Theme parks in China have a U.S. role model

Theme park op­er­a­tors tar­get China’s grow­ing con­sumer class “They want ex­pe­ri­ences, not just shopping”

Bloomberg Businessweek (Europe) - - CONTENTS - Rachel Chang, with Emma Dong

The Chi­nese are no strangers to theme parks. The main­land is home to about 300, from one in Shen­zhen fea­tur­ing repli­cas of land­marks such as Egypt’s Sphinx and the Eif­fel Tower to Yun­nan prov­ince’s Dwarf Em­pire, an at­trac­tion where all the per­form­ers and staff are lit­tle peo­ple. But the in­dus­try is quickly get­ting more crowded. Dalian Wanda Group on May 28 opened its $3.2 bil­lion Wanda City in Nan­chang, which in­cludes a theme park, a movie park, and an aquar­ium. And on June 16, Walt Dis­ney will un­veil its $5.5 bil­lion Shanghai Dis­ney Re­sort, where Mickey Mouse will co­ex­ist with zo­diac char­ac­ters fa­mil­iar to Chi­nese tourists. Five dozen more venues are sched­uled to open for busi­ness by 2020.

China’s theme park mar­ket will

ri­val that of the U.S. af­ter the new venues open, pre­dicts in­dus­try con­sul­tant Aecom, grow­ing from 120 mil­lion vis­i­tors last year to 220 mil­lion an­nu­ally by 2020. “Main­land Chi­nese con­sumers have up­graded a lot in their be­hav­ior in the last 10 years,” says Jen­nifer So, a tourism an­a­lyst at China Se­cu­ri­ties In­ter­na­tional. “They want ex­pe­ri­ences, not just shopping. That’s why so many theme park op­er­a­tors see op­por­tu­ni­ties there.”

Next year, DreamWorks An­i­ma­tion plans to open its $2.4 bil­lion DreamCen­ter in Shanghai, and Haichang Ocean Park Hold­ings will un­veil China’s big­gest marine park. Six Flags En­ter­tain­ment is due to open a park in China, its first out­side North America, in 2019. “In the end, the suc­cess­ful ones will be those who know how to op­er­ate theme parks, not just de­velop them,” So says.

Dis­ney and Six Flags, which have long run theme parks in the U.S., have an edge when it comes to ex­pe­ri­ence. Chi­nese op­er­a­tors counter that they have a su­pe­rior un­der­stand­ing of lo­cal con­di­tions and of­fer bet­ter value for the money. They also may en­joy a po­lit­i­cal ad­van­tage. At China’s an­nual po­lit­i­cal meet­ings this year, Li Xiu­song, An­hui prov­ince’s rep­re­sen­ta­tive to the Chi­nese Peo­ple’s Po­lit­i­cal Con­sul­ta­tive Con­fer­ence, said China shouldn’t al­low too many Dis­ney parks be­cause do­ing so would make chil­dren in­dif­fer­ent to Chi­nese cul­ture. He rec­om­mended that parks and at­trac­tions be based on Chi­nese lit­er­ary clas­sics.

One of the coun­try’s most suc­cess­ful op­er­a­tors is Songcheng Per­for­mance De­vel­op­ment, whose seven theme parks fea­ture live theatri­cal shows in­cor­po­rat­ing in­dige­nous cul­ture. It climbed to No. 10 in Aecom’s rank­ing of top theme park groups world­wide last year, with 22 mil­lion vis­i­tors, a 53 per­cent jump from a year ear­lier.

“The key for theme park suc­cess to­day is brand pop­u­lar­ity,” says John Gerner, an in­dus­try con­sul­tant. “That brand might be unique as­pects of the lo­cal area and its his­tory, but is in­creas­ingly a well-known in­tel­lec­tual prop­erty.” Chi­nese devel­op­ers should li­cense pop­u­lar char­ac­ters or de­velop some of their own, he says.

Some are do­ing that. Haichang Ocean Park has used char­ac­ters from the hit Chi­nese film The Mer­maid to pro­mote its Shanghai Haichang Po­lar Ocean Park. Still, the pull of pop­u­lar West­ern en­ter­tain­ment is dif­fi­cult to ig­nore. At Wanda City’s open­ing, per­form­ers were dressed as Snow White and Cap­tain America— both Dis­ney char­ac­ters—and some stuffed an­i­mals for sale re­sem­bled DreamWorks’ Kung Fu Panda.

Dis­ney said on May 30 that it’s pre­pared to ad­dress any in­fringe­ment of its in­tel­lec­tual-prop­erty rights. On May 31, Wanda said Dis­ney char­ac­ters ap­peared in some stores in Wanda’s retail mall that’s part of the Wanda City com­plex, but not in­side the tick­eted theme park area. “The non-Wanda char­ac­ters were op­er­ated by in­di­vid­ual stores within Wanda Mall,” Wanda said in a state­ment in re­sponse to Bloomberg queries. “They do not rep­re­sent Wanda.” Since it could take decades for Chi­nese com­pa­nies to de­velop fresh char­ac­ters to lure park­go­ers, says an­a­lyst So, lo­cal op­er­a­tors could ben­e­fit more in the near term by com­pet­ing on value. “A park like Haichang is not ex­pen­sive, and peo­ple can visit it of­ten,” she says. “But Dis­ney­land is ex­pen­sive and would be some­thing peo­ple go to only once ev­ery few years.”

Shanghai Dis­ney will boost the broader amuse­ment park in­dus­try, much as Hol­ly­wood films spurred movie-watch­ing among Chi­nese, says Michel Brekel­mans, co-head of L.E.K. Con­sult­ing’s China prac­tice. Now, China’s box of­fice is poised to over­take North America’s. “I ac­tu­ally think Dis­ney­land will help the lo­cal play­ers strengthen the theme park cul­ture in China,” Brekel­mans says. “Be­cause of its strong brand, peo­ple who might not oth­er­wise go to theme parks will go and be ex­posed to the con­cept.”

The bot­tom line As more theme parks open in China, an­nual at­ten­dance could reach 220 mil­lion by 2020, up from 120 mil­lion last year.

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