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Friday, August 19, 2011

worth reading Going for the Gold

Sales of golf equipment in China reportedly hit $469 million last year, and the best-selling brands are familiar to anyone who's ever walked through a pro shop on this side of the Pacific.

Indeed, U.S. manufacturers of golf equipment have beaten a trail to the People's Republic, to stake their claims in a market that's said to be growing by 15 percent annually. China Daily calls it “the next gold rush,” and notes that the competition at the top is squeezing out any potential home-grown competitors.

In its story, the newspaper spelled out the dimensions of golf retailing in China. Here's an edited version of the account:

From the white ball to sportswear, from the putter to the tee driver, major golf equipment manufacturers are pouring into China, vying for a share of the lucrative market. . . .

At the moment, the Chinese golf equipment market is dominated by U.S. brands Callaway, Titleist, TaylorMade, and Nike as well as Japan's Mizuno and Honma. An average set of golf clubs costs about 15,000 yuan [$2,342].

The golf equipment market is subdivided further, with each brand having one or two competitive products. For example, Callaway's iron club and putt club are considered the best, Titleist's golf ball is ranked No. 1, and experts say TaylorMade makes the best wooden golf club.

Chinese golf players appear to prefer U.S. brands to those from Japan.

Wu Ming, director of Shanghai Jiaotong University's school of golf management, said the popularity of U.S. brands has a lot to do with their advertising as well as the popularity of the Professional Golf Association Tour among Chinese golfers.

“In order to copy their golf heroes, Chinese golfers use U.S. brands,” said Wu. . . .

[Liu Yongmao, the founder of China's largest golf retailer, 100 Golf] believes the reason the Chinese prefer U.S. brands has a lot to do with the successful golf culture in the U.S.: “Although this game originated in Scotland, the U.S. is the real golf Mecca. The U.S. tour is the most successful in the world, both in terms of attendance and economic returns. In addition, the U.S. has the world's best golf courses and top-ranking golfers.”

As a result, Japanese golf equipment brand Mizuno has found fierce competition in the China market over the past five years. Industrial analysts said the former second-best seller in China is now lagging behind its U.S. rivals and only ranked fourth or fifth among all golf equipment brands in the country.

As the first foreign golf brand in China, Mizuno has witnessed growing demand for better service among Chinese customers. As a result, the company decided to provide tailor-made clubs.

Callaway used to sell its products through distributors in China but started to open direct-sale stores in 2006, indicating the company's confidence in the Chinese market.

Liu believes all golf brands will enter China sooner or later. According to him, during the 2011 Orlando PGA Golf Show, one of the most important golf exhibitions, the first session's topic was how to do business in China's golf market.

Intense rivalry in the golf equipment market will lead to an industrial shake-up. It is growing harder for small brands to survive due to rising rental and surging labor costs, say observers. Net profit margin has narrowed to the lowest in history, to between 5 and 8 percent.

“It is possible [for Chinese golf brands to be successful], but very hard. It requires great capability, resolution, and long-term commitment,” said Liu. . . .

1 comment:

  1. "The very rich ... are different from you and me," wrote F. Scott Fitzgerald. And it's true..

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