One of the most well-known ski towns in China is struggling to break even and is revamping its businesses

Huang Yue and her family flew from the southern tip of China to the mountains near Yabuli town, located in the northernmost province of Heilongjiang, because she heard the snow was immaculate.

"We mainly came to see the snow," says Huang, who lives in Guangdong province.

But the Huangs only stayed one night at one of Yabuli's ski resorts after skiing for two hours and paying for private lessons for their 10-year-old daughter. Though the family enjoyed the trip, Huang says they have no plans to return anytime soon.

Two decades ago, Yabuli town was the only spot to ski in China. It is the first place most Chinese people think of when they talk about skiing, and Yabuli Ski Resort is still the largest in the country.

But the town is losing its appeal even though it hosted the 1996 Winter Asian Games, the 2008 National Winter Games and the 2009 Winter Universiade. At a time when overall wealth in China is increasing and more and more ski resorts are springing up, Yabuli is barely making ends meet.

Last year, the town welcomed about 360,000 visitors to generate 119 million yuan in revenue, a 36-percent rise on 2011. That figure, says Yu Zebo, senior economist and director of the General Bureau of Forest Industry of Heilongjiang province, was "barely enough to cover the maintenance and management costs for the (town's) ski operators".

"The ski population is still too small," Yu says.

Located 200 kilometers, or a three-hour train ride, from Harbin, Yabuli's snow season lasts for 170 days a year; 150 of those are optimal for skiing. The snow can be as deep as 1.6 meters. After it hosted the international and national winter events, it gained a reputation as a town with state-of-the-art ski resorts.

But ironically, the rise in the number of skiers in China is threatening the town's ski businesses. Since 2000, when the China Ski Association estimates there were 200,000 skiers in China, the number of skiers has quickly grown. In 2005, there were 5 million skiers; by 2014, it is estimated that there will be 20 million in China.

Hundreds of ski resorts across China have recently opened to meet the increased demand. The Xinjiang Uygur autonomous region in Northwest China, the Inner Mongolia autonomous region and southwestern Yunnan province have all had ski resorts open within the past few years.

Resort developers in Jilin province, Heilongjiang's neighbor to the southeast, are particularly ambitious. Dalian Wanda Group, a Chinese real estate developer, has recently invested more than 2 billion yuan in a 18.3-square-km ski resort in the Changbai Mountain Range. The resort opened last winter.

"You've got larger and perhaps more financially stable competitors that are coming into the market. There are more skiers. But the absorption rate into a particular ski resort is much lower. Yabuli is at a disadvantage because it's not easy to access outside Harbin. And it's colder than the other resorts," says Justin Downes, president of Axis Leisure, a resort consultancy in Beijing.

Yabuli has also been suffering from competition within its borders. There are seven ski operators in Yabuli, each fighting over skiers with cutthroat prices.

"As a consumer, it is difficult to decide what is quality and what is not. When you get there, it can be confusing," Downes says.

One of the many reasons why Yabuli has suffered is that each of the town's ski resorts is managed separately. Industry experts say they need to work together to improve the town's public transport. Another reason for the slowdown is the scarcity of cafes or restaurants outside the resorts.

"It still lacks connectivity," Downes says.

He says the first step for Yabuli is to re-organize the resorts under one umbrella. So far, partial agreements have been achieved between the town's bigger operators.

The Sun Mountain resort owned by a Canada-listed developer leased part of its high and intermediate level ski runs to the state-run Broadcast International Hotel, which only has ski runs for starters.

The Avaunce International Convention & Exhibition Center, with its ski runs focused on beginners and intermediate skiers, reached an agreement with the Ski Training Base of Heilongjiang province to keep prices the same between the two.

The Yabuli Forest Bureau, which is in charge of the daily management of the Yabuli Ski Resort, set the price for a two-hour ski at 50 yuan to prohibit price-slashing competition, says Zhang Wenbin, the deputy bureau chief.

The bureau is also considering introducing a card system that allows skiers to ski throughout the area regardless of their hotel.

Another strategy to reinvigorate Yabuli is to look beyond the window.

The summer season now accounts for only one-tenth of Yabuli's overall revenue. But Downes says the summer presents the greatest opportunity for Yabuli.

"Whistler in Canada, which hosted the last Winter Olympics, was a winter resort with only about 400,000 or 500,000 visitors when I went there in the late 1980s. Ten years later, they have about 2 million skiers. But they have more visitors in the summer. Summer is now probably the most important season for the region," Downes says.

He adds that Chinese people are more inclined to go somewhere cool during the summer to escape from the heat. From July to September, Yabuli's temperature averages at 20 C.

As Whistler did decades ago, Yabuli is now trying to market its resorts as summer destinations.

Avaunce International Convention & Exhibition Center was the first ski resort in Yabuli to promote summer vacationing. Its summer business model includes mountain climbing, riding lifts, cycling, drifting and camping. One-fifth of its annual revenue is now generated during the summer, says Li Shengyuan, general manager of Avaunce.

Other resorts are following suit. Four years ago, Avaunce was the only summer operator, but last summer, four resorts drew more than 35,600 people and had turnover of 11 million yuan, a 36-percent rise on the previous year.

Yabuli should also get a shot in the arm from a 64 million yuan investment by the local government to exploit the hot springs in the area. The 18,000-square-meter project designed by the Canadian IBI Group aims to make Yabuli a year-round destination.

The local government is also spending 3 billion yuan to build a European-style neighborhood that includes 20 villas for rent and sale.

Part of the Yabuli transformation will also come from foreign partners.

Yabuli Broadcast International Hotel, a high-end establishment that focuses on provincial and domestic visitors, is looking to work with companies in Canada, Australia and New Zealand in an exchange of tourists as well as management expertise and investments.

"We've got more and more skiers who want to ski all year round in premier ski resorts. They can't do it in Yabuli or Australia alone. But with cooperation with Canada and Australia, it can be done," says Jiang Daojun, general manager at the hotel, who is heading to Canada in March to scout his first step with an overseas company.

Since 2010, Yabuli has been the permanent site for the annual China Entrepreneurs Forum. Styled after the World Economic Forum in Davos, the event brings together hundreds of influential Chinese entrepreneurs and economists, including real estate tycoon Wang Shi and Alibaba Group chairman Jack Ma.

"It is yet to bring any really significant economic benefit to Yabuli. But it puts Yabuli on the radar of the influential people. When everybody sees pictures of Wang Shi snowboarding down Yabuli on their weibo (China's version of Twitter), it's like the effect of a rock star," Downes says.

"China is hosting the G20 and the APEC, so why not Davos? It's possible," he adds.

Yu from the General Bureau of Forest Industry of Heilongjiang province estimates that in the next five years, a total of 10 billion yuan will be spent to upgrade and maintain ski facilities in Yabuli to meet Winter Olympics standards.

"It took four years for Davos to construct the highway to Zurich, and it cost seven years of taxpayers' money. The mayor ended up with a 14-year sentence. But now 40 years later, people are grateful for his contribution to Davos. The pioneer of reform usually has to pay the price. But the reform has to be done," Yu says.

sunyuanqing@chinadaily.com.cn

(China Daily 03/01/2013 page12)