Universal Dreams of China Park — Again 环球公司再次期待在华建立主题公园

I have to admire the determination Universal Studios, the theme park arm of Comcast’s (NYSE: CMCSA) NBC Universal, which, after 2 failed attempts to set up theme parks in China is making yet another bid to enter the market in the northeast port city of Tianjin. (English article) The foreign media report on the subject is quite vague, disclosed by a Tianjin official visiting Los Angeles, which sounds to me like talks are still in a very early stage and could easily go nowhere. But the idea is certainly intriguing and even sounds like a good business move for Universal if it can reach a deal, as Tianjin is already China’s sixth largest city and, more importantly, is just a half hour from Beijing via high speed rail link, giving any future park access to more than 20 million people within easy driving distance and millions more who come to Beijing as tourists. Increasingly wealthy Chinese have shown they are not afraid to spend the relatively expensive ticket prices of up to $100 per person to visit big-name theme parks, as evidenced by strong attendance for Walt Disney’s (NYSE: DIS) Hong Kong Disneyland. Still, getting such expensive theme parks approved in China can be quite difficult, as all require central government approval because of their big costs. Universal has already discovered this fact through the failure of 2 previous plans, both announced with fanfare about a decade ago for parks in both Beijing and Shanghai. The Beijing plan quickly fell apart, but the Shanghai one seemed to be moving ahead for several years when it also ran into trouble for reasons that were never fully explained and was ultimately scrapped. Disney has also found out how difficult it can be to build a park in China. The company was in talks with the Shanghai government for nearly a decade before finally closing a deal to build a $4.4 billion Disneyland resort in the city a couple of years ago. Back in Tianjin, Paramount Studios, the theme park and movie division of Viacom (NYSE: VIAb) was also in talks with the city’s government to build a theme park based on its characters and other property and even announced a deal for the 5 billion yuan project back in 2006. A quick Internet search on what ever happened to that project reveals that it was finally approved by the central government just a year ago, meaning it took another 4 years after the original announcement to get approval. Given the preliminary nature of Universal’s latest talks and the slow speed of Chinese approval, I wouldn’t expect to see a new Universal Studios park in Tianjin until 2020 at the earliest, and think it’s more likely the US entertainment giant will fail yet again in its China theme park hopes.

Bottom line: Universal Studios’ latest attempt to build a China theme park is likely to end in failure, but looks like a good idea in the unlikely case that it succeeds.

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