September 14, 2017 10:00 am JST

Malaysia's Genting dreams of ski paradise in China

Resort giant leverages 2022 Olympics to promote brand

KATE MAYBERRY, Contributing writer

The Lim family hopes that Genting's ski resort will make the brand a "household name" in China. (Courtesy of Genting Resort Secret Garden)

KUALA LUMPUR Tropical Malaysia will never host the Winter Olympics, but for the family behind local conglomerate Genting, Beijing is looking to be the next-best choice.

The International Olympic Committee awarded the 2022 Winter Games to the Chinese capital in a ceremony in Kuala Lumpur two years ago. Lim Chee Wah, the youngest son of Genting's late founder, and a former deputy managing director of the group, eagerly supported the bid, joining and sponsoring the committee that put it together.

Lim was doing more than backing an official Chinese cause. Genting is rated by valuation service Brand Finance as Malaysia's second most valuable trademark. And for the Lims and Genting, the 2022 Olympics is set to be great advertising.

This is because Genting Resort Secret Garden, a sprawling ski resort in the Chongli area 200km northwest of Beijing, is to host the high-profile Olympic freestyle skiing and snowboarding events. Lim, who indirectly co-owns the resort with his brother Lim Kok Thay, Genting's current chairman and chief executive, has put the total planned investment in the resort's construction at 18 billion yuan ($2.78 billion), a tremendous amount given the lack of a skiing tradition in China. When complete, the resort is to include 88 ski runs, 22 chairlifts and roughly 10,000 hotel rooms.

The 2022 Games are "significantly important to [Secret Garden's] development and growth," Lim told the Nikkei Asian Review in an interview.

Both Malaysia and China have applauded the Lims' commitment. On a visit last November, Malaysian Prime Minister Najib Razak said, "The involvement of a Malaysian company in the Olympics will raise the country's international stature." Chinese President Xi Jinping stopped by two months later, with the China Daily quoting him as saying, "The post-Olympics operation of the facilities should be considered beforehand, given that many Olympic host cities face challenges with venues left unused after the event."

Such high-profile backing might seem surprising since Genting's core business is gambling, an activity ostensibly illegal in Malaysia and China.

MONEY SPINNERS Genting's direct revenue from China is relatively insignificant, though it operates a number of hotels at Secret Garden and elsewhere in the country. Chinese, however, are core customers for the casinos and slot halls that Genting operates in Singapore, the Philippines, the U.K., the U.S. and the Bahamas. In Malaysia, Genting operates the country's only legal casino, though Muslims, a majority of the nation's population, are barred entry.

These properties, along with two casino-equipped Asian cruise lines, together represent the world's most far-flung gambling empire. Genting's leisure and hospitality division, powered by gambling receipts, generated around three-quarters of the group's revenue and operating profit last year, though the diverse conglomerate encompasses palm oil plantations, power plants, property development and oil and gas production.

China has two state-run lottery networks, but the promotion of casino gambling is forbidden within the mainland. In June, 19 staff members of Australian casino operator Crown Resorts were convicted of breaking China's gambling promotion laws. Most received prison terms.

Brand promotion has so far been a safer option for international casino operators. MGM Resorts International, a Las Vegas-based operator, put its name on a Chinese resort that, like Secret Garden, lacks gambling. It opened the MGM Grand Sanya in 2012 in southern China.

From 2011 to 2013, "Genting Casinos" and Genting's Chinese-language brand were splashed across the front of the uniforms of English Premier League team Aston Villa. The sponsorship of the Birmingham-based team, whose games were watched by many Chinese, reportedly cost the company 16 million pounds ($21.0 million).

Reflecting on his ski resort, Lim Chee Wah, who has lived in Beijing since 2000, told Malaysia's Star newspaper last year: "Right now, 'Genting' is being promoted here as China Genting Snow Park. By 2022, the advertising value for Genting will be tremendous."

GETTING CLOSER Lim explicitly cites his father Lim Goh Tong's success in building up Resorts World Genting, located in the namesake highlands in northern Malaysia, as the inspiration behind Secret Garden. He told the Star that he first saw the potential of the resort's future site in 1994, when he drove eight hours from Beijing to check out a new basic ski center. It took Lim until 2007 to reach an investment agreement with local officials. His brother and Genting joined the project a few years later.

Preparations for Beijing's Winter Games bid began in late 2013. The capital at first seemed a long shot since it had recently hosted the 2008 Summer Games and lacks its own mountain terrain. Even Secret Garden and other ski resorts at Chongli rely on man-made snow.

Chongli is now just a three-hour ride away from Beijing thanks to the transformation of China's infrastructure since 1994. The distance will be shortened to less than an hour by a high-speed train line scheduled for completion in 2019. In the end, four competing European bids for the 2022 Games were withdrawn, leaving just Kazakhstan's Almaty vying for the honor of host.

The bidding coincided with a push by the International Olympic Committee in favor of proposals involving less grandiose construction to avoid the wasted resources seen after past games. This was another opening for Secret Garden, Lim told the Star. "The investment we have put in is of great value to the IOC, which wants the private sector to continue with what they are doing."

More than a third of the work needed to prepare Secret Garden for 2022 is complete, and Lim puts the investment so far at 1 billion ringgit ($238 million). Thirty-five ski trails are open so far.

300 MILLION CUSTOMERS China had 200,000 skiers in 2000, but 15.1 million took to the slopes last year, according to the China Ski Industry White Book compiled by Wu Bin, chief strategy officer of property developer China Vanke's ski resorts division. Around 2 million visited the resort area that includes Secret Garden. The government wants 300 million Chinese taking part in winter sports by the time of the Olympics.

Lim said that the resort's current 1,000 hotel beds get 90% full on the weekends and are two-thirds full during the week. To help put Secret Garden on the map, the resort has strategic partnerships with five ski resorts in Japan, Australia, Switzerland and the U.S. Secret Garden has held a number of International Ski Federation-certified events and Lim told the Nikkei Asian Review that the Chinese, Japanese and South Korean national ski teams had each held training sessions at the resort. The new Malaysian national ski team has also been offered use of the slopes.

Chongli's ski season lasts about five months, but Secret Garden aims to draw visitors year-round with mountain biking, camping, horse riding and hiking. Nearly 90% of visitors come from the Beijing area. Genting Hong Kong, a separately listed unit of the group, pays the resort for the use of the ski facilities; between 2013 and 2016, the company cumulatively paid 17 million ringgit for this access as well as some consulting services, according to its annual report. Lim told the China Daily in 2013 that he aimed for the resort to break even by 2025.

Tourism industry experts are divided over Secret Garden's long-term outlook. Justin Downes, an international ski consultant who helped design the resort's master plan, believes Genting is well-positioned to leverage its tourism expertise. "People are looking for an experience and Genting has demonstrated they can do that around the world."

Others are less sure about Secret Garden's prospects, but believe it will still serve Genting's wider purposes. "Whether this resort will prove a popular brand among Chinese, I'm quite skeptical," said Anthony Wong Ip-kin, an assistant professor at the Institute for Tourism Studies in Macau. "[But] having a ski resort is a first step. The question is how to encourage Chinese visitors to [go to Genting's] other properties."

Genting chief Lim Kok Thay expressed confidence in his own comments to the China Daily in reference to his late father: "He would be very pleased that we are able to come back to China and make a substantial investment that will leave an imprint that relates to what he has achieved. We hope Genting will be a household name in China someday."

Additional reporting by Zach Coleman, Nikkei Asian Review deputy editor

Asia300

Genting Bhd.

Malaysia

Market(Ticker): KLS(3182)
Sector:
Industry:
Consumer Services
Casinos/Gaming
Market cap(USD): 8,391.38M
Shares: 3,851.77M
Asia300

China Vanke Co., Ltd.

China

Market(Ticker): HKG(2202)
Sector:
Industry:
Finance
Real Estate Development
Market cap(USD): 51,532.25M
Shares: 11,039.15M
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