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Golf's caretakers take root in China

By Yao Jing | China Daily | Updated: 2013-04-26 08:37

 Golf's caretakers take root in China

Kevin Holleran (right), president of E-Z-GO, says his company has about 40 percent of China's golf cart market. Yao Jing / China Daily

High demand for course transport, maintenance equipment a stroke of luck for foreign firms

Since 1994, 587 golf courses have been built in China. That's tens of thousands of hectares of land.

For companies such as The Toro Co, a United States provider of turf, landscape and construction equipment, that also means a lot of ground to cover and care for.

As courses continue to be built, golf course maintenance equipment makers, including mowers and golf carts, are seeing an upturn in business.

"We just started a joint venture at the end of last year. China is very important for us, to partner with a local company where we will look for manufacturing, capitalizing and future growth," says Kevin Holleran, president of E-Z-GO, a maker of golf carts, or cars as the company calls them.

E-Z-GO, which is based in Augusta, Georgia, also opened a manufacturing base in Wuxi, Zhejiang province, last year. In the 20 years before opening a factory, the company had been doing business in China primarily through distributors.

Holleran says the company's first Chinese customer was Mission Hills Shenzhen resort, which has a dozen 18-hole courses. Because of that deal to purchase its golf carts, the company is currently the market leader in the number of golf carts sold. Holleran would not release a recent revenue figure.

"I think there are 500 golf courses in China right now, and we are working with more of them than anyone else, and we are about 40 percent of the golf car market," he says.

China is among the company's top five markets for golf cart sales. The US is its biggest.

The company is also expecting greater sales with the number of golfers in China (there are currently about 1 million) increasing each year. Many Chinese golfers tend to use golf carts, a big difference from how golf is played in Europe, Holleran says.

"In Europe, the use of golf cars is still emerging because many of those cars are mainly used for caddies and players walk more. One course only need 10 to 12 golf cars," Holleran says.

But like many golfers in the US, nearly everyone in China uses a golf cart on the course. The average number of carts per course in China is around 60.

One of the major obstacles for golf cart makers is logistics. Manufacturing of carts in China for E-Z-GO has not begun yet and carts must be shipped from the US.

"We have to ask customers to wait for 60 days or 90 days as we build the products in the US. After the manufacture, we ship them over here and customers have to pay import duty," Holleran says.

The average price for E-Z-GO's golf carts is $7,000 (5,362 euros). Holleran says the long wait and the high taxes make it difficult for his Chinese customers.

"I think there is still room for us to serve the market better," he says.

E-Z-GO's sister company Jacobsen, which designs and manufactures turf-maintenance equipment and turf-care vehicles, says it also experiences logistical problems in China. Following in E-Z-GO's step, Jacobsen is planning a joint venture and a factory in China.

"At the moment, all the products are made in the UK or in the US. Moving machinery and shipping them from the US or UK is a long way and costs a lot," says Alan Prickett, managing director for Jacobesn's Asia-Pacific division.

Jacobsen began selling its products to China about 15 years ago, and about three years ago, the company began to focus more heavily on developing its market in China.

"We used to have only one employee based here, but now we have three. And we have also gone from one distributor covering the country to four today," Prickett says.

Sales from China account for more than 45 percent of total sales in the Asia-Pacific region.

"The increase is more obvious from 2011," says Prickett, who says the company's sales growth is growing by at least 10 percent every year.

"That is the main reason we set up a representative in January 2011 in China and in the future, we will invest more money in the market," he says.

The average price for a mower is $40,000 and the slowing US market accounts for 40 percent of the company's total turnover.

The Toro Co, established in 1914 and a provider of turf and landscape construction equipment, established a presence in China in 2001. Before that, the company had been cautiously dealing with Chinese golf courses through sales agents in Hong Kong.

"We became the agent of Toro since 2001. However, the business was almost stagnant from 2001 to 2005," says Deng Qun, general manager of Fat Dragon Horticulture Equipment (Shanghai) Co Ltd.

But in 2006, annual income for the agent doubled from the previous year.

"China had 50 new golf courses every year before 2006, but since then, the number has jumped to about 100. We are now increasing at the average of 15 percent in terms of sales volume year-on-year," Deng says.

Deng says they are providing products for 70 percent of golf courses in China, although the Chinese market only accounts for 2 percent of the company's total turnover.

"The base number of Chinese golf courses is very low although new ones are constantly being built. But in the US and Europe, old courses have to keep updating machines," he says.

yaojing@chinadaily.com.cn

 

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