Wanda to stir up theme park industry
Updated: 2014-12-24 12:08
By Lian Zi in San Francisco(China Daily USA)
The theme for Dalian Wanda Commercial Properites is that it can compete with Disney for a chunk of the theme park market in China.
Compared with Disney's legacy of almost 60 years, Dalian Wanda Commercial is relatively new to the leisure sector, even though it has made an impressive showing so far, said Dennis Speigel, president of International Theme Park Services, a Cincinnati consulting firm.
Speigel told China Daily that he would not underestimate Wanda's ability to establish world-class theme parks in China.
Dalian Wanda Group Chairman Wang Jianlin, who moved up to the No 2 spot in Forbes' ranking of the Chinese mainland's richest after the commercial unit raised $3.7 billion in a Hong Kong IPO Tuesday, announced that the company would open amusement parks in Wuxi and Guangzhou. He spoke at the opening of a movie park in Wuhan on Dec 20.
"The reason I'm investing 50 billion yuan ($8 billion) to build a Wanda City in Guangzhou is to directly compete with Hong Kong Disneyland. If we do well, we will probably build theme parks in the US," Wang said.
"Many people have the mindset that what comes from foreign countries is always better than our own," Wang told the media. "Once our projects are completed, you can compare our visitor numbers and sales revenue (with Disneyland in China)."
The amusement park program called "Wanda City" is part of the company's transformation plan that will be announced in January 2015. The company will pivot its businesses in culture, tourism, finance and e-commerce for future growth as the Chinese real estate market has cooled down, according to Wang.
Chinese households continue to look for new ways to spend their leisure time, and that is good news for Wanda.
Asia-Pacific has had the most dynamic theme park market of any region the past five years.
"With China's vast population and expanding economy, there is room for a number of theme parks to be successful there," said David Mandt, spokesman for the International Association of Amusement Parks and Associations (IAAPA).
China has 831 amusement parks, and that number will continue to increase in the next few years, according to a report by IBISWorld.
Revenue for the amusement park industry in China has increased over the past five years at an annualized rate of 12.1%, reaching $2.9 billion in 2014. IBISWorld forecasts that revenue will increase 8.6% annually in the next five years, totaling $4.5 billion in 2019.
Disneyland in Hong Kong sustained seven years of losses after its grand opening in 2005 before turning profitable. The park made about $14 million in the fiscal year ending Sept 29, 2012, compared with a loss of $30.5 million the year before. Shanghai Disney Resort is planned for 2015.
Hong Kong Disneyland's best yearly attendance was 7.4 million. Wang said Wanda City will attract more than 20 million visitors per year.
"Wanda is totally familiar with the Chinese market and will make a formidable opponent to Disneyland (in China), " said Speigel.
Wanda City, however, will face intense competition in the amusement park sector with a host of new parks expected to open in the coming years such as the Shanghai Disney Resort and the Beijing Universal Studios Park.
Disney performed relatively well in the US, with attendance of 25 million at its California parks in 2013. The company is currently investing $1.1 billion to expand its Florida and California parks.
"The US is currently saturated with theme parks," said Speigel, as almost every metropolis in this country has at least one major park.
Even though there is no room for major greenfield development, Speigel suggested Wanda Group purchase a local theme park company that understands the market.