• A nation takes to a new lifestyle

As China's nascent leisure industry begins to find its feet, Jenny Watson looks at where the opportunities lie in this sector.

Over the past decade, much has been done in China to develop a recreational sector in which tourism, entertainment, health care, sports and cultural events all feature.

With around 120 days of holidays every year, Chinese employees now have plenty of time off work in which to enjoy themselves. The 1990s saw a plethora of amusement parks, golf courses and retail venues being developed. But many failed to attract customers owing to poorly researched design and low-quality construction and marketing. In some cases the projects were not even completed, and the whole industry lost its momentum. Now, however, there are a wide variety of opportunities as the business of leisure takes off once again.

In the 10th five-year plan (covering 2001-2005) the Chinese government outlined a commitment to further broaden consumption. Development of the leisure industry is now seen as a means to improving the quality of life for all. According to the National Bureau of Statistics the value of leisure product sales, excluding clothes and books, in 2002 was Yn205bn (£16bn), representing 70 per cent growth from 1996 to 2002.

Several trends are becoming apparent. Because of the additional leisure time and greatly increased spending power that Chinese people now have, tourism has become popular and more people are choosing to travel in China and abroad during their holidays. More foreign investment has been attracted into the markets of leisure services. The reform of the healthcare system has given rise to individual health consciousness and increasing participation in physical activity. The influence of the West through television, film, magazines and the internet, is leading to demand for high-quality (and status) Western-branded products and services.

Youth goes clubbing
Whether it is in sport, music, or fashion, Chinese youth is widening lifestyle choices. Bars around China are working overtime to attract increasingly trend-conscious customers. Forget karaoke. Girls swirl in short skirts as spicy Latin rhythms pound a packed dance floor. The Havana Club in Beijing is one of a number offering new nightlife alternatives such as lively Latin cabaret. Beijingers, previously used to gathering at the Workers Stadium for ballroom dancing, now come for the cool new lifestyle promised by dance classes, new music and fashionable settings. This total style package is attracting affluent young party-goers in masses.

Almost completely agricultural a few years ago, the countryside around Beijing is now chock-a-block with recreational facilities. The city boasts nearly a dozen bungee-jumping sites just three years after the first one opened north of the city. The same is true throughout China's major cities - where an increasingly rich middle class is attaining the right mix of disposable income and free time to fuel an explosion in leisure activities.

Focus on holidays
China's tourism industry has flourished in recent years, with more than 870m domestic tourists in 2002 (11 per cent up from the previous year), according to the China National Tourism Association, and with income from domestic tourism reaching Yn385bn (£30bn). The introduction of three extended national holidays, the so-called 'golden weeks' has contributed. Chinese people enjoy their holidays and spend much more during Spring Festival than at any other time of year. Millions who lack the means to travel overseas will welcome forthcoming events such as the Beijing 2008 Olympics Games, the 2010 Shanghai Expo and the opening of Shanghai's Formula One circuit.

Theme parks
The development of theme parks has been a decade-long, roller-coaster ride, but now major multinationals are committed to entering the market. These investors have long looked to Asia as the key growth market in an otherwise mature business, and are particularly attracted to China's dense population, rapidly rising incomes and proven taste for public amusements.

Disney is already building the Hong Kong Disneyland fun park, which is slated to open in 2005 or 2006, and is also planning a project in Shanghai to be built by 2010. Meanwhile, Universal Studios, the theme park unit of Vivendi Universal, has unveiled plans for a US$870m park in Shanghai's Pudong district. Along with two firms owned by the Shanghai city government, Vivendi plans to build the international-standard park by 2006. There has been speculation that the company will build China's second Universal Studios park in Beijing before the 2008Olympics.

The troubles of the 1990s, when it was estimated that over 2,000 parks were launched, but that four in five of them lost money and were closed, led to scrutiny of the remaining success stories. Early hits such as Splendid China, the mainland's pioneering complex in Shenzhen, and the Song Dynasty Village in Hangzhou spawned many of the bad investments in imitations that were badly thought out, poorly equipped and similarly maintained. It is no surprise that both Disney and Vivendi will offer a mix of Hollywood and traditional Chinese themes, responding to consumer demand for good entertainment from high-status Western brands, with a distinctly Chinese flavour.

Sporting pleasure
Physical activity has traditionally been identified with work and health, and not as a pursuit for pleasure. But as growing numbers of city-dwellers seek to spend time enjoying the outdoors in their free time, so sport is developing as a leisure activity.

There are now over 100 sports clubs in Beijing, offering a range of activities including scuba diving, surfing, fishing, archery, cliff climbing, parachute diving, fencing, tennis, roller-skating, camping, tae kwon do, equestrianism, paragliding and many others. Mainlanders are discovering and embracing many of the pursuits that consumers in more advanced economies have loved for years.

Their desire for group participation has also increased the opportunities for sports entrepreneurs. Delegations to the UK this year from Guangzhou Sports Bureau and from Chongqing both encouraged British sports and leisure businesses to visit their areas, and showed particular interest in soccer and tennis coaching and exchanges.

In the mid-1990s, bowling boomed in big cities, and by 1997, China was the world's largest market for bowling equipment. The Beijing Bowling Association alone represents 60 members, with nearly 2,000 lanes.

Golf is another sporting craze that has longer-term potential due to a steady increase in popularity. This has been spurred on by the Tiger Woods Challenge Cup at the Mission Hills Golf Club in Shenzhen and the now well-established annual Shanghai Heineken Open. These high-profile events have led to demand for quality equipment and facility development on an unparalleled scale. The Mission Hills greens were designed by international professionals - including Nick Faldo, and the club offers courses by the US's David Leadbetter Golf Academy.

Closer to home is the the twinning of Carnousties Golf Course with Tiger Beach Golf Club in Yantai, instigated by Angus Council, which has been twinned with Yantai since 1999. Although 20 years ago this was a sport no-one in China knew how to play, investors have poured roughly US$500m to date into golf, and a selection of courses is on offer at all major cities. The emphasis now is very much upon quality rather than quantity. The Tianma golf club will soon open a country club, with bar and health club facilities that set it apart from most of Shanghai's other golf clubs, and another such club, Golds, is expected to open in Pudong soon.

The booming health and fitness business promises to be the next fad, tapping directly into the urban market by providing instantly accessible facilities. The Hong Kong-owned fitness chain Megafit, which opened its latest centre in Xi'an in June, is one of a fast-growing number of sports centres.

Meanwhile, major sports and cultural events lead the way in improving leisure facilities. Venues for the Beijing 2008 Olympic Games have been designed with continued use after the Games in mind. They include 32 new museums and the provision of public exercise facilities throughout the city. Qingdao, host of the Olympic sailing competitions, aims to become the hub of yachting sports and tourism business by attracting events such as the Volvo Ocean Race. The Shanghai 2004 Grand Prix, 2007 Special Olympics and 2010 International Expo will all bring similar developments to Shanghai.

Foreign management experts, facility developers and suppliers of equipment have provided advice and investment in many of the projects under development for these events. Arup is heavily involved in designing the National Stadium, whilst another CBBC member is putting its intelligent building expertise to use in bidding for the Beijing 2008 Olympic Village. In June a group of British businessmen met organisers of the Shanghai 2007 Special Olympics.

Alternatively...
Extreme sports are also growing in popularity, with young urban professionals participating in BMX racing, go-karting and sky-diving. The Beijing Youth Rock Climbing Group rents and sells equipment, provides training and organises mountain and ice-climbing expeditions, whilst one new craze in Chengdu is four-wheel drive safaris, which take tourists on bumpy rides into the wilderness. The Mountain Paragliding and Hot-air Balloon Show, which was staged in Xigaze, Tibet's second largest city on July 1, had paragliding and hot-air balloon lovers from around the nation.

The leisure industry, like China, is developing rapidly and clearly displays the vast potential often ascribed to the market as a whole. Growing demand for recreational entertainment combined with a lack of experience in the domestic leisure industry has created opportunities for international leisure entrepreneurs and suppliers and, it appears, will continue to do so.

For more information about leisure opportunities in China contact us on 020 7828 5176