China’s theme park economy thrives despite pandemic times

Against all odds, theme parks are thriving in China, thanks to rising disposable income, investor confidence and long-term opportunities.

On September 1, Universal Beijing Resort, the largest of its kind in the world, will begin its trial.

From 2008 to 2017, total theme park attendance increased by 13% per year. Today, there are more than 200 theme parks on the Chinese mainland and their number continues to increase.

In a time of misguided global divisions, the impressive increase in theme parks in China shows the brighter promise of foreign investment and Sino-US cooperation.

First extension of theme parks

in coastal megalopolises

In the past, theme parks were still concentrated in the coastal areas of southeastern China, thanks to greater economic prosperity, advanced development, mega-cities of 10-20 million people, and a relatively mild climate. .

With one in three major theme parks in eastern China, the parks’ initial offerings were still relatively undifferentiated. Nevertheless, the parks of the big cities relied mainly on international intellectual property, according to the infrastructure council AECOM.

The period was marked by the first wave of international theme park expansion, which culminated with the opening of the Shanghai Disney Resort in June 2016. It was the dream of Disney President (then CEO) Bob Iger who had invested $ 5.5 billion and 17 years in the project.

In its first year of operation, Shanghai was already fueling a good chunk of Disney’s profit growth. With over 11 million visitors, about half of whom came from outside Shanghai, it was on its way to becoming the top-grossing Disney park in the world.

Expansion signs the confidence of foreign investors

in the Chinese business environment

At the time, Disney’s impressive performances were carefully scrutinized by other international giants eager to join the Chinese theme park economy, including the American Universal and the British Merlin Entertainment, famous for its Legoland parks.

Today, the second wave of theme park expansion is on its way. The capital invested for theme park projects in the first half of the 2020s could climb to $ 20 billion.

“The Chinese have confidence in the country, confident in the controls,” said Tom Mehrmann, president of Universal Beijing Resort a year ago. With the strong domestic travel industry, Universal saw a great opportunity, despite pandemics. The Beijing Resort will be the company’s fifth park in the world. In turn, Merlin’s Legoland Shanghai is expected to open in early 2024, followed by Legoland Beijing.

These multibillion-dollar investments are a testament to the growing confidence of foreign investors in China’s business environment, its success in containing the pandemic and, most importantly, the gradual expansion of Chinese middle-income groups.

Despite the international rivalry,

dominant local operators

Internationally, Shanghai Disneyland enjoys great brand recognition. Still, it held less than 6% of the market in 2018. The three dominant Chinese operators – OCT, Fantawild Holdings and Chimelong – held a combined 58% share of the market, according to Tianfeng Securities in March.

Last year, as in previous years, 12 new theme parks were launched in China, despite the pandemic, construction disruptions and social distancing restrictions.

At the same time, the theme park economy is spreading from the megalopolises of the coastal regions. Most of the new parks are concentrated in first-tier emerging cities, including Nanjing and Zhengzhou, which have between 8 and 10 million people.

As competition intensifies, local brands tend to be more popular in smaller towns with an increased use of storytelling and a focus on local conditions, history, and legends.

Attendance at theme parks in China could reach 70 to 80 percent of pre-pandemic levels this year. However, analysts expect it to be another two years before the number of visitors to the park returns to 2019 levels.

China’s theme park economy, a global bright spot,

for the coming years

In the global theme park industry, the long-term trend line is clear. As parks stagnate in wealthy Western countries, the search for new markets is pivoting towards emerging Asia.

Before the pandemic, North American parks were advancing at a modest 1.0%. Europe was relatively flat, as were the parks of Latin America. Instead, Asia’s major parks rose around 2.0%, while China’s performance was much stronger, with OCT, Chimelong and Fantawild reporting high single- or double-digit increases.

In China, the number of per capita visits to theme parks in China was 0.13 in 2017 and is expected to reach 0.16 by 2020. In the United States, per capita attendance is estimated at 0.65. Although the level is higher in high-income economies, the difference suggests that the market is far from saturated in mainland China.

In early 2021, President Xi Jinping declared the completion of the goal of making China “a moderately prosperous society in all respects.”

As the middle-income group continues to expand in China and transportation systems improve, the increase in disposable income virtually guarantees that the demand for amusement and amusement parks will continue to grow.

Dr Dan Steinbock is an internationally renowned strategist of the multipolar world and the founder of the Difference group. He served in India, China and America

Photo: Jennifer C.

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