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”
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.