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Investors buckle up for Chinese roller coaster ride

By ELIZABETH WU in New York and Huang Ying in Beijing (China Daily) Updated: 2014-06-30 03:00

International and domestic companies are rushing to invest in China's amusement parks, but analysts have warned of fierce competition and low profits.

Six Flags theme parks, a US company, and Riverside Investment Group, a real estate developer in China, have formed a partnership to build a number of Six Flags-branded theme parks in China over the next decade. Terms of the arrangement were not disclosed.

Texas-based Six Flags Entertainment Corp, with $1.1 billion in revenue, has 18 parks across the United States, Mexico and Canada.

"Six Flags is spreading global wings," said Dennis Speigel, president of International Theme Park Services in Cincinnati, Ohio.

"China is without a question the hottest spot on the planet," he said. "Where there's smoke there's fire."

Speigel said China, the United Arab Emirates and Russia are the top countries for investing in theme parks.

In 2012 and 2013, a dozen theme parks and a water park were opened in China, with an estimated investment of 21.3 billion yuan ($3.44 billion), according to the China Theme Park Pipeline Report, released by management services company AECOM.

Another 59 theme parks are in the pipeline. Beijing and Tianjin are at the center of the development in northern China, while the Pearl River Delta region and Hainan province are taking advantage of the rapid development of tourism in the south, according to the report.

In 2012, DreamWorks announced plans for a Shanghai Entertainment District, and last year announced an indoor theme park in the Yangtze River Delta.

Chinese companies are also expanding their projects. Dalian Wanda Group said the 36 billion yuan Wanda cultural tourism complex in Wuxi, Jiangsu province, will be completed by the end of 2016 to compete with nearby Shanghai Disneyland, which is scheduled to open at the end of 2015.

China's amusement park business is a "boom and bust" market, but some of the parks that operate in China are not earning a lot of money, Speigel said.

Yang Yanfeng, an associate professor at the China Tourism Academy, said there are about 3,000 big and small theme parks in China, but less than 10 percent of them are profitable.

Developers tend to connect theme parks with adjacent commercial real estate projects to attract crowds, prompting the appreciation of the surrounding commercial property. In return, property sales and leases support the theme parks, Yang said.

Speigel, a veteran consultant in the theme park industry for 50 years, doesn't believe all the planned theme parks in China will really be developed. "Some of them won't happen."

Contact the writer at huangying@chinadaily.com.cn

Investors buckle up for Chinese roller coaster ride

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