ACQUISITIONS

China Animation eyes Asian expansion after takeover of Japan’s Joypolis amusement park chain

Shenzhen-based animation firm hopes to open at least three more parks in China and expand in Southeast Asia

PUBLISHED : Wednesday, 02 November, 2016, 2:08pm
UPDATED : Wednesday, 02 November, 2016, 10:58pm

China Animation Characters hopes to open at least three more Joypolis indoor amusement parks in China and expand its footprint to Southeast Asia after it agreed to buy the Japanese chain.

Shares in China Animation Characters surged 11.4 per cent to close at HK$3.43 on Wednesday after they resumed trading in the morning.

The Shenzhen-based animation firm said on Tuesday that it would buy an 85.1 per cent stake in Sega Live Creation for 600 million yen.

On top of a licensed facility in Dubai, Sega Live Creation manages the Joypolis parks in Tokyo and Osaka in Japan as well as Qingdao in China.

Zhuang Xiangsong, the chairman of China Animation, said he now owned most of the Joypolis parks and its intellectual property rights outside Japan after taking control of Sega Live Creation.

“The acquisition is a milestone for us. We will base in China while actively expanding in Asia such as the Southeast Asian markets,” he said.

The company planned to open parks in the Chinese cities of Changzhou, Zhuhai and Shenzhen soon, mostly in shopping malls, Zhuang added.

By moving away from its previous focus on the trading of its own animation products, China Animation is now competing head-on with Walt Disney and Universal Studios in tapping Chinese residents’ growing spending on entertainment activities.

Earlier this year, the firm held the grand opening of Joypolis Shanghai as its first licensed theme park.

Given that Sega Live Creation has a net asset value of about 2.9 billion yen, Zhuang said the acquisition was “a very lucrative deal”.

“Our Japanese partner values our know-how of the Chinese market and our ability to pull investment. It is keen on exploring the Chinese market with us,” he said.

Sega Live Creation is the leisure facilities development and management arm of Tokyo-listed Sega Sammy Holdings. After the deal, Sega Sammy will still own the remaining 14.9 per cent stake in the unit.

The Japanese entertainment and game giant used to operate nine Joypolis theme parks in Japan and China, which feature arcade games and amusement rides based on Sega’s intellectual property rights. But only four remain operational currently due to reduced visitor numbers.

Zhuang said Sega had introduced more virtual-reality games recently and the market feedback was positive.

He added that China Animation would finance future development with capital from funds and developers to achieve fast and asset-light growth.

Dickie Wong, executive director of research at Kingston Financial Group, said he was neutral about China Animation’s move.

“While the company can tap the increasing demand for medium-distance family outings in China, especially in top-tier cities, whether it can attract many visitors from smaller cities, given their lower spending power, remains a question,” he said.

Zhuang said the firm might cut the ticket prices for the parks in cities like Changzhou to boost traffic. The average ticket price at the Shanghai park is about 200 yuan.