But for industry eager to cash in on interest, betting remains missing link

The interest of China's middle class in equine sports is quickly growing as they look for new ways to enjoy their wealth, similar to how they have taken to leisure activities such as golf and sailing. Horse-riding is already a common tourism activity in many Chinese cities, and spectator sports such as horseracing and equestrian shows are now becoming popular.

Equine sports also have a strong social and networking element because they have a culture of exclusivity internationally, which suits China's newly wealthy middle class.

The strong association of horseracing with the British royal family is enough to create a buzz in the Chinese market. And the annual Royal Ascot race meetings, as much about fashion and hospitality as the horses, are increasingly popular with Chinese visitors.

Chinese consumers' growing appreciation for equine sports has created many business opportunities internationally, ranging from exporting horses to China to infrastructure support such as training, horse breeding, riding equipment and building racetracks.

"In China some people view equine sports as something they can engage with, and others view them as a way of showing that they have got the opportunity to spend," says Claire Williams, executive director and secretary of the British Equestrian Trade Association.

Professional horseracing first arrived in China with the establishment of early British expatriate communities in the mid-1800s. One legacy of that was the Shanghai Race Club, which remains a social racing club for wealthy Chinese racehorse owners competing in international races.

Despite the history, horseracing never boomed as an industry because betting on the sport is illegal on the Chinese mainland, although in 2008 the China Speed Horse Race Open in Wuhan was organized as a step toward legalization.

Since then, the sport has grown rapidly. The first China Equine Cultural Festival was held in Hohhot, capital of the Inner Mongolia autonomous region, last year.

Today, there are at least a dozen registered jockey clubs in China, and about half a million people work in horse-related industries, the China Horse Industry Association says.

The opening up of horseracing has attracted great interest from businesses in many Western countries with established horseracing culture.

This includes Britain, and many of its neighbors or former colonies to which the culture spread. It also includes the Middle East, where the equine industry has huge significance culturally.

In a deal in 2012, the Irish company Coolmore signed up with the northern Chinese city of Tianjin to build a $2 billion (1.5 billion euros) national equine center. Singapore Turf Club is also helping the China Horse Club of Tianjin to introduce the China Equine Culture Festival to Singapore later this year.

Not only are more Chinese riding or watching horses, many also travel abroad to watch competitions.

Royal Ascot was first held during the reign of Queen Anne in 1711 and is now always attended by Queen Elizabeth II and members of the royal family.

Charles Barnett, chief executive of Ascot racecourse, says this year it worked with the China Horse Club and China Merchant Bank, each of whom invited a group of guests to the races.

"We facilitated the visit, and the guests had a nice time watching the racing."

In April, the UK achieved a breakthrough in entering the Chinese equine market after a thoroughbred and sports horse export agreement was signed between Zhi Shuping, China's minister of the General Administration of Quality Supervision, Inspection and Quarantine, and Owen Paterson, Britain's environment secretary.

When the export protocol is finalized, the UK will be able to export thoroughbred and sports horses to China - an opportunity the UK government estimates to be worth 10 million pounds ($16.6 million; 12.6 million euros) a year to the British economy. France and Ireland had earlier signed similar agreements with China.

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 a lot of 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 Tattersalls, 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, Tianjin and Baotou 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 in 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 in Beijing, in cooperation with the Beijing Equestrian Association. It also had 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 struck 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 30-40 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 adds.

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. 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 of more developed international markets.

Yao Congbin, chief technical officer for Connolly's Red Mills, says China's horse veterinary infrastructure is now improving as the country's horse veterinary equipment and medicine are increasingly advanced.

However, its horse veterinary standards are still lacking compared with those elsewhere because traditionally veterinary schools and degrees have not focused on horses, Yao says.

It is only in recent years that horses have attracted more attention in veterinary courses, but there is still a shortage of skilled and experienced teachers. Consequently, China has a dearth of good equine vets.

Yao says he is optimistic about the future of China's equestrian and horseracing industries because horses are an important element of Chinese culture, and equestrian is seen as an emerging fashionable sport.

"In regions like Inner Mongolia or Xinjiang Uygur autonomous province people learn to ride horses when they are young, so they have a special feeling for them. With the improvement of financial situations, these people would like to go to horse events and ride for leisure, even participating in horse racing.

"At the same time, many young people in big cities are increasingly adopting horse riding as a hobby, which is another important part of the market."

cecily.liu@chinadaily.com.cn

Royal Ascot worked with the China Horse Club and China Merchant Bank this year, each of whom invited a group of guests to the races. Photos Provided to China Daily

(China Daily European Weekly 09/12/2014 page16)