Presentation to the Darley Flying Start Conference at Keadeen Hotel, Newbridge, Ireland
October 25th 2006
Junling Sun
The Future for Horseracing and Breeding in China
Ladies and Gentlemen; good afternoon. The Chinese economy growth has been experienced across all sectors, and naturally there is significant potential for development of China’s Thoroughbred Industry. Today, I will analyse the future for horse racing and breeding in China.
Firstly, I introduce the Background of China’s Horse Racing and Breeding
Since 1,066 B.C. there has been a special government department to manage horses in China.
There is a strong horse culture
The horse is revered as a symbol of bravery, cleverness, luck, and fighting one’s way in Chinese culture, often an outstanding horse is referred to as a ‘Dragon’.
Long history of horse racing and gambling
Horse racing has been a traditional sport in China for thousands of years. Modern horse racing in China began in 1850, with 30 racecourses in operation. During this time, there was a Mathew Effect (rich get richer, poor get poorer), because more poor people wanted to get big money through betting (Psychological Anti-Mathew Effect). This is what Chinese Government worries about. However, the Second World War saw racing and gambling cease. Since 1982, Horse Racing has been a part of the National Games in China. In 1993, the Chinese government legalized gambling on horse racing in Guangzhou. It developed rapidly. However, because of poor management and corruption, the State Council closed it in 1999.
Secondly, we look at the gambling market in China
Some people think there is no gambling in China; they are wrong. Since 1984, public lotteries were legalized. The gambling turnover has increased rapidly each year. In 2005, the total turnover on gambling reached ¥ 71.7 billion (€1=¥10). It was only 0.39% of GDP which was lower than other betting nations. On the other hand, there is an estimated ¥600 billion (€60 billion) lost in illegal offshore gambling each year and officials are working to rectify the problem.
The China Centre for Lottery Studies (CCLS), established through Peking University in 2002, researches into the development of gambling models and management (including horse racing betting), and undertakes to educate people through MPA (Master of Public Administration). It gives inkling that gambling on horse racing is likely to begin shortly.
Then we analyse on betting consumers & horse racing gambling in China
According to the UN Food and Agriculture Organization (FAO), Engle Consumption Coefficients in China were 36.7 in cities (rich) and 45.5 in the county (well-off). There is substantial much room for further increase in the amount gambled in China based on the Gambling Department of China study, especially considering the economic, incomes and consumption enduring growth. Government Officials have been considering increasing the types of gambling. Already we have witnessed the legalization of Soccer gambling in 2001, Basketball gambling in 2004 and the introduction of slot machines in 2006. So, what does this mean for the introduction of wagering on horse racing?
What is about horse owner consumer market in China?
There are 320,000 people whose incomes surpass US$5 million. In addition, there are 40 million people whose incomes surpass US$37,000 per year in China Mainland, the majority of which live in Eastern China. Furthermore, 340,000 non-Chinese citizens moved into China to work in 2005, many of whom earn healthy annual wages. These sectors of the community are potential horse owners.
Now we look at the Racecourses
China has about ten well established racecourses, including those situated in Beijing, Shanghai, Wuhan and Guangzhou. In addition a state of the art all weather track is currently nearing completion in Nanjing, with a budget of €150 million for the new development. This will be followed by a €200 million racecourse development in Suzhou (nearby Shanghai) which gets underway in 2006. Plans for the construction of further world class racecourses are already in place.
International Circumstances is benefit to China’s thoroughbred industry
China has become a more internationally friendly business oriented nation. As such, this should have a knock-on effect for the development of horse racing and breeding in China, with input and skills gathered from the world. I would like to thank Darley Flying Start for selecting a Chinese guy and giving a hand to China’s thoroughbred industry.
What is the future for Horse Breeding in China?
How many horses will China require, once gambling on thoroughbreds is legalized? The majority of the 7.9 million horse population currently in China is non-thoroughbreds. 2.7 million square kilometers of pasture suitable for rearing and grazing will make China to become a self supplying breeding and exporting nation. There are already several thoroughbred stud farms in operation in China, as a result of investment from Hong Kong, Australia and Japan. The largest stud in operation is Beijing Huajun Stud, with 2000 thoroughbreds on the property. The operation has sourced approximately 600 broodmares, stallions and racehorses from Australia, New Zealand and Europe since 1999. Thoroughbred production costs in China are low and it is possible China could be considered a thoroughbred exporting nation in the future; such is the potential for breeding in China.
The problems of Chinese horse racing and breeding development
The hurdles facing racing in China have been highlighted by two case studies – the failure of Guangzhou Jockey Club and Tongshun Jockey Club. The Guangzhou Jockey Club was forced to close in 1999, as a result of mismanagement and corruption. Similarly, the Tongshun Jockey Club was operated by management unfamiliar with Chinese culture. The Tongshun Jockey Club was found to be conducting gambling on racing, outside of the legislation and government control. This eventually led to the closure of the Tongshun Jockey Club. This highlights that lack of suitable management is one of the major obstacles for racing and racing betting in China.
At this point in time, there are no effective media streams to promote the social elements of racing. The owner market is very difficult to do. Other challenges facing Chinese Racing include finding and educating suitably skilled staff for positions across a broad spectrum of roles within the racing and breeding industry. In addition, for China to ever achieve world recognition as a thoroughbred racing and breeding market, veterinary practices and quarantine protocols will have to come in line with global standards. China is still considered as an equine veterinary isolation country. I think it is a prejudice. Why, when there is no Equine Influenza, Equine Viral Arteritis, African Horse Sickness and Equine Infectious Anaemia is nearly eradicated.
That’s all, thank you for your attention during the Darley Flying Start presentations. Any questions are welcome.
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