out of this British control came, among other things: The East India Company; IPA (India Pale Ale); and, of course, Indian golf courses.

To that point, golf was actually being played in India long before it was being played in the United States – the first golf course outside of the British isles was…yep, you guessed it…in India (built in 1829 – which is prior to St. Andrews I might add). And since then, many more Indian courses have been developed.

But according to Sumit Rathor (who is the Client Services Director of Rathor Associates in Bangalore and also an avid golfer), many of these courses were historically private, “with limited memberships and a waiting list that sometimes [was] as long as 50 years.”

In an email response regarding the growth of golf in India, Mr. Rathor thinks the future looks bright:

“I’ve been playing golf for nearly thirty five years now – I started playing when I was five years old. And if I were to sum up the new horizon on golfing in India, its bright and futuristic. More people are taking to golf at a very young age, because today you have a very scientific approach to coaching. I am also happy to see more women golfers in the circuit, which is certainly an encouraging trend.”

And, new course construction is always a good sign to boot. According to Mr. Rathor:

“Another encouraging trend in India is the entry of private enterprise to invest in golf courses along the outskirts of major cities. Bangalore has three new courses coming up and many more happening on the drawing board. These new courses will offer open access to virtually anybody who wants to learn or play.”

One such course (Prestige GolfShire) can be seen in the photo above. If courses like Prestige keep popping up, it won’t be long before golf catches on in a big way with the general public. And that means growth in the entire golf industry – not just in India, but with retailers here in the States too. Today, there are roughly 30 million golfers in the U.S. (which is basically 10% of the total U.S. population). Should that same trend catch on in India, it would add approximately 120 million new golfers to the world – or 4 times what is in the U.S. now! I’m sure I don’t have to point out all the sales potential for U.S. companies (just food for thought for those who think we’re losing too many jobs to India).

And let’s not forget about golf tourism. Golfers seeking an exotic locale to tee-it-up will no doubt begin considering India. And India isn’t just a weekend trip – it’s a 10- to 14-day adventure of awesome culture, sites and food (imagine – chicken tikka masala in the snack shack at the turn)! Anyway, all this will boost travel sales both in India and here in the States (on that note, flights in my area to Bangalore start at $1,300…guess I better start saving my pennies).

So needless to say, I’m excited about the growth opportunity for golf in India. Not because American companies can take advantage of a new market, but because an entirely new group of people will be introduced to this great game. And when that happens, it bodes well for golf in general.

So Much For Growing Golf in China

Golf Comes to the Masses: India

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