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Peppa Pig Play Cafe China Leisure

Linda Dong on the rise of IP & branded LBE in China

We speak to the president of China Leisure Development Company about her top trends to watch

The China Leisure Development Company is an affiliate of China Creation. Founded to focus on the leisure and attractions market in China, the company partners with top international IPs to bring dedicated location-based entertainment products to China.

Linda Dong

China Leisure’s president, Linda Dong, studied economics and began her career with Goldman Sachs, before returning to China to work for the M&A team of Morgan Stanley Real Estate Fund. She later joined her family business, China Creation Group, where she worked with Nickelodeon on the Nickelodeon Universe indoor theme park at the Mall of China in Chongqing, which fuelled her decision to focus on working with IPs.

I didn’t think that the finance sector was very exciting, compared to bringing magic and joy to audiences in the entertainment and attractions sector,” she tells blooloop:

“After a couple of years in finance, I realised that I enjoyed doing projects a lot more. The other reason I left the finance sector was that I wanted to do my own startup, so in between real estate development and attractions and finance, I did a year and a half in fashion on an online platform here in China.”

China Leisure Development Company

Dong then sold that business to join forces with her family:

“My family business is in real estate. My father needed some help with the Mall of China project, which was the first time I dipped my toe into the whole theme park and attractions industry.”

She began to build a network of connections, and to do some research:

“I went to over 10 parks in the span of a year, and rode on over 70 roller coasters, to catch up because I was a bit of a latecomer,” she explains. “I do like to investigate thoroughly! Coming from finance, it’s all about the due diligence.”

Nickelodeon China

She went to all the world-famous parks, including Disney, Universal, and several parks in Europe:

“I wanted to understand the balance between IP, storytelling, theming, and the purely mechanical attraction side,” she says. “I worked my way through that. We completed the design of the Nickelodeon Universe for Mall of China before we entered into a purchase agreement to sell the project to the other shareholder at the time. After that, I couldn’t go back.”

Master planning, writing and content development, attraction and graphic design for the Nickelodeon Universe was done by FORREC.

A significant market

Child playing at Peppa Pig Play Cafe

She felt there was a significant market in China for the attractions sector, especially with IP.

“Over a year and a half, we saw a lot of projects announced. Not many of them made their way right through development, construction, all the way through to opening. So we saw what the challenges were for international IPs coming into the Chinese market.”

Sometimes, such challenges involved potential cultural differences. Other times, the difficulties were different:

“Developers may not understand the attraction sector and what was needed; they didn’t necessarily know exactly what they had to contribute, and the amount of work that goes into building a world-class LBE project. For a lot of reasons, many really great potential projects that get announced don’t find their way through to daylight.”

Accordingly:

“At China Leisure Development Company, we established ourselves in this sector to be a bridge between the IPs and the Chinese developers that really want and need these projects, but who find the process is a little bit laborious, which it is, for people who don’t really fully understand and comprehend what goes into it.”

China Leisure: understanding how to work with IPs

Touching on the challenges and opportunities inherent in working with IPs, she says:

“One of the things is to understand the IPs thoroughly,” she explains.  Any lack of dedication in forming a complete understanding of the IP in question will leave developers at a disadvantage, she contends:

“A lot of developers who aren’t experienced in this area don’t really understand that theme park isn’t about sticking a Mickey Mouse image onto a rollercoaster. It’s about these stories that are incredibly compelling to this audience. This is why these IPs are worth multi-billions of dollars.”

Paw patrol FEC

“It’s not the cute image of Mickey Mouse, or Peppa Pig, or Paw Patrol that is worth all that money, but the stories, and what they represent. So, it’s not about scattering a few images and fibreglass statues around. It’s about the whole experience.”

In the end, it comes down to the sort of world-building that affords a genuinely immersive experience for the target demographic.

“Many developers really don’t understand IPs,” Dong says. “They don’t understand the stories, which makes it very difficult. There can be a lot of friction during the design and development process as to why certain things can’t be done, and why other things have to be done in certain ways.”

Peppa Pig Play Cafés

China Leisure’s Peppa Pig Play Café in Hangzhou, featuring six immersive Peppa Pig settings, was the first project where the design was done in-house:

“When we embarked on the project, my design team and I –  we are all fairly young and don’t have kidswatched all eight seasons of Peppa Pig.”

China Leisure Peppa Pig Play Cafe

This ensured they had a thorough understanding of the brand and stories, before embarking on the project. She adds:

“We were able to create these very immersive environments with little Easter eggs, which 90% of our customers may not spot, but that 10% of the fanbase will recognise as something very special from the episode that has been recreated in real life, and the other 90%, while not knowing the specific details, will feel the difference in terms of immersion.”

A focus on FECs for China Leisure

In China, she explains, especially in real estate, development is a very cut-and-dried industry:

“Design doesn’t necessarily bleed into operations, into storytelling, into anything else, so key decision makers may not understand certain things, and might not understand the value of those things to the customers that would, ultimately, be serving. That’s where a lot of the friction comes in.”

Nickelodeon Playtime China

The short-term focus for China Leisure is on FECs. Dong explains that decision:

“In a country like China, especially, which already has a Universal and a Disney, it’s going to be very difficult to find another large-scale city with a big area that requires development. Then it has to be a perfect storm. So many things have to go right for that kind of project to be able, ultimately, to open, and it’s a long-term timeline type of project: 10, 15, 20 years.

“Numerous private companies have looked at doing theme parks with international IPs, but the scale of the challenges and the friction issues arising from key decision makers not really grasping the IPs or the industry has made it very difficult for any of these bigger theme park projects, even with private developers, to come to fruition. There’s always that clash between the creative side and the investment side.”

Smaller investments

FECs are different:

“Coming into COVID in 2019 with the whole macro environment turning, I just didn’t see any great opportunity, until China is, at least, into recovery, whereby any of these larger scale projects would be likely to open. FECs and play cafes that are 1000 to 3000 square meters require much less investment and have a much faster return on investment timeline.”

Teenage Mutant Ninja Turtles FEC

Additionally, she comments:

“Whether they are in a theme park format or a 1000 sq m play café format, these IPS are still beloved. You still have that huge fan base there that is willing to spend. We thought that it would be a much easier business model to just convert these IPS into smaller formats that we could open at speed.”

This is proving to be the case:

“We’re not ready to announce the details but we’ll be opening up a second Peppa Pig Play Cafe location very soon!”

China Leisure & retailtainment

The FEC/play café format is ideally placed to take advantage of the retailtainment trend. Dong explains:

“A lot of retail that is dying because of eCommerce and COVID; it’s a winter storm, essentially. Everything was going online, and then COVID hit, meaning even people who wanted to shop offline couldn’t. A lot of big retail spaces were opening up. Then, of course, there was the education reform bill, which closed a lot of major tutoring centres and kids’ after-school programming centres.”

TMNT FEC China

In response to the country’s drive to ease the academic workload of young students, the law required local governments to take steps to reduce the burden of excessive homework and off-campus tutoring. This resulted in spaces in central locations becoming vacant:

“Previously, the rents on such central locations would have been completely out of reach for LBE anchors,” Dong says:

“Now, suddenly, these locations are looking for LBE projects to draw traffic offline. It’s a really big opportunity opening up for smaller scale LBE projects that can anchor community city level shopping malls.”

She adds:

“Numerous developers and malls were coming to us, offering us previously unimaginable tenant subsidies and rental levels, which makes it a very compelling business model.”

Choosing the right attraction

Matching the IP with the type of attraction is, she says, key to the project’s success:

“Again, it’s a matter of really understanding the IPs and the demographic range,” she explains. “There are always LBE projects, in whatever format, that can fit the needs of that demographic.

“With Peppa Pig, China Leisure Development Company opted for a play cafe because we know that it would be very hard to sustain a larger FEC of 3000, 4000 square meters with that key two-to-five-year-old demographic. They don’t need that much space. They’re not like the seven or eight-year-olds that need a lot of space to run around and need a huge slide, swings, and all sorts of exciting stuff. It’s more about immersion, for that younger age group.”

Peppa Pig play cafe from China Leisure

“We opted instead to shrink the format for Peppa Pig into a play café, where the café portion essentially caters to the adults, who are at a play centre for three hours and don’t have anything to do. If you can make it a family outing where the kids can play, and the adults can have a nice relaxing brunch, we’re able to increase our per caps and widen our demographic, not just to two-to-five-year-olds, but also their adult families.”

Know your limits

It is, she comments, crucial to understand the limitations, as well as the possibilities:

“Peppa Pig is very, very popular among the two-to-five-year-old group, so we’re able to get a large portion of that target demographic penetration rate. The limitation is that once you get outside of that range, the penetration is virtually zero. It’s very specific. So as long as we realise the limitations and the advantages of the IP, and we structure the product around that, we’re able to be in a very comfortable space from a business model standpoint.”

China Leisure play cafe

Keeping the offering fresh isn’t a huge issue:

“The great thing about working with these IPs is that there are always fresh stories out there. As long as there are new babies being born who are then coming of age and watching Peppa Pig, we actually have a pretty fresh appeal to new and up-and-coming guests. It’s a two to three-year age range, in terms of appeal, but we always have new guests coming in.

“At that location, we would only stay for five to a maximum of eight years, which is more than enough time for our return on capital. As long as Peppa Pig is still very popular, then we go to a new location and switch up the attraction offerings, or we switch to another IP that has appeal at that time, five to eight years in the future. It’s a product where the model stays the same, but the product can change.”

Paying attention to crucial differences at China Leisure

In terms of the importance of paying attention to cultural and regional differences, Dong explains:

“I think that’s part of the reason we opted to design this in-house this time. There are many differences in child-rearing practices here in China versus in the US, as you can imagine. Chinese people, for example, are very particular about not letting kids play where adults or other people may have walked with outdoor shoes. That is less of a problem in the US.”

Nickelodeon playtime china
Nickelodeon Playtime in Shenzhen, designed by JRA – part of the RWS Entertainment Group.

“With Nickelodeon Playtime, which was our first FEC, our international design team did a great job, but these nuanced little cultural requirements don’t always get captured. In that case, we originally anticipated that the customers would just remove their shoes before they went into the play equipment. We had hard floors everywhere in the FEC, but we realised very quickly that our customers didn’t like that.

“Some kids would wear their shoes because it wasn’t a compulsory requirement for people to take their shoes off before entering. Some of the littler kids, and even the adults, would wear their shoes into the playground, which resulted in feedback saying it was very unsanitary.”

Solving problems and learning from previous projects

The solution was to install shoe shelves at the entrance and to require people to take off their shoes. However:

“We were unable to re-lay all of the flooring, so portions of it were harder and not as comfortable as that of some of our competitors, who had put in soft flooring throughout.”

China Leisure FEC

This was taken into consideration when it came to designing China Leisure’s Peppa Pig project:

“We have an entrance where kids and parents take off their shoes. Once they come into the café, everybody’s in socks.

“All of our flooring is soft and very comfortable. It’s still PVC – we wouldn’t use carpet because that would be impossible to keep clean – but we have a layer of foam underneath so that when you walk on it, it’s a little bit springy. So you can see that a small Chinese cultural detail like taking your shoes off can translate to a big design component.”

A competitive market

She cites another instance where cultural considerations make a design difference:

“Chinese parents are very protective of their kids. In the US, you can let kids run around on hard surfaces, and if they fall, you just blow on their skin, give them a hug, and that’s it. Here, if they get a bruise or they start bleeding or hit their nose, it’s a hospital visit, so everything we have is soft padded, all of the corners are rounded, and softened with those silicone covers you get to baby-proof your house.

“It really impacts the design materials we use. All our props are foam with PE, in contrast to Peppa Pig World in the US, where the props are hardwood.”

Nickelodeon_playtime China

In terms of future plans, the FEC market in China is, she says, currently competitive:

“We have one of the most highly developed FEC markets in the world in terms of numbers, and in terms of their quality. We have a couple of major competitors in the market that do 3000, 5000, and 8000 sq m-type FECs for kids of 10 and under. In terms of numbers and coverage, we have a lot more play centre-type FECs per city, per population, than they would have in the US. There are a lot more competitors and a lot more brands out there, and all of them are domestic.”

Play cafés

Specifically, these centres are, she explains, of a certain type:

“They have created these just beautifully designed, huge palaces for kids to play in, with areas of between 5000 and 8,000 square meters. A lot of capital has been raised, and we’ve seen a lot of development.”

There are hundreds of these in China at this point. She adds:

“It is partly because of this that we have opted to go with the play café format. Because of how popular this format has become in China, it is a little bit over-competitive right now. We see a lot of cannibalism, with admission prices dropping steadily year over year since COVID started”

Girl looking at princess costumes

The boom overlapped with the COVID pandemic:

“Many of these FECs have opened subsequently, something that has been leading to a steady decline in revenue for all the brands and products in the market.”

Future plans

This, however, is something Dong envisages will be temporary:

“With economics, things ultimately balance out in the end. You have this oversupply; you’re going to end up having store closures. Once that settles down a little bit, and, potentially, some of the funding runs out, we would see an opportunity to go back in.”

Accordingly, she explains:

“China Leisure Development Company has signed an FEC-type format of 3000 to 5000 metres with Hasbro, which uses many of Hasbro’s international IPs, such as the Transformers, Peppa Pig, PJ Masks, My Little Pony, and so on: a multi-IP format.

“However, we have put a hold on it until we see there is less competition in the market.”

In the shorter term, she adds:

“For now, we have opted to focus instead on the play café format because it’s smaller, it’s easier to get into, and there’s more space.”

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Lalla Merlin

Lalla Merlin

Lead features writer Lalla studied English at St. Hugh’s College, Oxford University, and Law with the Open University. A writer, film-maker, and aspiring lawyer, she lives in rural Devon with an assortment of badly behaved animals, including a friendly wolf

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