When ‘Splendid China’, the mainland’s first theme park opened in 1989, its success and a growing middle class seeking entertainment brought hundreds of parks online of which many opened in remote locations, had no cohesive theme and gave no reasons for guests to return or tell their family and friends about their experience. The exception was Hong Kong Disneyland, which opened in 2005. Soon after, a government report identified that of the theme parks operating in China 70% were losing money which led to a government ban on new park development which lasted until 2013.
The government very much wants to promote theme park development on a few levels. Firstly, it fits well into the vision of a consumer, service-driven economy. It provides entertainment in areas where non existed before. And most importantly, domestic tourism is rising 10% year over year. Theme parks fit well into the government’s policy of developing “green” industries that can employ the masses. A massive consumer population makes potential profits very alluring.
According to a McKinsey report, the percentage of affluent and mainstream Chinese will be 57% of the population by 2020, a significant increase compared to just 8% in 2010. When the first theme parks opened in the late 1990s, China barely had a middle class with just 5 million households, today that number is 225 million. By 2020, the ranks of the Chinese middle class may well outnumber Europeans.
Wonwhee Kim, of ProForma Advisors presented at the blooloopLIVE Asia some other consumer dynamics driving theme park demand by making the point that the 18-34 in age segment or “millennials” are more populous in China than in North America and Europe combined. Making up 31% of China’s total population, they have become a spending army of over 400 million consumers — prompting Goldman Sachs to call them “the single most important demographic on the planet today.” Some US parks have over 60% of their guests in this age category.
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