Theme Parks Industry: China will Lead the Market by 2020

28/02/2019

Studies revealed that the increase in Chinese purchasing power and a growing demand for high-quality entertainment will result in China to be the largest market for theme parks by 2020. But it shouldn’t come as a surprise

 

According to statistics, China will become the largest market for theme parks in the world by 2020, overtaking the US.

The “China Theme Park Pipeline Record” issued by AECOM – an American infrastructure firm that provides design and consulting – revealed, in fact, the exponential growth of Chinese theme parks’ visitors.

Thanks to the increase in Chinese purchasing power together with a growing demand for higher quality entertainment, the Dragon is standing out from the global industry recording a continuous growth in parks attendance.

Over the last 10 years, the global theme park attendance grew at an average rate of 13% while in 2017 alone, the 25 largest theme parks in the world experienced an overall business grow by 4.7%. The Asia-Pacific region did well too, especially for what concerns the People’s Republic.

 

In 2017 alone, 190 million people visited Chinese amusement parks recording a growth of 20% compared to the previous year.

 

Indeed, thanks to the Dragon and, in particular, to the brand-new Shanghai Disneyland – opened in 2016 – Asia is the geographic area where theme parks recorded the most conspicuous increase in visitors presence with a growth of 5.5%, more than double the growth in the United States.

Today, the Middle Kingdom is home to 128 theme parks while other 70 attractions will be added by 2025. Four of these structures are among the first 25 most popular parks in the world with Shanghai Disneyland ranking 8th and the Chimelong Ocean Kingdom in Hengqin island, Guangdong province, ranking 11th.

In this list, Hong Kong and Shenzhen represent two of the main popular location for amusement parks in China.

 

Theme parks industry - chimelong ocean kingdom - cifnews

© Ctrip.com. Zhuhai, Guangdong. The Chimelong Ocean Kingdom hosts the second world’s largest aquarium and award-winning light shows. In 2017, it received almost 9.7 million visitors.

 

Nevertheless, the country’s positioning in both the Asian and the global list of the most popular theme parks demonstrates how this industry in China goes far beyond Disney or Universal brands. The Chinese Chimelong, Oct Parks, and Fantawild are among the 10 major companies in this industry recording the highest growth on an annual basis.

However, these two groups follow two different strategies to reach success. Growth at Oct, a state-owned enterprise, is mostly based on acquiring and improving existing parks and attractions. Fantawild’s approach, instead, is to develop new parks that feature their own characters from movies, television, and cartoons produced by the Fantawild Animation company, well known in the domestic Chinese markets.

 

The popularity of Fantawild’s theme parks shows a new trend in the country, a desire for more localized content that applies not only to TV characters but also to food, events, and design features.

 

Moreover, as mentioned above, the increase in per-capita income is one of the reasons Chinese theme parks are gaining such a success. The population density together with a higher GDP made the industry’s proliferation possible over the last years.

These structures are, in fact, mainly located in coastal areas especially in the East China region where they account for 34% of all theme parks in the country.

However, the smaller number of city-scale theme parks in central China surely represents a big opportunity for the industry’s growth. Indeed, proposals of new parks are mainly concentrated in both central China and in the Southwest region, as well as in the Eastern one.

 

Theme parks industry - aecom 2018 report - cifnews

© AECOM. 2018 China Theme Park Pipeline Report. Distribution of Existing Theme Parks in China.

 

But the interesting fact of Chinese investment in this industry is the ability to respond to a growing demand for better quality entertainment with the latest technologies.

For example, one of the newest amusement parks is entirely dedicated to virtual reality. It is the Oriental Science Fiction Valley in the southwestern province of Guizhou, which offers 35 attractions and a Transformer looking robot statue that is 174 feet high.

The implementation of this park is part of a major project intended to boost technological development and innovation in the region. In Guizhou, indeed, Apple has already designed the construction of a data center structure providing an investment of one billion dollars.

 

Thanks to the use of new technologies, the Oriental Science Fiction park provides a unique experience showing both Chinese achievements in hi-tech and the ability to use it not only to respond to customers’ needs but also to boost regional development.

 

In addition, as the high-speed rail network continues to expand in China, traveling became cheaper and easier over the last decades. Traveling more than previous generations, Chinese consumers started to gain exposure to international influence and therefore, to gain higher expectations. Today, they are looking for high-quality content and services so that theme parks now have to provide the best experience to survive in the competitive market.

Therefore, while the significant increase in admission prices reveals people willing to pay more for better leisure, the success of Shanghai Disney demonstrates how the market responds well to world-class projects.

For what concerns investments, more than half of all the open parks in the People’s Republic had an initial capital expenditure of less than $150 million but the two biggest attractions involved more than $750 million, a figure that now needs the central government’s approval, according to the latest regulations.

The total expenditure for new projects is expected to reach $11 billion by 2020, while from 2021 to 2025 it is estimated at almost $20 billion, which means an average investment of $430 million each park.

This level of expenditure is much higher than the investments allocated in the past. But this rising expense is due to the higher use of the latest technology at the service of entertainment and to an increasing desire to offer better and better experiences to visitors.

 

Theme parks industry - oriental science fiction valley - cifnews

© YouTube. Guiyang, Guizhou. The Oriental Science Fiction Valley is China’s First VR theme park. Opened in 2018, the park’s mission is “to inspire dreams in science and technology.”

 

Having a theme park is still seen as an important asset to a modern city in China. It represents the natural evolution of the latest positive trends in the Dragon such as economic growth, a rising middle-class, better transportation infrastructure and an emerging inclination to travel to reach leisure.

Being one of the core components of the leisure industry, theme parks in China thus serve as a key economic driver. This, in turn, will lead local economic development, improve quality of life, create employment opportunities, boost consumer consumption, support the tourism and service industries, and promote cultural development.

Therefore, many Chinese cities are already encouraging theme parks development as a way to boost cultural industries, expand the services sector and improve the livelihood of their residents.

Chinese entertainment companies are expected to invest more and more in their offer in order to support both the industry and the local economy. Indeed, parks like the Chimelong already conduct excellent national marketing and advertising campaigns to help keep traffic flowing to their resorts.

 

By 2020, total theme park attendance across China is estimated to reach 230 million people with many of the proposed parks expected to achieve 1 to 2 million visitors per year each.

 

However, although the total attendance at China’s theme parks is still lower compared with other developed economies, the report’s findings demonstrate a significant opportunity for future growth in the Chinese market.

The number of these parks in the Middle Kingdom will continue to increase rapidly over the next years. Almost 70% of all these projects are going to be developed and operated by theme park chain operators, which will continue to expand in new cities taking advantage of rising levels of consumption and tourism demand.

Indeed, as the new middle-class society spread out of classic big cities, new destinations will be the main targets for further leisure investments so that lower-tier cities will start to represent new entertainment hubs in the near future.

So while the purchasing power keeps rising in China and the demand for better quality entertainment keeps follow, the quick growth of leisure parks in the whole country is not surprising. It is no wonder why the Dragon will lead the worldwide industry so quickly.

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