Riding the wave

Wanda and Disney go head to head as analysts predict fierce contest in China's booming theme park market

Wang Jianlin has thrown down the gauntlet to The Walt Disney Co.

The founder and chairman of Wanda Group opened his first theme park on the Chinese mainland last month - and in doing so proclaimed his company as the biggest threat to the new Shanghai Disney Resort.

"Chinese culture led in the world for 2,000 years, but for the past 300 years, because of our lagging development and the invasion of foreign cultures, we have more or less lacked confidence in our own culture," Wang, one of China's richest men, said at the opening ceremony for Wanda City in the eastern city of Nanchang on May 28.

"We want to be a model for Chinese private enterprise, and we want to establish a global brand for Chinese firms."

In an earlier interview with China Central Television, the state broadcaster, he warned that Disney's first foray on the Chinese mainland was destined to fail because of his park's competitive pricing and because "the frenzy of Mickey Mouse and Donald Duck, and the era of blindly following them, has passed".

Strong words, although Disney did not feel the need to respond. (A successful first year would be the best comeback.)

However, analyst Grant Ji says the Wanda chairman's bold comments suggest a wider trend. "It reflects the aspirations among Chinese companies to achieve global recognition as well as his determination to get a slice of the lucrative theme park market," says the executive director of capital markets in North China for CBRE Group, a commercial real estate company based in the United States.

Data from the Chinese Tourism Academy show that the total revenue of China's tourism sector was 4 trillion yuan ($608 billion; 536 billion euros) last year, with about 230 billion yuan generated by theme parks. Meanwhile, annual visitor numbers to theme parks nationwide is also forecast to hit 282 million in 2019, more than double the figure in 2014, says Euromonitor International.

The massive $3 billion Wanda City complex in Nanchang includes an outdoor, China-themed amusement park with twirling teacup rides, bamboo forests and China's longest, fastest and highest roller coaster; an indoor shopping mall with a cinema, restaurants and hotels; and the world's largest ocean park.

Disney's new resort and theme park in Shanghai, which has cost $5.1 billion to build and is scheduled to open on June 16, will be the largest in the world. It features the usual storybook castle as well as a pirate-themed zone, Treasure Cove, and the Tron Lightcycle Power Run, which is based on the popular Tron movie.

Ben Cavender, principal of China Market Research Group, believes both parks have the potential to do well. "Wanda's pricing will be competitive, although its operational experience and brand recognition may lag behind Disney," he says.

One advertisement for Wanda City offers a night in the luxury Mandarin Hotel and two adult tickets for the theme park for 888 yuan. A package priced at 1,588 yuan includes two nights' hotel accommodation as well as the cost of entry for two adults to the theme park, the aquatic park and a "cinema paradise" zone.

By comparison, three-day Shanghai Disney Resort packages now being offered by China Travel Service start at 2,590 yuan a person, which includes two nights at a nearby hotel and an adult ticket for the park.

Purely on ticket price, Wanda is attempting to undercut Disney. The cost of admission for one adult to the Nanchang park costs 198 yuan on weekdays and 248 yuan on weekends and holidays. For Disney, it is 370 yuan and 499 yuan respectively.

Cavender adds that Wanda and Disney have different target customers. "Disney is more appealing for those affluent middle class, while Wanda City is more attractive to those who care more about value for money," he says.

Wang Ling, who lives in Nanchang, visited Wanda City on the opening day with her 3-year-old son. Asked whether she would also take him to Shanghai Disney Resort, she answers, "Maybe someday, although I've read in news reports that the cost to visit Disney is pretty high."

Competitive pricing is not Wanda's only strength, according to some visitors.

Zhang Yiyi, a fan of theme parks from Zhejiang province, recently wrote a review online after visiting both Shanghai Disney Resort and Wanda City. He argues that the Nanchang attraction caters to a wider range of visitors, while Disney's rides and other recreational facilities are tailored more for children.

For the American company, however, its biggest advantage could be its name.

"Disney is one of the strongest, iconic brands in the world today," says Brad Burgess, director of Burson-Marsteller China, a branch of the global public relations company. "Although Disney originated in the US, the brand's appeal spans cultures, political preferences, ages and people groups. These are traditionally seen as divisive, and the strength of the Disney brand crosses these barriers.

"This is what makes the company unique, its appeal to both the hearts and minds of its audiences. So Chinese brands will need to develop a similar appeal, and I trust they can do this over time. But regarding the China market, there are few playbooks and sometimes it's anybody's guess."

Burgess believes Disney's challenge in China will be becoming as localized as possible while still maintaining its core essence.

"I've noticed an incredible amount of Disney marketing in Beijing shopping malls ahead of the (Shanghai park) opening," he adds. "I see how they are 'Chinafying' their approach, from using Asian imagery to the music they play."

CBRE's Ji says the Nanchang site is the latest step in Wanda's efforts to transform from being a property developer to a theme park operator. At the start of this year, the company slashed its property sales target by 40 percent, while its top executives have announced plans to open 15 to 20 Wanda Cities on the mainland as well as five overseas by 2020.

Wanda signed a deal in February with French retailer Auchan Group to develop a 3 billion euros ($3.4 billion) project called EuropaCity, which will be built adjacent to Charles de Gaulle Airport in Paris.

"This will mean competition for Disneyland Paris," Ji says. "I believe Wanda's international theme parks will also be attractive for Chinese travelers abroad."

And it's not just Wanda and Disney that are jumping on the theme park bandwagon in China. Along with established domestic players like Happy Valley, Chimelong and Fantawild, many other international companies are eying the market.

Universal Studios Inc has said it wants to open a site in Beijing, while Six Flags has teamed up with Riverside Investment Group, a Beijing real estate developer, to build a number of Six Flags parks across the mainland over the next decade.

The Eden Project, the attraction in southwest England, also signed a deal with property developer China Jinmao Holdings Ltd last year to build China Eden, a tourism and education project, in the east-coast city of Qingdao.

It will be the Eden Project's first venture in Asia, according to Tim Smit, its co-founder and executive vice-chairman. "This opportunity is exciting because our partners share our view that we should build a project that builds on 4,000 years of Chinese relations with the environment and Eden's fresh approach to education," he said in a media release.

China already has about 3,000 large and small theme parks, according to Yang Yanfeng, an associate professor with the China Tourism Academy. However, he says, less than 10 percent are profitable.

To make money, Wang Xuguang, president of Haichang Ocean Park Holdings Co Ltd, which manages several aquatic-themed parks in China, says the positioning, planning, core products and operating capabilities of such attractions are decisive factors.

Chen Shi, assistant general manager of TFTR Investment Co Ltd, which holds interests in amusement parks, adds that there is a structural imbalance in the industry in China. "Only those that really meet the market demand can have steady cash flow," he says. "Services as well as intellectual property are core to being competitive."

Parks with light assets, quality services, mature IP, innovative facilities and lots of interaction with visitors can stand out among the fierce competition, he says, adding that with China's soaring demand for leisure and travel he is optimistic about the market potential for theme parks.

Chinese consumer spending reached the highest level in the first quarter of this year, despite the country's economic slowdown, according to a May 31 report by market researchers Nielsen. Lynn Xu, its senior vice-president in China, says there is massive growth potential for spending on leisure and tourism in third-tier cities and rural areas.

So even though Disney is facing stiff competition, it looks like being a happy ending for theme park fans.

huyuanyuan@chinadaily.com.cn

Wanda City complex in Nanchang, Jiangxi province, includes an outdoor, China-themed amusement park; an indoor shopping mall; and the world's largest ocean park. Photos Provided to China Daily

Disney's new resort and theme park in Shanghai is scheduled to open on June 16. It will be the largest in the world.

(China Daily European Weekly 06/10/2016 page1)