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Industry News

Thriving Theme Parks in China By Alice Yang

Walt Disney’s US$5.5 billion theme park in China harvested a great successful year after opening in June 2016. According to its annual financial report, Shanghai theme park had already gained profit in its first full year of operations, much better than what its American headquarter had expected.

 

"That's an extraordinary achievement. I'm not sure we've ever done that. It’s a mark none of its resorts has been able to hit in the last 30 years,” said chief executive officer Bob Iger. “After the first year, I'm pleased to say that prospects are really strong for continued success and continued growth," he added.

 

In China, there is even potential for Disney to build a second park in the long run, Iger said, adding it would focus on the Shanghai resort first. And a Toy Story-themed land opening is planned this year.

 

"With the theme park, films, co-productions, Disney English and retail, they're creating an ecosystem to bring consumers in and foster a broader buzz and awareness," said Ben Cavender, Shanghai-based principal at China Market Research Group.

 

With the opening of its first resort in mainland China, Disney is banking on Chinese parents willing to spend lavishly on their children and a rising middle class intent on travel.

 

According to the report from Talking Data, the Shanghai Disney Park logged more than 11 million visitors in the first 12 months of operation, and 58 percent of them are among the age between 26 to 35, many of who are married and visited the park with their young children.

Shanghai Disneyland is the largest theme park being built in China but far from the only one. There has been a building boom in the wake of the growth of a strong middle class in China as the economy there has improved. Another 64 theme parks are in the pipeline. Other foreign companies also eyeing the Chinese market include Comcast's NBC Universal and Six Flags. Universal Studios is a building a theme park in China. The planned US$3.3 billion development in Beijing is scheduled to open next year. And U.S. operator Six Flags Entertainment Corp., is set to open two parks in China by 2020.

British theme park developer Merlin Entertainments Group Ltd., the owner of Madame Tussauds museums, is also on the way to launch China’s first Legoland theme park in Shanghai, with construction work scheduled to finish by 2022, in a bid to grab a slice of China’s booming entertainment market. More than that, the company will open one of its history-themed Dungeons in Shanghai and a Little Big City attraction in Beijing. In addition, in 2019 Merlin will open its third Legoland Discovery Centre in the country in Beijing.

As its theme park sector continues to thrive, China is expected to surpass the U.S. as the largest theme-park market in the world by 2020, attracting 221 million people every year, nearly double the attendance of about 120 million in 2015, according to U.S. consulting firm AECOM.  It is also predicted that China’s spending at its parks is to reach nearly US$12 billion (£9.5bn) by 2020, leapfrogging both the U.S. and Japan. As Chinese disposable income rises, attractions are reaping the rewards, with tourism numbers increasing as more leisure opportunities become available to tourists.

A growing middle class and rising incomes have spurred domestic developers like Dalian Wanda Group and Evergrande Group to join the game as well. There are some 700 theme parks in China, according to a report by the state-run People’s Daily last year, but 70% of them are making a loss, according to a report by Shenzhen-based research center Forward Industry Research Institute.

“Bigger players, especially those with international backgrounds, will be in a better position as they can generate revenues from multiple channels such as the sale of food, souvenirs and stays at park hotels,” said Pascal Martin, partner at consultancy OC&C.

But the trend remains positive. Earlier this year in March, China announced that the Ministry of Culture and the China National Tourism Administration would merge into the Ministry of Culture and Tourism at the first session of the 13th National People's Congress. The new ministry was established to coordinate the development of China's cultural and tourism industries, enhancing the country's soft power and cultural influence. As a perfect format to combine both culture and tourism, the theme park has raised great attention from the Chinese government.

The opening up of policy has also contributed to the emerging sector. Last year, China has removed restrictions on foreign investment in large-scale theme park projects, opening up the possibility for new developments in what is already a hotbed for theme parks under development.

 

 

(About the Author: Licensing Project Manager of China Toy & Juvenile Products Association)

 

 

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