Despite all the excitement over the theme park businesses in China, Wang Xuguang, chief executive of Dalian-based Haichang Ocean Park Holdings , refuses to strike an optimistic note. The number of visitors to the country’s theme parks will likely reach 220 million in 2020, nearly double the attendance of about 120 million in 2015. But competition and higher operating costs bode ill for theme parks, Wang said. “About 90 per cent of the theme parks around the world see their businesses run out of steam after three years of operating,” Wang said. “It is a daunting challenge to sustain growth for theme park operators.” Haichang, which currently operates eight theme parks across the mainland, plans to open its 3 billion yuan (US$457 million) Polar Ocean Park in Shanghai next year, taking a step forward in building the company into one of the world’s largest ocean park operators. The park, at Nanhui in Shanghai’s Pudong district, is in line with Shanghai’s efforts to build the city into a world-class tourist destination. The municipality is striving to create a synergy between Disneyland and the Polar Ocean Park, expanding the motorway that already links the two theme parks. The US$5.5 billion Shanghai Disneyland that officially opened in June 2016, drew 11 million visitors in its first 12 months of operation. Haichang’s latest ocean park aims to attract 3 million visitors a year. The rising affluence of Chinese consumer results in an increasing demand for entertainment facilities. Amid the fanfare and enthusiasm surrounding Disney’s first amusement park on the mainland, a theme park construction boom has taken place in recent years. Dalian Wanda Group, a property-to-entertainment conglomerate controlled by billionaire Wang Jianlin planned a string of Wanda City theme parks before it sold the businesses to developer Sunac China in July. “We still need to learn from global giants like Walt Disney which runs its amusement parks successfully based on its strong intellectual property portfolio,” said Wang. “Sustainable growth can be achieved only after operators can increase per-capita spending by tourists during the visits.” While the general outlook for China’s theme park business is “very bright” for the next few years, a number of small Chinese park operators might disappear due to consolidation in the sector, said Pascal Martin, partner at consultancy OC&C. “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,” he said. Chinese theme parks generate around 70 per cent of their revenue from ticket sales, whereas the proportion for international parks such as Disneyland and Universal Studios is around 30 per cent, said Martin. As such, one of the biggest challenges for China’s domestic theme park operators is diversifying their revenue sources. Possible solutions include creating more marketable characters, building more facilities inside the parks and also building parks in clusters to attract visitors for longer stays. Nothing Mickey Mouse about Disney’s impact on Shanghai Last year, Haichang’s parks drew a total 12 million visitors. Aside from the project in Shanghai, the company plans to launch a park in Sanya, Hainan province by the end of 2018 and another in Zhengzhou, Henan province in 2019. Wang expects new merger and acquisition opportunities in the coming years as theme parks typically grapple with financial difficulties after three to five years of operation. “We are looking for the opportunities,” he said. “At present, we are strengthening our own core competence in developing intellectual property and building brand awareness to prepare for future growth.” “Banking on the intellectual property of Seven Guardians, we want to embark on an asset-light strategy to chase sustainability of our businesses,” Wang said, adding that the company has completed basic design work on the theme park characters. Attendance at Haichang’s attractions grew 6.8 per cent from a year ago in the first six months of 2017, but its non-ticket sales including sales by restaurants, stores, and hotels, jumped 17 per cent in the same period. The company is also planning amusement parks along the countries that make up China’s belt and road infrastructure scheme.
