In Japan, during the heady bubble economy of the 1980s, investors speculated on golf club memberships, whose prices skyrocketed to millions of yen until the bubble burst. A similar golf fever infected Ireland when its economy was heating up in the 1990s: Golf fees at clubs quadrupled and banks financed memberships that spiraled to unheard of heights.

Today, golf watchers wonder whether China will be the next country to tee off with its own boom and bust. With the economy growing rapidly and incomes rising, interest in the sport is increasing. About 250 courses are under construction in China, and about 600 more are on the drawing board, according to Dan Washburn, a Shanghai-based American sports writer, who has covered China’s golf industry since 2002. “China — where golf was banned until 1984 — is propping up the entire golf course industry,” Washburn wrote in an article published in September in Golf World magazine. “This may be the only country in the midst of a golf boom.”

But will China’s golf boom hit a hole in one, or land in a bunker? Ye “Tiger” Bi, the founder and CEO of China Golf Group, a Shanghai-based golf course developer, clearly expects the former. During a keynote speech at a recent annual Wharton Asia Business Forum in Philadelphia — titled, "Global Asia, Global Opportunities: Capitalizing on the Growth in the East" — Bi noted that demand for golf courses in China currently exceeds supply, leaving the industry a long way to go before it reaches saturation. “We see a very exciting and promising future in China's golf business over the next decade," he said. One reason for this optimism: Increasing disposable income in China "has created huge growth opportunities” for numerous sports and leisure sectors, including golf.

Luxury Leisure

As Bi — a serial entrepreneur who set up his golf company in 2006 — noted at the Wharton event, China’s economy has grown at a rate of more than 8% annually over the past 20 years, creating an appetite for luxury lifestyles and leisure activities among the country’s new wealthy. “It is widely believed that now is China’s time for golf, because the economy and increasing consumer demand is strong enough to support the industry,” Bi said. Citing a study jointly conducted by MasterCard International and the Institute of China National Conditions Research, he noted that people in China “tend to start playing golf once their annual income [rises to] over US$20,000.”

Many Chinese are earning far more than that.Beijing-based Hurun Research Institute notes that there are now 875,000 individuals in China with personal wealth of more than RMB 10 million (US$1.5 million), and 55,000 individuals with RMB 100 million.

Golf was introduced to modern China in the 1980s, with the first golf course built in 1984 in Guangdong province. Development was slow at first. Before 1990, there were only 10 golf courses in the entire country, Bi recalled. Today, China has at least 500 golf courses and some 800,000 golfers, according to Bi's estimates; by 2020, the China Gulf Association predicts that the number of courses in the country will increase to 2,700 catering to 20 million players. As in other countries, Bi said, golf clubs in China are increasingly not just used as a place to play golf, but also to network, socialize and cut business deals.

Worldwide, there are more than 30,000 golf courses, with 59% in the U.S., 19% in Europe, 12% in Asia and the rest scattered throughout other parts of the world, Bi said. In China, golf resorts are primarily in the highly developed regions along the east coast, such as the Pearl River Delta, Beijing, Shanghai, Shandong and Fujian.

Since 2004, the government has put moratorium on golf course development due to concerns that developers were illegally building their resorts on farmland. Reports say developers have been able to secure permission from local governments despite the ban, or sidestep the rules, by calling a golf course a park or an open space. Many have also combined their golf ventures with luxury property development to take advantage of the country's real estate boom.

Securing enough land for development is arguably one of the biggest challenges companies face. Developers lease land from the Chinese government, usually as part of an agreement that villagers affected by new construction projects receive some sort of compensation – which, according to some reports, doesn't always happen.There have been other skirmishes involving developers and local governments, which provide a hint of how ropey the industry can be. In an article published in March on, Washburn reported about one case of the government plowing up an alleged illegal golf course in Zhejiang province, about 140 miles southwest of Shanghai, in a showdown involving locals, government bureaucrats and the real estate development firm behind the project.

Yet, at the same time as these wrangles, China has become home to the world’s largest golf facility, according to Guinness World Records: The Mission Hills Golf Club, which opened in 1994 north of Hong Kong in Shenzhen and has since expanded into a complex of 12 18-hole courses. A sister project with up to 22 courses is under construction on Hainan Island in the south of the country as part of a government plan to develop a tourism hub there.

Perhaps to make up for the time lost during golf's slow development in its early years in China, speed now seems to be of the essence for developers like one behind the Mission Hills Golf Club. "It took us 10 years to develop the world's largest golf club. It took us a year and a half to re-develop this entire Hainan project," Ken Chu, vice chairman of Hong Kong-based Mission Hills Group, told The Wall Street Journal in an interview in June last year, adding that the new club is "far more expensive" than its Shenzhen venture, which cost US$1.5 billion.

Tees and Fees

With supply still falling short in a country whose average per capita annual income is said to be less than US$6,000, golf remains an elite sport in China, and the exorbitant fees promise to keep it that way for a while. According to Bi, while annual golf club dues in China are relatively low — averaging US$700 a year compared with between US$15,000 and US$25,000 in the U.S. — green fees can run as high as US$120 per day and initiation fees for an individual membership to an 18-hole golf course range from US$15,000 to US$300,000.

A 2008 survey by consultancy KPMG found the average price for a golf membership in China was US$53,000. “This is far higher than in any of our surveyed countries in Europe, the Middle East and Africa, and is four to five times higher than the initiation fee in the most expensive European golf market,” the report said.

More than 90% of golf courses in China today follow the membership model, Bi said, and most sell about 1,000 memberships per course. Not every golf club member in China is getting out on the green, however. In fact, Bi said, “about 40% of memberships" are sold to people who do not intend to play, either because they like the social status of membership and use it for gifts or favors or are investors. “Golf membership prices are going up every year,” Bi said. “It’s better than the stock market.”

This is a good thing for club developers, who sell memberships before the course is completed. “As soon as you start construction, you can sell your memberships,” he said.

On Par

Bi said his company wants to do its part to make golf more popular in China. The company's mission, according to it web site, is to become the first chain of golf resorts in China offering end-to-end golf course development and management services. Up until now, that has entailed being an independent contractor for various parts of golf projects. But in January, the company unveiled plans for a sports and resort center in Dingan County in Hainan province. Occupying 445.36 hectares of land, an international standard 36-hole golf course and other sports and leisure facilities, the resort will take three years to complete, according to a company press release. Part of the land can be further developed into residential and commercial property, it added.

Bi doesn’t think China is experiencing a speculative bubble of golf club memberships like Japan did in the 1980s. He noted that Japan, a country with a population of about 128 million people, has some 2,500 golf courses, while China, with a population of 1.3 billion, has only 500. “We are in the up trend, not the down trend,” he said.