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In depth

Is Asia the ace in the pack? Theme Park China (part 2)

It’s little wonder, then, that IAAPA Asia attracted 165 local and international exhibitors to Shanghai from across 57 product categories – including ride designers and manufacturers, 4D cinema screens, show producers, aquariums, bowling alleys,  mini-trains,   popcorn and nacho machines, ticket and wrist-band systems and strobe and lighting control solutions. All had their eyes firmly focused on Asia sales.

Among those mixing fun and business was Jeffrey J. Janovich, VP of Sales for Ottawa-based Proslide Technology Inc. His company, which designs and makes fast-and-furious water rides for parks across the world, is working on the world’s largest water park in the Canary Islands and has ongoing raft slide and water ride projects in the US, Canada, Taiwan, Australia,  Bali, Korea and Japan. “There is a lot of amusement park development going on in China, and many of the guys behind it are smart. They’ve toured the U.S. and European parks and they know what they want.” says Janovich.

Janovich says Proslide, which also worked on Shanghai’s Dino Beach park, has been approached on a number of potential China projects, although it has yet to fully tap Asia’s potential. “We are a small, specialised company and a leader in creating and building water rides in North America, but we haven’t collectively gone after Asia yet, ” he says. “We want to work with people who’ve done their homework and understand that this business is not really about price differentials, ” he says. “The return on investment for a park from getting the best water rides can be substantial; that’s why the major U.S. parks do that. The crucial issues are ride performance, excitement and safety.”

A leading Indian designer of children’s playground facilities and water slides,   Arihant Corp., is also eyeing continental expansion. “We are well established in our home market, and are now exploring the wider Asia market, ” says Mangesh Taksale,  the company’s Business Development Manager. “We are not yet doing any work in China, but we are looking to distribute here. So far the response has been very positive.” Andrew Thatcher, Sales & Marketing Manager of San Diego-based Wave Loch Inc., tells a similar tale. “We’re here at this Expo to expand our sales reach across Asia, not just in China, ” he says.

China Players

Overseas players will not have the Asian market to themselves, however. One of the stated purposes of the IAAPA Asia show was to give Chinese companies who’ve not had much exposure to international buyers the opportunity to make some connections, says Masterson of IAAPA.

The amusement park industry in China is regulated by the Chinese Association of Amusement Parks and Attractions (CAAPA) – which is affiliated to the global body, IAAPA. Founded in 1987, CAAPA  has pushing 500 members, including 380 amusement parks and 100 ride manufacturers – many of which snapped up the best booths at the Shanghai show.

One of the show’s largest booths was hosted by Fantawild – a Shenzhen-based theme park creation company which opened its first park in China last year. Its signature show attraction was a large, detailed scale model of the forthcoming Wuhu Huaqiang Park. Taking its cue from companies like Disney, Fantawild is seeking to leverage revenues from its park assets by developing a spin-off store chain selling branded toys and accessories.

Other prominent Chinese exhibitors included Shenzhen Unite Art Co. Ltd., a themed model parks provider; Nanfang Machinery, a large-scale hydraulic machinery company; Zhongshan-based Shiyu Group, an arcade games, prize machines and smart card systems manufacturer; and a water park and equipment company from Sichuan.

Spotting the Danger Signs

Beyond the glamour and glitz, the rollercoaster ride of profits and losses exists just as in any other industry. The fundamentals of the global amusement industry are strong, says Bray, IAAPA’s CEO. “The United States will be a USD20bn industry this year, with a number of new attractions being added.” Yet the warning signs of operational complacency in the United States – the spiritual home of the amusement park industry – are clear.

China’s emerging parks would be wise to avail themselves of the plight of Six Flags. Despite being the world’s largest regional theme park company, with 29 parks in North America, it has struggled for years and last December installed a new CEO, Mark Shapiro, to turn the company around. In a July interview with Park World, Shapiro chastised the company’s recent history for a lack of park maintenance, poor service and signage, sub-standard theming, insufficient leveraging of key assets – and an over-emphasis on teenagers, rather than families, as the core target market.

Shapiro’s rescue strategy focuses on asset management – Six Flags closed a park in New Orleans and will sell its Houston AstroWorld Site – and a clearer market focus. “Our turnaround efforts necessitate marketing aggressively to families to broaden our customer base, diversifying in-park entertainment options and focusing on an improved guest experience – from keeping our parks cleaner, to a more service-oriented staff, ” he says.

Six Flags is also reaching off-site for more customers. It has agreed multi-year sponsorship and marketing alliances with pizza chain Papa John’s and home accessories retailer The Home Depot. “Our corporate alliance programme provides us with not only sponsorship revenues but also significant marketing value through in-store promotions, ticket sales and out-of-home advertising, ” Shapiro says. While it’s too early to assess the long-term strategic impact, Six Flags’ first quarter revenues were down USD6.8m on the same 2005 period, and its net loss was USD241m.

Controlling Growth

 Six Flag’s recent travails are not lost on Liu Jingwang, Executive Vice President of CAAPA. Liu acknowledges that, although the amusement industry will contribute considerably to China’s economy, it’s still a young, developing industry – and uncontrolled growth could be detrimental long term. “Medium-sized cities in China all want or are building amusement parks, ” says Liu. “I’ve been telling municipal governments to control excessive capital spending on these projects to avoid potential losses.”

Liu has visited a number of amusement parks in Europe and the US and believes that the Chinese industry can, and indeed must, learn from both the successes and failures. “This expo represents the biggest support we’ve ever seen for our industry in China. We are currently in discussions with different Disneyland executives and we have a lot to learn from them, ” Liu says, “But we cannot copy bluntly.”

Sustainable expansion of China’s amusement park industry requires long-term funding. PricewaterhouseCoopers’ Theme Parks and Amusement Parks 2006 –2010 report notes that “although many parks have failed due to a lack of major reinvestments, ” some have made money, “indicating that with proper planning and reinvestment, it is possible to develop successful parks in China.”

Gary Bowerman writes for the Shanghai Business Review and this article appears with their kind permission. 

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