Smiling Singaporean tourists tumble out of the bus and into the grasslands. A group of farmers, who 15 minutes earlier were tending their yaks in the adjacent fields, are now decked in their holiday best and line up to hang hatas, or ceremonial Tibetan scarves, on the necks of their visitors. Scenes like this are becoming more common around the once quiet city of Zhongdian, which has been attracting growing numbers of visitors since China's State Council formally changed its name to Shangri-La on May 22. The move ended the dispute over which area was the real model for James Hilton's The Lost Horizon, the classic 1933 book that was made into an Oscar-winning film by Frank Capra.
Zhongdian, situated 700km northwest of Kunming, lost no time in cementing its new name in the imaginations of visitors. Within weeks of the central government announcement, the mysterious-sounding Chinese characters Xiang Ge Li La, or Shangri-La in English, suddenly appeared on street signs and at the entrances to hotels, primary schools and government offices.
There is growing concern, however, that the local government, which lacks experience in tourism and the capital necessary to develop the industry, is too keen to lease some of the area's most promising sites to state enterprises and foreign firms, under a sort of build-operate-transfer system. Critics say that while these companies may have money to spend, they have little know-how in managing tourism projects.
According to one source in Shangri-La, the local government has already leased out a number of its major scenic sites. Shangri- La's part of Tiger Leaping Gorge has been leased to a Kunming company (the other half falls under the authority of the city of Lijiang to the south). Napahai, a scenic lake, has reportedly been given to another Yunnan company to manage. Leases are believed to run for 99 years.
Zha Xi Duoji, director of the Shangri-La Folk Environment Protection Association, points to examples of ill-conceived ventures by state enterprises whose only qualifications appear to be money and connections. "Whoever has good connections can develop here, whoever doesn't can't do anything," he says. "There will be a huge negative impact from this. The natural environment has already been hurt. If we open up the area and we don't handle it well, there will be more destruction."
Zha Xi, a minority Tibetan and an architect by training, also complains that the SOEs that are investing here commandeer natural resources and don't allow local people to get involved. "There is very little chance for local people to participate, and the best resources have been monopolised by entrepreneurs, who invest very little money," he complains.
There have been a few instances of problem investments. One Yunnan company evicted farmers from land that sat on a natural hot spring and then erected a poorly designed hotel that clashed with the local scenery. So far, few visitors have stayed there. Other developers reportedly talked about flooding the village surrounding nearby Ringa Mountain, considered sacred by local Tibetans, and turning its summit into an island. The plan was stopped by angry villagers.
Zha Xi also points to the takeover of a type of wine produced in Zizhong that was introduced by French Catholic missionaries some 100 years ago. He says that in 2000 a Kunming company, keen to capitalise on the area's new-found fame, bought the brand name for just Yn60,000. "The local government and people just didn't know what it was worth," he says. "When I heard how little they paid, I said they thought the local people were stupid. For a small sum of money you can snap up our resources. This is extremely unfair."
Such abuses encouraged Zha Xi to attempt to empower local peasants. He and some friends formed their association in February to protect local rights from outside encroachment and at the same time use tourism to boost the local environment. The association, which is seeking outside investment, is helping local farmers build tourist lodges in what it calls 'natural villages,' which farmers will manage themselves. The association has obtained a licence from the government to establish three natural villages, with the option of expanding to nine. The number of visitors at any lodge will be limited to 30 people a day to protect the environment, says Zha Xi.
The money earned will be used to buy yaks, cows and horses and to improve the quality of the existing livestock, which he says is poor. Zha Xi talks about buying horses to move tourists around the area, reducing the impact of vehicles, and he also wants to develop a local cheese industry based on yak's milk. "We depend on farming and raising cattle," he says. "We want to use tourism to promote agriculture." Other projects include the introduction of solar energy units and more efficient wood-burning stoves in Tibetan homes to reduce the use of precious wood for cooking and heating.
Other organisations are also busy trying to protect the environment in anticipation of mass tourism. The Kunming-based Centre for Biodiversity and Indigenous Knowledge is building a lodge in a scenic area that is home to many varieties of birds and wild flowers. The lodge will be constructed in an eco-friendly way, will allow only 15 visitors a day and will blend into the local countryside. It will be managed by farmers and income from the project will benefit local villages.
Tsring Nima, Shangri-La's deputy director of tourism, says the area attracted 1.24m visitors last year and concedes that this had a large effect locally. However, he says that things should improve over the next few years. "We have so many sites, it won't have much of an impact," he says.
The Shangri-La government has set a goal of 12 percent growth in tourism each year, with a minimum target of 6 percent. Tsring says the government must play a strong regulatory role, emphasising planning and the promotion of eco-tourism, to ensure that the rising numbers do not trample the local environment.
Conservationists, however, wonder if the government may not some day regret its eagerness to take on the burden of being Shangri-La. Even before the name change, visitor numbers had been increasing steadily for six years and there were worries that rampant tourism could destroy the natural beauty on which the local government is hoping to capitalise.
"The fact that they are talking about 12 percent growth is cause enough for concern," says one Western conservationist. "I'm not sure the local officials have the sophistication or political willingness to resist the temptation of tourism. My worry is that they'll replace one damaging industry, logging, with another – tourism."
Infrastructure projects are proceeding at a feverish pace. Zhongdian already has an airport, with connections to Kunming, Chengdu and Lhasa. Highway construction is under way throughout the prefecture. Hundreds of workers are building a new road through the mountains from Shangri-La to Deqin in the north. When it is completed by the end of the year, the road should cut a sometimes hazardous eight-hour journey time by half. Rush work is also being carried out on a perilous mountain road in Deqin. This will improve access to a mountain glacier that now attracts only a handful of visitors each day.
Lack of foreign interest
However, despite predictions of a tourism boom, international hotel management companies remain lukewarm on the area's prospects. There are 100 hotels in Shangri- La but only one, the Gyalthang, which is foreign-managed.
The Gyalthang Hotel is currently negotiating with an international company for a joint venture expansion of its facilities. However, Uttara Sarkar Crees, the hotel's manager and director of Gyalthang Travel Service Co, says Shangri-La is already room-heavy. To back up her argument, she points to several halffinished construction projects in the downtown area, abandoned when local investors pulled out of hotel projects after realising that tourist numbers were not high enough.
"Seasonality is very dramatic in Shangri-La," says Zhang Mei, chief executive of WildChina.Com, a Beijing-based travel service company. "During Chinese New Year a hotel could be fully booked and a week later completely empty. It's very difficult to manage a hotel that requires a lot of investment. Cash flows don't make much sense in a place like this."
Another problem is the local government itself. One industry source claims that it is difficult to deal with local officials and regulations, which he says are not up to international standards. Furthermore, he claims, there is a severe shortage of local talent. Tsring however remains upbeat, saying that the administration has been talking to hotels in Hong Kong and hopes to attract some five-star ventures to the area.
Crees, who also works as an eco-tourism consultant for the World Wide Fund for Nature and for other Chinese provinces, says she has some reservations about the name change but that she is cautiously optimistic.
"Having the name Shangri-La has created certain expectations and I worry whether we will be able to meet them," she says. "However, tourism is going to grow whether we like it or not. The question is how to convince people that there is a different type of tourism that can bring in dollars but that can be managed so it won't hurt the environment."