Big development is a mixed blessing
Dalian Wanda Group, one of China’s largest real estate developers, announced last week that it will open its largest film park this December in Wuhan, Hubei province in central China.
Wanda hopes the park will play a key role in reviving Wuhan’s traditional culture by funding the spread of its celebrated embroidery and making the city more modern and international.
The film park, with a million square feet of floor area, is both a commercial and entertainment complex. Wanda has invested nearly $656 million in the early phases of the project, which included rebuilding an old business road in the city center. Wanda says it will make 500 million yuan annual net profit from it starting next year.
Wang Jianlin, president of Wanda and one of the richest men in China, has long been an advocate of cultural industry and that foresight has enriched the developer’s businesses and given it more transformation options when China’s property market cools down, Wang predicts.
Wanda is one of the largest theater owners in China today, with 85 large shopping plazas and nearly 60 five-star hotels as of last year.
It runs about 1,300 movie screens and earned 4 billion yuan from its cinemas last year. It built 260 new film screens last year and its revenue from cinema has grown about 30 percent annually in recent years.
Since acquiring the world’s second-largest cinema chain — US-based AMC Entertainment —two years ago for $2.6 billion, Wanda has paid more attention to expanding overseas.
Wang aims to control 20 percent of cinema chain outlets in the world by 2020, when cultural industry will contribute to 55 percent of Wanda’s profit.
Last year, Wanda’s sales revenue hit 186.6 billion yuan, up 31 percent year on year. It has maintained an annual growth above 30 percent for eight consecutive years.
The sales revenue of its cultural industry business was 25.5 billion yuan, an increase of 23 percent year on year, of which 16.7 percent is from AMC Entertainment.
However, some analysts view Wanda’s interests in the culture industry more as a pretense to buy land from governments rather than a real commitment to renew China’s lackluster culture industry.
Since 2012, the central government has urged local authorities to develop cultural industry, because it promotes innovation, raises public morality and does not pollute the environment.
Labeling real estate projects “cultural industries” helps property developers buy land from the government more easily and at lower prices, critics charge, adding that large property developers like Wanda also operate their projects after they are complete, still enjoying the preferential tax policies for cultural industry.
Many competitors think Wanda’s real purpose is to acquire land. Revenues from selling the 1.5 million square meters of apartment houses newly built along the old road rebuilt by Wanda in Wuhan, which costs nearly three times that of building the cinema park, will earn Wanda at least 10 billion yuan in the first year of sales, and cover its investment in the cultural industrial facilities in the entire project.
Wanda has similar projects in Hefei of Anhui, Haerbin of Heilongjiang, Nanchang of Jiangxi and Qingdao of Shandong, all of which started in the last five years.
The overall investments of these cultural and entertainment parks amount to about 200 billion yuan. Each park covers dozens of hectares in the city’s places of historical interest, because Wanda always emphasizes its cultural projects must closely mesh with local culture and history. The land it has acquired in cities as sites for cultural projects would be very expensive to buy otherwise, observers say.
Most of the cities on Wanda’s new expansion list are secondtier cities, with huge populations, governments with a strong desire for investment and the customers longing to experience the cinema and entertainment that existed only in Beijing and Shanghai before.
But Wanda does not seem to have the ability to meet all these demands.
The film parks designed by Western entertainment architects do not fit well into the historic context and city environment of the cities.
Apart from introducing some dull brands and the popular culture of the United States featuring Hollywood blockbusters and fast food, the real estate developers’ cultural projects do not contribute effectively to local cultures, because they do not sincerely respect local cultures.
Wuhan had around 127 natural lakes in the 1950s. But property developers and business owners, with government permission, have filled three fourths of them to make land for commercial houses and factories over the past half century.
Statistics show the number of medium and large cultural innovation parks increased from about 200 in 2002 to more than 10,000 now in China and only 10 percent of them can make ends meet.
Most of the parks are used by property developers to obtain land, at the acquiescence of governments that are eager to get investment to stoke economic growth, the most important factor promoting officials in the government system.
“After seeing the so-called new modern lifestyle and cultures brought in by Wanda, most of us realize that we have lost not only the special old way of life here in Wuhan along the old road, but also the desire and respect for any cultural project promoters, who claim themselves as cultural evangelists,” said a reporter with a local tabloid in Wuhan.
Wanda film park in Wuhan of Hubei province will open in December.