Introduction There are a number of theme parks in China. Some of them are well designed and managed. Some are fairylands for the children, which have great fun playing in the fairy tale castles and the animal kingdoms with cartoon characters; The youngsters would like to experience the thrilled and exciting amusement ride. Meanwhile, the elderly like to take pleasure in the folk custom. However, though the market is believed to be big and potential, about 70% of the China’s 2500 amusement parks are losing money.
Whom and why will run non-profitable business?
Unlike residential developments, the restrictions imposed by the Chinese government to cool the “hot” property market do not apply to projects categorized as cultural or entertainment purposes. The loophole allows developers to buy land from the government often at a relatively low price to build a theme park and then erect adjoining apartments and hotels. To plug the loophole, Beijing authorities banned the construction of new theme parks over a certain size in August 2011.
This measurement canceled many projects in the capital but not deterred most developers from continuing with their amusement park development plans.
Actually, many investors do not concern on losing money when operating theme parks, since the sales of tickets and food make up only a very small percentage of their profits, a China Daily reports said. Furthermore, parks require a lot of funding and have high operating costs, so it can take a longer period of times for investors to regain their money. According to China Daily, many theme parks built in the early 2000s have been bankrupted, with the properties failing to sell at dozens of auctions over the past seven years. Amusement Park Industry Trend.
Focusing on the theme park business, according to Chris Yoshii, an analyst for AECOM, told USA Today recently that almost a third of China’s 2,500-plus theme parks have opened within the past two years, with the total number expected to surpass that of the U. S. by 2020. During the five years through 2012, the Amusement Park industry experienced rapid development, growing 14. 4% per year on average to an estimated $2. 3 billion in 2012. China’s economy developed rapidly over this period, and household disposable income levels improved dramatically.
As a result, the number of people paying for leisure activities increased significantly, resulting in strong visitor growth for this industry. The top four operators in China account for about 13. 6% of total revenue in 2012, and this share is expected to increase, as visitor numbers and gate receipts for the industry’s largest amusement parks increase steadily. According to AECOM, a Hong Kong tourism consulting firm, theme parks in Asia sold a combined 103. 3 million tickets last year, one-third of the total in the world and second only to those sold in North America (127 million).
Also, fewer new players will enter the industry due to its high and increasing barriers to entry. As a result, analysts are optimistic in this industry. It is forecasted that in the next five years, industry revenue is forecast to increase at an average annualized rate of 16. 7%. The increasing popularity of amusement parks was another industry driver. Since World Carnival entered the Chinese market in 2004, visiting amusement parks has become a popular way to spend time. The number of international visitors also rose significantly over the past five years, as China’s popularity as a tourist destination has improved.
According to 5u588. com, a Chinese tourism-industry information website, 70 tourism real estate projects have already been signed this year, with a total investment of 260 billion Yuan. That figure is expected to surpass 1 trillion Yuan by December 2012. Current Outstanding Theme Parks According to China Highlights website, there are top 7 theme parks in China. Here are the list and its brief notes: 1. Hong Kong Disneyland Park It is the newest Disneyland in the world at present, and one of two large theme parks in Hong Kong. There are four theme areas in the Hong Kong Disneyland Park: the Main Street, U.
S. A. Adventure World, Fantastic World, and Tomorrow World. 2. Shenzhen Happy Valley There are nine theme sections in Shenzhen Happy Valley, including Spanish Plaza, Cartoon City, Adventure Mountain, Happy Time, Gold Mine Town, Shangri-la Forest, Hurricane Bay, Sunshine Coast, and Maya Water Park. Equipment and fun are unique in China and even in Asia, imported from the USA, Holland, and Germany, attracting numerous tourists to Shenzhen every year. 3. Beijing Happy Valley At present, Beijing Happy Valley occupies about 540,000 square meters.
It offers a great opportunity to experience an ecological environment in Fiord Forest, the Mayan disaster in Lost Maya, a crystal city in Atlantis, ancient Greek myths in Aegean Harbor, a dream life in Shangri-La, and environmental protection consciousness in Ant Kingdom. 4. Shenzhen Window of the World Reproductions of the most famous of the world’s greatest wonders, historical heritage, and other interesting places there. At night, there are also many spectacular folk song and dance performances. 5. Cinemlong Happy World The vertical roller coaster there is the world’s best roller coaster.
And the ten-looped roller coaster had gained a Guinness World Record. There are five theme sections in the park: the Habi Kingdom, the Screaming Zone, the Rainbow Bay, the Water Paradise, and a central square for shows. 6. Splendid China The 82 attractions have been reduced on a scale of 1:15 and located according to where they are in China. Splendid China is just like a giant map of China. These attractions can be divided into three categories: ancient architecture, landscapes, and folk culture. 7. China Folk Culture Village There are 25 ethnic villages set up on a scale of 1:1.
It veritably shows local customs and folklore in China with ethnic performances, crafts shows, and regular large ethnic festivals, including: the Water Splashing Festival, the Shaman Festival, the Torch Festival, the Huaxia Great Cultural Temple Fair, and the Inner Mongolia Grassland Cultural Festival. Apart from Hong Kong Disneyland, all the above theme parks are managed by local Chinese. Another interesting finding is that five of them are located in Southern China. It is suggested that the weather and government authority did affect the location of an amusement park.
Since the sub-tropical forest weather is good for amusement parks to raise up animals and could make visitors feel comfortable in winter times. Also, comparing to Beijing and Shanghai, Guangdong Province may not have as many as traditional site seeing spots for international visitors. Therefore, the government is generally accepted theme parks and believes it can boost the tourism. Forthcoming and Promising Players As we all know, Disneyland theme park will start its business in Shanghai 2015, with US3. 7bn investment. Furthermore, there are a number of theme park projects are being widely speculated.
Firstly, news from BBC in August 2012, Dreamworks, the Hollywood studio production of Shrek, Kung Fu Panda and Madagascar, plans to invest US3bn to build “The Dream Center” in Shanghai in 2016. The main theme is about global cultural centre and the attraction point is the world’s largest Imax screen. Secondly, on the roof of the world, the Tibetan capital Lhasa is building its first theme park, to be opened in June 2013. This amusement parks core culture will be Oriental, ie. from the popular Chinese hero Monkey King to dinosaurs, to Mongolian warrior Genghis Khan.
They believe it could help recoup their $472 million investment within six years, says Ding, an executive at Yu Gui Garden investment group. Local Fight Back Company owning “Happy Valley” theme parks is optimistic on strong and foreign amusement parks component in China. Believed this could cultivate a much bigger market in China. Similar to Japan, the Disney resort promoted the development of other local parks. Another example is the United States: before Disney set up its resorts, the country had only three parks that boasted more than one million visitors per year.
After Disneyland opened, the number of overall visitors in the country quickly surged to more than 10 million annually. The same situation happened several years later in Hong Kong. When Walt Disney launched its third overseas theme park in the city in 2006, other amusement parks in Hong Kong, such as Ocean Park and the adjacent Shenzhen Happy Valley, all witnessed a rapid increase in annual revenue and number of visitors. Investment of 25 billion yuan is reportedly being put into the Shanghai Disney project, in comparison with the 2 billion yuan that invested in Shanghai Happy Valley in the first phase of construction work.
The company has invested more than 16 billion yuan over the past 25 years to build theme parks. It has finished the first round of strategic theme park construction in Shenzhen, Beijing, Shanghai and Chengdu, and has started the second round of park development in cities including Wuhan and Tianjin. It has received 164 million visitors to its theme parks, and has earned a total of 17 billion yuan so far. The company said they invest at least 30 million yuan in every theme park to develop new recreation projects every year.
Expected the number of visitors to Happy Valley theme parks to surpass 20 million this year, with a growing trend to 30 million a year by 2020. China has a huge market for theme park operators. According to Wu Wenxue, vice-chairman of the China Tourism Association, over the next five years, the market demand for theme parks may surpass 10 billion yuan a year. Conclusion From my personal viewpoint, theme parks in China will be generally developed into two different main streams. Firstly, it is foreign and famous owned amusement parks, like Disneyland, World Carnival and Dreamworks… etc.
The second stream will be full of Chinese and Oriental cultures, which may aim to attract international visitors. Both streams are believed to be growing and promising. However, the key concern is safety. Since there are some fatal accident happened in local amusement parks every year, people may lose confidence in all amusement parks in China. The government body should put the focus on the quality issues ranging from equipment to food safety in the parks. Only quality assurance could allow the industry to develop continuously. References http://www. chinadaily. com. cn/business/2010-11/22/content_11587814.
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