Loss making
"Surveys show that the majority of theme parks (in China) have been loss making," points out Michel Brekelmans, the co-head of L.E.K. Consulting's China operations based in Shanghai.
China's largest theme park chain, Happy Valley, opened its first park in the 1990s, offering a more Western-style format, introducing its own characters and dividing the park into different themed areas. While Happy Valley has been successful and expanded, the majority of parks opening in China are either animal themed or loose adaptations of existing theme parks.
According to Brekelmans, the majority of new parks will present visitors with an amalgamation of thrill rides, roller coasters and Ferris wheels. "More recently local operators are realizing that theming is a key factor in marketing the park and creating the overall experience," he says. "We're seeing more attempts to come up with original concepts."
With the arrival of Disney and other multinational projects, he says, more expertise and dedication are being shown across the board. "A wave of joint ventures with foreign players is entering the market, bringing with them the skills and concepts to succeed in China," he says. "Slowly local players are learning lessons, and many smaller upstarts have exited the market."
Brekelmans believes that China's theme park developers are slowly becoming more creative and savvy about the market, adding their own cultural flavor to home-grown parks.
"We are seeing attempts to come up with original concepts based on Chinese culture and history such as Ming Dynasty (1368-1644) parks or The Monkey God," he says.
Part of the learning curve, he adds, is the realization that smart marketing and well-placed reinvestment provide an important boost to theme park revenue. "For theme parks to be successful on their own, it's critical to drive repeat visits," Brekelmans says. This means reinvestment, offering new attractions that can bring visitors back for their second, third and fourth visits.
"In China, this does not necessarily mean coming up with a new attraction every two years, as these can be highly risky and capital intensive investments," Brekelmans says. "China has a great tradition in staged acrobatic performances, for instance, and these could be a great draw for people if done well and to a high standard."
The artical is adapted from China Knowledge@Wharton, http://www.knowledgeatwharton.com.cn. To read the original version, please visit: http://www.knowledgeatwharton.com.cn/index.cfm?fa=article&articleid=2741
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