City clubs are back in fashion in China, their association with West-ern decadence and high living now forgotten as the country embraces the market economy and all that comes with it. New clubs are being built to cater for expatriates and wealthy locals living in the major cities. Most members tend to be corporate executives, some of whom demand membership as part of their package.
Being private clubs, members can expect a personalised service shared with people of common background or interest ?something which the numerous luxury hotels cannot offer. Clubs also provide the right environment to entertain or network, combining an opulent setting with first class dining facilities. Discretion is particularly important as a result of the anti-corruption campaign. Government officials, instructed not to dine with commercial entities unless on business, might deem it safer to accept hospitality in a plush club, rather than in a hotel or restaurant.
Simpson. It has perhaps the best views in Beijing, being situated on the 50th floor of Capital Mansion in the main business district. While the building itself may not the most glamorous in the city, a dedicated lift to the top floor soon takes guests away from the noise and bustle of urban life. There is also an athletics centre in the same building. Membership is currently in excess of 1,000 and the target number is 1,600 to 1,800.
and various sporting facilities, including a bowling alley and indoor tennis courts. Membership stands at 735, but the owners seem more pleased with the quality of take up from the business and political community. "The members make the club, not the fabric," says Mr Michael Longshaw, director of CCA Europe. CCA is targeting the local and international community because it makes business sense and it promotes networking opportunities. The club is open about being prepared to offer special membership rates to government officials. Honorary member-ship is granted to ambassadors and consul-generals ?a policy adopted by leading clubs across the world.
CCA Group is a specialist operator of private clubs in the Asia Pacific region and China is regarded as one of the most promising markets. In addition to Beijing, the group has a city club in central Dalian targeting the large Japanese community there and a golf and country club in the heart of Guangzhou. "The Dalian property is probably a bit ahead of its time," concedes Longshaw, but CCA is also looking to open multi-purpose clubs in Nanjing and Kunming.
The Capital Club was the first major international club to appear in China during the Communist era, opening in October 1994. It is a 50:50 joint venture between Citic and Club Corporation of America. "The idea is for this to be a place where Chinese and foreigners can talk in private," says the marketing director, Su-Chen Harris Connecting with leaders
A big advantage of both the Capital Club and Chang An Club is the stability provided by their established membership base and the prominent local and foreign figures who sit on their boards. "We connect with the local leadership and that's crucial," says Mr Dieter Klostermann, chairman of CCA Group. Policy is determined by members, so nothing gets passed which is likely to alienate the majority.
The China Club, located on the site of the former Sichuan Restaurant, was opened in September 1996 in a blaze of publicity. Showbusiness stars were flown in to publicise the event by Mr David Tang, the man behind the property. Tang is the entrepreneur famous for the China Club in Hong Kong and the Shanghai Tang retail outlets. He wanted to open a club on the site after visiting the restaurant in the 1980s but it took several years to conclude negotiations with the owners.
The 380-year old buildings in a courtyard setting are most impressive and provide an excellent opportunity for outdoor functions. Being a protected site, little has been done to alter the exterior but there have been substantial renovations to the interior and investment in the decor. It took a long time to get approval to start renovation work and Widening choice
The proliferation of clubs means a wider choice for potential members ?manifest in the different ambience and facilities on offer. The clubs themselves are now more focused in their marketing approach, targeting certain segments of the business and political communities. For example, some clubs offer sports facilities or accommodation in addition to the standard lounges, bars and dining rooms, while others are developing golf clubs and out-out-town leisure facilities designed for families looking to get away from the pressures of city life.
Unfortunately, the emergence of new clubs is coinciding with a cooler economic climate. "The Asian crisis has certainly affected us," says Mr Jeffrey Clarke, general manager of the Shanghai American Club. "Shanghai is booming but a lot of the countries that our customers do business with are not booming. A number of companies are cutting .back on the number of expatriates and expatriate budgets."
The city club concept is most established in Beijing. The Chang An Club, regarded by its operator CCA Group as the club in the city, was opened in October 1996. Located in the modern Beijing Tower close to Tiananmen Square, the club offers dining
The view from the Shanghai American Club this delayed the opening date, forcing the management to start a new membership drive.
The aim is to offer an old-fashioned Chinese atmosphere in a unique setting. "We're trying to convey the feeling from the For-bidden City," says Ms Jackie Tan, marketing manager. The management, for example, went to great lengths to source antique furniture and books to add to the authenticity.
Combining tradition with modern amenities is a worthy but difficult ambition. "They've got something special in terms of the set up but, like all clubs in China, there is not the level of comfort or homeliness that can be found in traditional clubs elsewhere," says Mr Josh Green, who is part of a team also setting up a club in the capital.
Downstairs is now home to a 200-seat theatre which hosts a variety of performances including cabaret, music and plays. It is hoped the two venues in the same building will complement one another ?with theatre-goers, for example, visiting the club fora pre-or post-play dinner.
"There is a definitely a space for a home-grown product rather than a multinational formula," says Josh Green, one of two foreign directors of the club. The investors are local Chinese, the same group of people who have worked together on Poacher's. Green believes that the ethos will appeal to those with a similar positive outlook and commitment to China.
The approach is bold, not just because the team is branching out into a new area but because the target market is potentially elusive ?entrepreneurs and corporate employees who wouldn't normally regard themselves as `club' people. "We're not trying to recreate
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One drawback to the China Club, according to an expatriate in the city, is its location on a rather dusty. anonymous road to the west of Tiananmen Square. Another says the club has failed to attract significant numbers of prominent local Chinese. "We do not regard the China Club as a competitor," dismisses Mr Ulrick Wolffram, general manager of the Chang An Club.
Klostermann says the quaint surroundings may appeal to New York investment bankers but not to local officials who prefer more modern facilities.
However, Mr David Lie, executive chair-man of Newpower Group and an advisor to the China Club., says the targeting of local members over the past year has been quite successful, given the fact that "it's not cheap to join". Membership is running at around 900, with the local membership tag set at US$15,000 and overseas membership at US$7,000. The target number is 2,000.
Unlike most other international clubs, the China Club will be offering accommodation ?eight rooms to be opened from September.
New clubs in Beijing will include one funded by American Clubs International (ACI), to be located in the prestigious new China Resources building close to the second ring-road. Construction is under way and it should be complete by the middle of next year.
However, not all the clubs are setting out to target the elite. The team behind Poacher's Inn, a thriving bar well known to Beijing's expatriate community, is also in the process of converting part of a traditional building into a club. Due to open in late July or early August, it will be known as the Island Club because of its location on an island in the centre of Tuanjiehu Park. ' Investors have spent US$500,000 on just the internal decoration and the main influence will be Chinoiserie.
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a formula done somewhere else," explains Green. "Our main problem will be converting non-club people into club people." The joining fee is well below that of the other clubs ?US$2,000 for individuals and US$3,000 for companies.
The Island hopes to attract 200 members in 1998 and 400 by the end of next year. Green says the uncertainty caused by the Asian crisis has not dampened their expectations. "The Japanese and Korean communities here have certainly been hit but they are not our target market," he comments.
A return to former times
One of the curiosities about Shanghai is that it has taken so long for an international club to become established. However, it now seems that investors are making up for lost time.
Clubs have a rich history in Shanghai. In 1939 .the Shanghai Directory listed more than 200 international clubs. The variety was enormous ?clubs catering for specific nationalities, such as the Russian Club and the Swedish Club, purely . social clubs and clubs affiliated to sports such as polo, cricket and rowing. The Shanghai Club on the Bund, exclusive to the British community but prohibiting women, contained the world's longest bar and was regarded by many as the club in the city.
"It will never be like it was then," says Ms Tess Jonston, who has written extensively .on Shanghai's history and architecture. She envisages around five major clubs becoming established in the city to serve today's expatriate community, which is much smaller than in the days before the Communists came to power.
"The market is big enough to have several good clubs in Shanghai," says Mr Michael Ho, executive director of ACI, adding that Hong Kong currently supports around 60 international clubs.
The first international club in the modern era is the Shanghai American Club, which opened last December. "We're quite pleased with the quality of the product," says Mr Jeffrey Clarke, general manager. "Training has been the key issue."
The club is a joint venture between ACI and the four shareholders behind the Shanghai Bund International Tower. Ho says US$12m has been invested in the club.
It is modelled on the American Club in Hong Kong and its big attraction is the spectacular view of the Bund and Pudong. The immediate vicinity of the building does not match the history of the Bund nor the dynamism of Lujiazui financial area in Pudong. However, neither location can offersuch a panorama, offering views of both the old and the new.
The club has excellent dining facilities and there is also a business centre and fitness club on the third floor. It has so far attracted nearly 500 members at an average life membership rate of US$18,000. The current membership fee has just risen to US$22,500. Ho says the club will be profitable when membership reaches 800, although that depends partly on usage rates.
Half of the membership are not actually based in Shanghai, many living in Hong Kong and other regional centres. Typically, they are executives with responsibility for many cities, including Shanghai, and this means their usage rate of the club is limited. Increasing turnover from among the 250 members who do live in the city is one of Clarke's goals. "Few people come to the bar," he laments. "They tend to come in groups to see the view." This is despite a variety of social functions which are organised by the club.
From a marketing perspective, Shanghai American Club's big advantage is being the first club in town. "We experienced a lot of hurdles in terms of government approval," comments Ho, but the reward is having first pick of the crop. Despite proclaiming an international outlook, a high proportion of its members come from the US.
The club is not pursuing members from the local Chinese community, reasoning that their idea of a club is somewhat different. "The challenge is to communicate [to them] the intangible benefits of club membership," adds Clarke, "things like staff remembering members' names and their favourite drink."
Klostermann says the older generation in Shanghai are familiar with the concept, but Beijing is a different matter. Lie recalls it took two months to convince even leading government officials that the China Club was not just another restaurant or karaoke bar.
A host of other investors are advanced with plans to open up in Shanghai. CCA expects to open a club on the Bund by mid-2000. G's Club, near the American Consulate, has the backing of the Lai Sun Group. Considerable investment has gone into this purpose-built site but the whole project has been dogged by delays caused by quality problems at the construction site. The club is due to open in November 1998, two years behind schedule. Mr Palle Jensen is general manager of G's which, like the China Club, is managed by Peninsula Clubs and Consultancy. He admits goodwill hasbeen lost but says a membership campaign will resume shortly. The individual membership rate has been set at US$20,000.
Meanwhile, Shanghai Links is investing US$26m in converting into a city club the upper floors of one of the most famous buildings along the Bund.
The competitive climate is likely to intensify as clubs seek to establish the beginnings of a town and country club network in China's main coastal cities.
No compromise on quality
While the focus of every club differs in certain respects, the success of each will depend to a large degree on being able to meet the high expectations of members. "Everything has to be five- or six-star," says Ho. "Keeping to this level is the most difficult thing."
A challenge to investors will be maintaining standards over the coming years when membership levels are being built up. Lie estimates that it costs in the region of US$2m to operate a quality, city centre club. He warns there is no future for a management which compromises on customer needs. Members expect high staff ratios to be maintained and food quality to exceed those of the top hotels. For example, Shanghai American Club prides itself of flying in chilled, as opposed to frozen, red meat from the US and importing most of its varied salad items.
"Clubs have to be more careful [than hotels] about how flexible they are because they are dealing with members and not guests," says Longshaw. Facilities are inevitably under-used during the long low seasons in China and Klostermann says it's important to promote usage by organising a regular programme of business events.
The ownership structure of the clubs and the relationship with the building's management company are also crucial aspects in achieving excellence foreign investors want to be left to control the physical environment and all aspects of service. Even seemingly trifling problems can lead to difficulties. For example, the views from the Shanghai American Club cannot always be enjoyed to the full because the windows are not cleaned sufficiently frequently. "You have to face this kind of problem all the time," says Ho. For its part, the China Club soon realised that the atmospheric courtyard lighting was just a little too subdued for some of its local members.
These are inevitable teething problems for clubs to address as they strive to provide the excellence of service demanded by a distinguished and dicerning membership.
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