The Chinese market has been fueling much of the growth in the theme park industry over the past few years. But the Chinese government now is taking steps to control the runaway growth of theme park developments in the nation.
Chinese media reports that regulators are taking a harder stand on approving theme park projects. If you don't read Chinese (or trust Google's automatic translation), you can find a good English-language summary of the changes here.
And the TL;DR (in any language) is that China wants to stop the development of crappy knock-off parks that no one is going to pay to visit anyway, as well as park developments that depend upon associated real estate deals to be viable. (Yes, this is where everyone at Disney associated with the original Disneyland Paris business plan whistles quietly while staring at the ceiling.)
So is crackdown the bad news for theme park design industry that Variety seems to be making it out to be? While volume = income for design firms, one might question just how much money was going to reputable design firms from the fly-by-night projects. Culling the industry by shutting down projects doomed to fail offers the potential of delivering more market share to solid projects, strengthening parks from Disney, Universal, Fantawild, Chimelong, and other players with the money and expertise to deliver successful developments in the Chinese market.
Real estate developers around the world have learned that one of the fastest ways to get local governments and banks to open their wallets for your project is to promise them the next Disneyland. Offer normally steel-eyed business cynics the chance to invest in a theme park (or a movie production), and many of them turn into willing, no-questions-asked suckers, eager to turn over their money for what they think will be an easy payday that makes their community famous. Every few months I get a phone call or email from some local reporter somewhere in the United States asking me to comment on a local developer's proposal to bring "the next Disneyland" to their community. Inevitably, the reporter seems disappointed when I point out that's not going to happen.
Anyone who's tried to buy or rent a home on the west coast of the United States already knows that Chinese investors are flush with cash and looking to spend. It's even crazier within China, and the sharps are out looking for marks. That's generated countless number of theme park development proposals from people who don't have the knowledge or experience to make it in what is actually a highly competitive and unforgiving industry.
The Chinese market is underserved with world-class theme parks at this point, given the growing purchasing power of its citizens. But the key phrase there is "world class." Theme parks demand an enormous amount of capital, including land, utilities, and transportation infrastructure, as well as the rides, show buildings, stores, restaurants, and support facilities built within them. Even a "cheap" theme park that fails can be devastatingly expensive mistake for a community.
As with just about everything else in life, if you want to pass the test, you'd better do your homework first.Tweet
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