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Failure to list China's Venice highlights conflict
Source: Agencies |
September 2, 2011, Friday
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Print Edition
Print Edition
A failed listing attempt by the operator of an ancient Chinese water town has highlighted the difficulties involved in marrying cultural and natural heritage icons with profit-minded capital markets.
The operator of Wuzhen, dubbed the "Venice of China", in Zhejiang Province earlier this month scrapped its plan to list shares in Hong Kong due to a lack of government support. The failure may deal a blow to similar plans by other tourism site companies, including the famed Shaolin Buddhist Temple.
There have been reports that many other Chinese tourism attractions are planning to list, but the failure by China CYTS Tours to spin off Wuzhen Tourism Development serves as a reminder of the tough fight these firms face.
Chen Chong, an analyst at Founder Securities in Beijing, said: "It has been made clear since 2008 that listings of important tourism sites, unless they are backed by solid investment plans to develop the sites, are not encouraged."
Assets linked to Shaolin Temple come under HKCTS (Dengfeng) Songshan Shaolin Cultural Tourism, a joint venture between Dengfeng city and the HKCTS Group, China's largest travel group.
The local government of Dengfeng city, home of the Buddhist temple, owns 49 percent of the joint venture and the HKCTS Group owns the remainder.
Reports about Shaolin Temple planning a listing sparked a public outcry two years ago when they surfaced. Many Chinese are concerned the temple, which has become a high-profile commercial entity in recent years, is becoming overly money-minded.
With tourism a hot investment theme in China, it is little wonder tourism companies are eager to sell shares.
The asset management arm of Edmond de Rothschild Group, owned by the Rothschild family, said this week it bought more than 5 percent of China CYTS Tours and plans to increase that stake over the next 12 months. Its Wuzhen subsidiary counts China-focused private equity firm IDG among its investors.
Chen said: "The tourism industry is a sunrise industry. It is a pillar sector of the government's five-year development plan."
China's tourism industry is expected to grow rapidly over the next few years as per capita income climbs and the government promotes domestic consumption to support economic growth.
The tourism sector is forecast to grow at about 10 percent annually over the next five years. Total revenue from the sector will reach 1.9 trillion yuan (US$300 billion) in 2015, up from 1.15 trillion yuan last year, according to official Chinese media.
The listing of companies linked to famous Chinese sites is not new in the country's three-decade-old capital markets.
Shanghai-listed Huangshan Tourism Development, for example, sells admission to Huangshan, or the Yellow Mountain, a Unesco World Cultural and Natural Heritage site in east China's Anhui Province.
Ticket sales for the famed Emei Mountain in southwest China is also an important source of income for Shenzhen-listed Emei Shan Tourism.
The operator of Wuzhen, dubbed the "Venice of China", in Zhejiang Province earlier this month scrapped its plan to list shares in Hong Kong due to a lack of government support. The failure may deal a blow to similar plans by other tourism site companies, including the famed Shaolin Buddhist Temple.
There have been reports that many other Chinese tourism attractions are planning to list, but the failure by China CYTS Tours to spin off Wuzhen Tourism Development serves as a reminder of the tough fight these firms face.
Chen Chong, an analyst at Founder Securities in Beijing, said: "It has been made clear since 2008 that listings of important tourism sites, unless they are backed by solid investment plans to develop the sites, are not encouraged."
Assets linked to Shaolin Temple come under HKCTS (Dengfeng) Songshan Shaolin Cultural Tourism, a joint venture between Dengfeng city and the HKCTS Group, China's largest travel group.
The local government of Dengfeng city, home of the Buddhist temple, owns 49 percent of the joint venture and the HKCTS Group owns the remainder.
Reports about Shaolin Temple planning a listing sparked a public outcry two years ago when they surfaced. Many Chinese are concerned the temple, which has become a high-profile commercial entity in recent years, is becoming overly money-minded.
With tourism a hot investment theme in China, it is little wonder tourism companies are eager to sell shares.
The asset management arm of Edmond de Rothschild Group, owned by the Rothschild family, said this week it bought more than 5 percent of China CYTS Tours and plans to increase that stake over the next 12 months. Its Wuzhen subsidiary counts China-focused private equity firm IDG among its investors.
Chen said: "The tourism industry is a sunrise industry. It is a pillar sector of the government's five-year development plan."
China's tourism industry is expected to grow rapidly over the next few years as per capita income climbs and the government promotes domestic consumption to support economic growth.
The tourism sector is forecast to grow at about 10 percent annually over the next five years. Total revenue from the sector will reach 1.9 trillion yuan (US$300 billion) in 2015, up from 1.15 trillion yuan last year, according to official Chinese media.
The listing of companies linked to famous Chinese sites is not new in the country's three-decade-old capital markets.
Shanghai-listed Huangshan Tourism Development, for example, sells admission to Huangshan, or the Yellow Mountain, a Unesco World Cultural and Natural Heritage site in east China's Anhui Province.
Ticket sales for the famed Emei Mountain in southwest China is also an important source of income for Shenzhen-listed Emei Shan Tourism.
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