Bottom line: Wanda’s recent theme park building spree looks aimed at challenging Disney, but many of its new resorts are likely to fail due to lack of experience and poor choice of locations.
Watch out, Disney (NYSE: DIS). Chinese real estate giant Wanda Group has recently embarked on a global theme park building binge that would put Disney to shame, and certainly outpaces the US entertainment giant in terms of investment dollars. This month alone Wanda is getting set to open a multibillion-dollar park in the interior Chinese city of Jiangxi, and it has also just announced the ground-breaking for another mega-park in the scenic southern tourist city of Guilin. Then there’s its plans for a $3.3 billion park near Paris announced in February, which would be its first major overseas resort.
All of this comes as Disney prepares to open its own first park on the Chinese mainland, a $5.5 billion resort set to premier in Shanghai next month. That resort has been drawing huge headlines these last few weeks in my adopted hometown of Shanghai, where nearly a million people have already flocked to the new Disneyland just to view it from the outside. The actual park won’t host its grand opening until mid June.
But while Disney has taken decades to build up its portfolio of just 6 Disneyland resorts worldwide, Wanda seems in quite a hurry to play catch-up. Its aggressive chief Wang Jianlin, one of China’s richest men, has already built about a half dozen major domestic theme parks in China, including the one in the relatively poor interior province of Jiangxi set to open late this month.
The company also announced the ground breaking last week for a separate 16 billion yuan ($2.6 billion) theme park in Guilin, the southern city that is one of the country’s most popular tourist draws known for its famous craggy mountains and meandering rivers. (English article) Wang has quite major plans for that site, including 5- and 6-star hotels, an ocean park and the usual theme park. That resort is set to open in 2020, and has quite lofty goals of attracting 20 million visits in its first year.
This new flurry of activity comes just 3 months after Wanda announced its first global theme park foray, with plans to build a 3 billion euro ($3.3 billion) park with local partner Immochan on a site 10 kilometers northeast of Paris. (previous post) I expressed a bit of skepticism at the time of that announcement, since Wang’s sudden investment spree is quickly spiraling into the tens of billions of dollars and taking him into numerous unfamiliar terrains.
Wanda says on its website that it now has 11 theme parks of various sizes around China, and based on the figures it’s giving those investments are probably collectively worth more than $15 billion. The company’s choice of locations looks relatively straightforward, with most parks located in smaller cities famous for their local scenery.
By comparison, Disney was insistent on its selection of Shanghai for its sixth theme park worldwide and lobbied for a decade before it finally got permission to go ahead with the project. That insistence was the product of years of experience that shows such parks do well when they rely not only on out-of-town visitors but can also attract a lot of day-trippers, since Shanghai is home to more than 20 million people and within easy driving distance for similar numbers.
By comparison, Wanda is betting much more heavily on out-of-town visitors for its sites. Most of the cities he has selected are favorites on the Chinese tourist map, though it’s far from clear that those visitors will be numerous enough to make his parks succeed. China’s own history with domestically developed theme parks is actually quite spotty. Numerous parks have opened in the past with big hopes, only to close a few years later due to poor management and failure to attract their targeted number of visitors.
The upcoming pair of openings, one for Wanda’s Jiangxi park next week and Disney’s in mid-June, illustrate the challenges that Wanda will face in realizing its theme park dream. Whereas the Shanghai Disneyland is generating huge buzz both at home and abroad, I have yet to meet anyone who has even heard of the Jiangxi park, even though Shanghai is a relatively short train ride away and should be one of its main target audiences.
At the end of the day, I can’t really fault Wanda for failing to get much publicity for its theme park ambitions. Among global companies only Disney can really get that kind of publicity, and perhaps Universal Studios can also generate some buzz. Part of that owes to the huge preparation and other consideration that goes into such massive projects — a process that Wanda seems to be skipping. Accordingly, I continue to have big doubts not only about Wanda’s new parks in Jiangxi and Guilin, but also about the broader long-term viability of its huge theme park gamble that seems a bit rushed and lacking in planning.
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