Sport of kings a lure for nouveau riche(2)

Louise Kemble, chief executive of the Thoroughbred Breeders' Association, says it is important for China to develop infrastructure to care for and train thoroughbreds before beginning to import them in large scale.

This would include veterinary support, nutritional expertise and horse training, and British expertise in all these fields can be employed to help China, Kemble says.

"The thoroughbred is a Ferrari compared with a Mini that's just a pony. We can offer education and support to make sure the facilities are correct."

Jimmy George, director of marketing at Tattersalls, the British bloodstock auctioneers, says that after talking to potential Chinese customers, the level of interest in buying horses is growing.

Tattersalls first came into contact with customers from the Chinese mainland a few years ago, although Hong Kong is already a developed market for the company, George says.

Tattersalls wants to expand into the Chinese market because it has always been an international business, he says, and he believes once thoroughbred racing becomes established there, the market will produce many business opportunities.

George says he has visited Beijing, Shanghai, Wuhan, Chengdu and Tianjin to speak to prospective customers, some of whom are high net worth individuals and farm owners.

At the moment, pending finalization of the export protocol, many of Tattersalls' Chinese customers buy horses to keep overseas and race in international competitions.

The British Horse Society has also been helping China standardize riding qualifications and sharing its expertise in giving lessons.

Jo Winfield, the head of education and training at the British Horse Society, says it has been working with Hong Kong riding schools for many years but this year the Beijing riding school Equuleus International Riding Club has become BHS's first approved school on the Chinese mainland.

Winfield and her team are helping Equuleus design a curriculum and run the courses.

The courses are still entry level but she says she expects more advanced courses will eventually be available in China.

Many international equine industry programs, such as those by Darley, a thoroughbred horse racing operation controlled by Sheikh Mohammed bin Rashid Al Maktoum, ruler of Dubai, now welcome Chinese students.

In 2012, Darley opened the Dubai International Thoroughbred Internships program, which teaches students about thoroughbred racing and breeding, and the aim is to recruit graduates from China's top universities.

"As the Chinese thoroughbred industry is at an early stage of development, we have decided to support China by helping their people develop the skills needed to form a foundation for the future of the industry," says James Hall, director of Darley China.

"We hope the interns will become ambassadors for the Chinese thoroughbred industry," Hall says, adding that by next June more than 60 Chinese students will have graduated from the program.

Apart from the most obvious opportunities like horse exports and training support, many other players in the British equine industry are seeking opportunities in China, including riding gear, supply equipment, and equestrian facility construction, Williams says.

She initially started to look into the Chinese market in 2010 by visiting a weeklong equestrian festival in Chengdu.

In 2012 she took a delegation of British companies to the China Horse Fair in Beijing to promote their products. The delegation attracted great interest and Williams has been organizing the trip every year since then.

The delegation consists of companies involved in various aspects of the equine industry, including riding equipment, horse supplements, saddles and infrastructure such as riding surfaces.

Last year the delegation also hosted a reception at Johnny Walker House, an ultra-luxury boutique in Beijing, in cooperation with the Beijing Equestrian Association. It also organized a day visit to some of the riding establishments in Beijing to gain a better understanding of the Chinese market, Williams says.

Although the UK has a big equine market, exports are still important for many British companies because the size of the British domestic market is vulnerable to uncontrollable factors such as disease or weather, she says.

The UK market was hit by foot and mouth disease in 2001 and a year of awful weather in 2012.

"A lot of UK companies are looking at exports because they cannot put their eggs in one basket," Williams says.

Traditionally British equine industry companies have exported heavily to Germany, North America and Australasia, but they are now looking at emerging economies such as Turkey and China.

The first company globally to receive the right to export horse feed to China was the Irish company Connolly's Red Mills, but group exports director Michael Connolly says the process has been slow and complicated.

The company began seeking Chinese government approval in 2005, and after years of hard work finally managed to export its products there in 2012.

Despite the long-awaited launch, Connolly says, the amount of horse food his team has sold to China has been a little disappointing.

As Connolly's targets the premium horse feed market, its customer base is already limited, and while it has managed to supply most of the premier stables in China, those customers only feed an average of 30 percent of their horses premium feed.

"While we are somewhat disappointed at this stage, we remain optimistic about the future," Connolly says.

The premium food products from Connolly's are on average between 30 and 40 percent more expensive than traditional horse feed of rice bran and oats, he says.

Two big regulatory challenges remain to limit the growth of China's equine sports. The first is the illegal status of betting on horseracing, which means the industry cannot fund itself, because revenue from sponsorship and ticket sales are insufficient to make events financially viable.

A prestigious event like Royal Ascot would be financially viable without betting, but most other horseracing events would not, says Barnett of Ascot Racecourse.

"For Royal Ascot, which is the most important horseracing meeting of the year, the majority of income would be generated through gate money and corporate entertainment, and on top of that sponsorship, TV viewing revenues and then betting."

In comparison, most other horseracing would be supported by income generated through betting and selling pictures to betting providers.

"Some days we would not make a profit without a betting element," Barnett says.

China has not been certified as disease free by the World Organization for Animal Health, which means that overseas horses that enter China are not allowed out again because of the concern that they might spread diseases contracted in China. The Chinese horses are also not allowed to leave the country.

Roly Owers, chief executive of World Horse Welfare, says China's lack of disease-free status for horses means it is difficult for it to host world-class horse competitions, because international owners are unwilling to send their horses there.

This also means China cannot have its horses compete in major international competitions alongside the world's best horses, Owers says.

To be considered for disease-free status, China needs to conduct regular and standard tests for horse health and apply for inspection, he says.

The country's veterinary infrastructure, training infrastructure and other equine industry support functions are slowly catching up with those in more developed international markets.