It’s been a short 60 years since the founding of modern China, and a substantially shorter timeframe for its winter sports evolution. Yes, winter sports, along with the rest of this enormous economy, is on the upslope. The growth in personal wealth, the country’s technological advancements and its progress toward becoming the world’s next superpower are fueling rapid change. As with many other aspects of China, it may not be a smooth ride. Even so, the China winter sports game has all of the ingredients to become the largest in the world.
Ski resorts and experiences vary greatly in China. In the not too distant future, foreign visitors might find themselves sitting next to celebrities and tycoons drinking French champagne and soaking in hot tubs after a great day on the perfectly groomed slopes of the Changbai Mountain Range. They might be equally surprised to find that uphill transportation in some areas in western China is still by horseback.
Given this extraordinary range in facilities, real data on the size and strength of the industry is hard to come by—as is often the case in China—but it is also changing daily.
It was just 50 years ago, in 1957, that the first-ever Chinese ski resort was opened in Yabuli, Heilongjiang Province. By 1980, there were only three such resorts, and an estimated 5,000 skier visits. Thirty years later there are a reported 215 resorts situated across this vast country, focused mainly in the Northeast region of the country between Beijing, North Korea and southeast Russia, with skier visits exceeding 5 million annually. In addition, about two million complete beginners come to the resorts every year, and about 20 percent stick with the sport. Figures for snowboarding are not available, but companies like Burton, Quiksilver, and DC sense a groundswell of epic proportions and are investing accordingly. Industry pundits and government authorities alike suggest that skier visits will hit 20 million by 2014.
THE CHINESE SKI INDUSTRY
Those looking in from the outside might believe that the China industry has faltered, or perhaps does not possess its much-hyped potential. This may be due to unrealistic expectations of explosive growth. China has the fastest growing ski market in the world, but the market’s step-by-step growth, in most places, has been slow or incomplete compared to the West. A very select few resorts and suppliers have been able to develop the right experience for the Chinese market.
Success, so far, has required adherence to a well researched and somewhat conservative business strategy. Most developers have been too aggressive in their plans and gotten ahead of the organic growth of the market. As in North America, many resort developers are pinning their development funding, success and their cash flows on the sale of recreational real estate. However, Chinese buyers are still far behind in this trend. Not surprisingly, attempts to develop full-blown resorts in remote locations have often failed.
As is true in most ski markets around the world, successful projects align the physical environment, market demand and economics to guide the plan. For example, the urban resorts around Beijing rely on mountain operations for revenues and are, to all appearances, thriving. Destination resorts, such as Yabuli, require substantial investment in the bed base, and require additional sources of revenues. So far, real estate sales has been unable to foot the bill. But summer operations and golf are possibilities here.
Critics of the Chinese industry have suggested that the Chinese are not looking for foreign involvement or product, but simply want to borrow the ideas and fabricate their own versions. Five years ago, this was true in many areas of business, not just the ski industry. And in the ski industry as in other businesses, the Chinese have been successful imitators. To their credit, they have ably designed inexpensive yet reliable chairlifts.
But there are still many aspects of the business that the Chinese have not yet mastered, and for which they are actively importing skills and products from established markets. Leitner-Poma and Doppelmayr CTEC may not compete in the Chinese fixed-grip lift market, but both have established full-blown offices in China to capture the detachable chair and gondola market. Many Chinese have experienced overseas resorts, and are now demanding these types of lifts. They are asking for not only the best and the fastest—but also the safest. Perceived safety is a key factor in determining where the Chinese choose to ski.
Chinese consumers still make up a very small percentage of the multi billion-dollar worldwide ski equipment market.
Only ten percent of downhillers own their own gear and clothing. Many resorts are still renting equipment that you might only have seen in a ski museum. But this pie is starting to grow, too. Consumer demand, especially at the more established resorts, is resulting in the upgrade of fleets across the country. Again, while sales are low by U.S. standards, the growth potential of the China market has the attention of key manufacturers such as Atomic, Rossignol, Elan, Head, Völkl, and Burton. All have offices in China. With the potential for millions of new customers, this is a massive market for hard and soft goods manufacturers when the switch is hit!
But this opportunity also illuminates the difficulties of marketing in China. Chinese production of international hard goods brands (K2 and Volkl make most of their skis here, and other companies are shifting production to China as well) is great for consumers abroad, as they can buy high quality gear at affordable prices. But ironically, to date domestic Chinese have to pay a 30 to 40 percent premium, as they incur export and import taxes to buy both hard and soft goods that are produced in China—these goods must be exported and then imported. Domestic manufacturers will continue to knock off international equipment designs and sell them for much less. But the Chinese are becoming increasingly image-conscious and want to be associated with international brands, so many are willing to pay a premium for them. Growth in the clothing and equipment markets is bound to multiply rapidly.
The key to growth in China is the rock-solid belief that the Chinese will no longer settle for second best. They will demand the best in value, the best in experience, the best in safety. This has already begun in full force. The operators, industry experts, suppliers, consumers and government all believe that the sport will not really start to blossom until the facilities and service improve. It is with this knowledge that the international market should remain engaged with China, although patiently.
Chinese operators are tackling the year-round aspects of resort operations at the same pace as winter operations and are morphing into four-season destinations. With good reason: The Chinese are now experiencing greater work-hour flexibility and higher disposable incomes. That, coupled with the ever-increasing urban density and the desire for families to jump in the family car and escape to the cleaner, cooler mountain air, is the engine driving summer operations.
Equally important is the Chinese preference for “soft adventure.” They are warming up to cross-country biking; many of the world’s largest bike manufacturers are now represented in China. Ziplining and Alpine sliding are becoming mainstays of the four-season lineup, as are more passive activities such as hiking, fishing and other lake-based sports. Action sport markets are evolving, but the Chinese have not yet embraced full-contact sports such as downhill mountain biking.
THE WESTERN INFLUENCE
Foreign operators have already emerged in China. Melco China Resorts (formerly Intrawest China), Dolomiti (funded by Italy’s Leitner Group) and Pingtian (whose consultants include former Vail Corp execs) are three such examples. Many of the larger local resorts and potential destination properties are undergoing extensive master planning by the likes of Whistler’s Ecosign. There are currently three megaresorts (30,000-plus bed units) being planned.
But actual development has taken place a lot more slowly than Westerners are used to. Some of those that have tested the waters in China, including some of those listed above, may feel burned or misled by the hyped-up GDP numbers, economic bullishness and prospects of triple-digit growth. While growth will come, the Chinese ski industry will not be transformed and developed overnight. China’s large and growing economy still lags the West in some key aspects. Those entering the market in any capacity must be patient—mentally and financially.
To be successful, foreigners in China must be able to teach and listen equally well. Foreign organizations that are helping to transform the industry, whether they are planners, architects, equipment suppliers, teachers or consultants, have taken the time to really understand the country, the people, the economy and the very sensitive way of conducting business in China.
THE WAY FORWARD
To lead the charge in developing a respected industry and growing market, the Chinese Ski Association (CSA) has been working toward the implementation of a range of new regulations with a focus on the safety of skiers. As was also true in the early years of the ski industry in the U.S., this includes the development of a certification program for training ski instructors, and publishing a complete instruction manual for skiers. The association has begun on-the-job training for instructors and deploying professional coaches to ensure the safety of beginners.
The CSA also intends to develop a resort accreditation program (think of this as an AAA hotel-style rating system) that measures quality in safety, education and value. This system, once implemented, is bound to boost skier visit numbers to great heights (and improve the beginner conversion rate). This rating system will extend from medical personnel, equipment maintenance and ski instruction to guest services, value for money and even how much snow must be laid down before a property can open. All of these regulations will ultimately pave the way for the cultural revolution of skiing in China!
And that cultural revolution is essential. Culture is something that China is rich in—but understandably, not in ski culture. Chinese resorts are remote and frontline resort staff are, for the most part, peasant children who have been sent by their parents to make some cash while the fields are frozen over. The last thing that crosses their minds is to hit the mountain on a powder day. For skiing and riding to grow and gain a foothold, the staff will need to feel a passion for the sport and the environment. A cultural shift must take place.
This is where foreigners have much to teach. The main resort operators, and even the CSA, are turning to international staff, suppliers and organizations to get involved. The exploration of events and organizations—such the X-Games, NST Tour, Burton Global Open, and the FIS, to name but a few—are indicative of the desire to ramp up the image of winter activities in China, and of the opportunities global event organizers see.
China is already holding up its athletes as heroes and its athletes already feature prominently on the podium in many freestyle disciplines. Don’t be surprised to hear the “March of the Volunteers” (the Chinese national anthem) more than a few times this February in Vancouver, and be even less surprised when China features on the ballot of the 2022 Winter Games. China is not shy about dreaming big. And when China dreams big, it delivers big.