A failed listing attempt by the operator of an ancient Chinese water town has reignited a kind of Buddhist versus capitalist debate over the merits of marrying cherished cultural and natural heritage icons with profit-minded capital markets.

The operator of Wuzhen, dubbed the Venice of China and located 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 of kung-fu fame.

Many other Chinese tourism attractions, including the Shaolin Temple, have been reported to be planning to list, but the failure by China CYTS Tours Holdings (600138.SS) to spin off Wuzhen Tourism Development Co serves as a reminder of the tough fight these firms face.

It's 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, said Chen Chong, an analyst at Founder Securities in Beijing.

Assets linked to Shaolin Temple are housed under HKCTS (Dengfeng) Songshan Shaolin Cultural Tourism Ltd, a joint venture between Dengfeng city and the HKCTS Group, China's largest travel group.

The local government of Dengfeng city, where the Buddhist institution is located, 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 that the Shaolin Temple, which has become a high-profile commercial entity in recent years, is becoming overly money-minded.

HOT INDUSTRY

With tourism a hot investment theme in China, it's little wonder tourism companies are eager to sell shares.

The asset management arm of Edmond De Rothschild Group, owned by the Rothschild family, said on Tuesday 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.

The tourism industry is a sunrise industry. It's a pillar sector under the government's five-year development plan, said Chen.

China's tourism industry is expected to grow rapidly over the next few years as per capita income climbs and as the government promotes domestic consumption to support economic growth.

The tourism sector is forecast to grow at an annual rate of about 10 percent over the next five years. Total revenue from the tourism sector will reach 1.9 trillion yuan in 2015, up from 1.15 trillion yuan in 2010, official Chinese media have reported.

The listing of companies linked to world famous Chinese sites is not new in the country's three-decade-old capital markets.

Shanghai-listed Huangshan Tourism Development Co (600054.SS), for example, sells admission to Huangshan, or the Yellow Mountain, a UNESCO World Cultural and Natural Heritage site in the southern Chinese province of Anhui.

The sale of admission tickets to the famed Emei Mountain in southwest China is also an important source of income for Shenzhen-listed Emei Shan Tourism Co 000888.SZ.

While some argue against the listing of cultural and natural assets, others say such funding could help pay for conservation and protection projects.

Investment China Management Investment