Theme park building boom hits the skids in smaller Chinese markets
The Dragon Fantasy amusement park, a 165-acre development in Tangshan City about two hours’ drive from Beijing, has no visitors. One section was opened for a few months in 2013, then closed.
Wei Jiushan spends his day in a fantasy land, surrounded by rides, arcades, souvenir shops, bungee-jumping towers that look like six-story-high banyan trees and a small village of mushroom-shaped houses.
But he barely notices all of that. After all, he has his corn to harvest.
A gruff, 52-year-old security guard, Wei says he’s been working at the Dragon Fantasy amusement park for three years. The problem is that the park, a 165-acre development in Tangshan City about two hours’ drive from Beijing, has no people. Developers began building it in 2011, opened one section for a few months in 2013, and then closed it again for lack of visitors and funding.
So he grows a few rows of corn, two dozen stalks at most, in a grassy island among shuttered ticketing offices and merchandise shops by the park’s front gate.
“They don’t allow me to grow corn, but I have nothing else to do,” he said, holding an ear up for inspection. “The corn isn’t even growing well, because the land’s no good. Look, it has worms in it.”
The park has all the hallmarks of a white elephant with dismal prospects, in surprising contrast to what’s going on in major Chinese cities such as Shanghai, Beijing and Guangzhou. That’s where heavyweights such as Walt Disney Co. and Universal Studios are building multibillion-dollar parks, betting on huge growth in the industry.
Analysts say that the China theme park market is worth $3.3 billion and will probably hit $4.8 billion by 2020 as the country’s consumer class continues to grow. A forecast by Los Angeles engineering firm AECOM, a contractor on many projects, even predicts the number of parkgoers in China will surpass that in the U.S. by 2020.
But outside of major tourist hubs, the parks boom has been less of a thrill ride. Many of the country’s estimated 850 parks developed by cities and smaller companies have struggled to attract thrill-seeking customers.
“They have these build-it-and-they-will come strategies — and then the people don’t come,” said Jeffrey Towson, a professor of investment at Peking University.
Dennis Speigel, president of International Theme Park Services in Cincinnati, pegs much of the problem on China’s economy, which is no longer growing at the breakneck pace of years past. The issue was highlighted by the August devaluation of the yuan.
“We’re already seeing a slowdown with the emerging middle class starting to hold back and not spending as much as they used to,” he said.
The Dragon Fantasy park, in Tangshan’s Fengnan district, an eerily uninhabited sprawl of brand-new apartment blocks and freshly paved roads a few miles from the central city, also underscores the challenges that China faces as it attempts to shed its export- and investment-based economic model to one based on consumption.
Tangshan is best known in China for being the site of an earthquake in 1976 that killed more than 250,000 people. In the following decades, the city developed into an industrial powerhouse, its factories churning out heavy machinery, chemicals, textiles, cement and steel.
Yet China’s appetite for raw materials is declining, and Tangshan officials have tried to transform the city into a tourism destination. A 2014 post on the Tangshan government’s website said that a state-backed company, Tangshan City Fengnan City Construction Investment Co., built Dragon Fantasy with a $235-million investment. It added that the park would create 800 jobs and bring in $88 million of annual revenue.
“This project will upgrade the whole industry, play an important part in revitalizing the industry, and also provide a high-level foundation for the extracurricular, high-tech education of our youth,” it said.
Typically, the parks are developed by local governments or state-owned enterprise that have access to land, a local developer with construction and management experience, and an entity with some source of usually cheap debt or equity, such as a local government financing vehicle, Towson said.
“In those cities, it’s like trying to play cards with a really bad hand,” he said. “Maybe they’re just doing what they can. And what do they got? They’ve got land. That’s their main card to play.”
There is also money to be made through construction contracts, management fees, and selling extra land for building hotels or apartments. “The trick to getting everyone to say yes to a very speculative project is to give each party compensating near-term profits,” he said.
Before the Chinese economy showed signs of slowing, 59 theme park projects were in the pipeline in China, with dozens of Southern California-based designers and contractors winning contracts to help infuse the projects with American ingenuity and imagination.
Well-established domestic companies have also positioned themselves to benefit from the boom. The massive Beijing-based property developer Dalian Wanda is investing tens of billions of dollars to build dozens of amusement parks across the country, including a “Wanda City park” in Xishuangbanna, a swath of jungles and thatch-hut villages near the Laos border.
So far, none of the major projects proposed by the biggest U.S. and Chinese theme park firms have been delayed or put on hold, such as the $5.5-billion Shanghai Disney Resort set to open in the spring.
“They are looking at this for the long run,” said Naveen Sarma, senior director at Standard & Poor’s. “In the long term, China is still a huge market. It’s an attractive market.”
Still, previous investments abroad have shown that underperforming theme parks can be expensive.
Disney was forced to inject $1.3 billion last year to improve and refinance aging Disneyland Paris, which has struggled with attendance and has had a rocky history since opening in 1992.
Edward Marks, chief executive of the Producers Group, a Glendale theme park design and construction firm that has worked on Universal Studios Singapore and Chimelong Ocean Kingdom in Hengqin, China, said he would not be surprised if some smaller projects on the drawing board are shelved.
“I see people reevaluating where they are with particular projects that haven’t broken ground,” he said.
Wei, the security guard, said that he began working in steel plants when he was in his early 20s. Then the mills went bankrupt, one after another, and he was forced to find new work. The park pays him about $350 a month, he said, less than what he made at the steel plant, but enough to survive.
“These are all supposed to be merchandise stores,” he said, waving toward a row of abandoned storefronts, their colorful facades cracked and peeling. “When the park first opened, some families would come, but the rest of the park never opened.
“The government probably just ran out of money,” he added, and went back to tending his corn.
Times staff writers Kaiman reported from Tangshan and Martin from Los Angeles. Tommy Yang in the Times’ Beijing bureau contributed to this report.
