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Theme park craze is poor profit logic

(China Daily)
Updated: 2009-11-18 07:50

Thousands of theme parks have sprung up in the country in the past two decades. But 70 percent of them are losing money. Despite that the Water Margin Theme Park, Shanghai Disneyland and the World Chocolate Dream Park were announced in quick succession. An article published in the Beijing News tells us why. Excerpts:

Will Shanghai Disneyland, after completion, open the floodgates of profit for the Walt Disney Company? Not necessarily. Among all the Disney parks, only those in the US and Japan make profit . Even the once highly profitable Hong Kong Disneyland is not doing good business now.

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A report released at the last China Tourism Resort and Attraction Summit said 2,500 theme parks had sprung up in the country in the past two decades. But 70 percent of them are losing money - only 10 percent make some profit.

The reality is that so many theme parks could not have been built without governments' help.

In fact, a major State-owned enterprise based in Shanghai's Pudong district will reportedly invest in the Disney project, too. This means the Shanghai municipal government will be involved even in another capacity in the construction of the park.

The Shandong provincial tourist bureau is involved in a similar capacity in the Water Margin Theme Park.

Why are local governments so enthusiastic about such parks?

On the one hand, a theme park adds to a local government's political achievements. On the other, costly theme park projects help increase land prices, create jobs, invigorate GDPs and raise government revenues.

So even if a theme park loses money, the local government won't because taxpayers will always be there to foot its bills. That's why despite fears that a theme park could run into the red, local governments are still crazy about building them.

(China Daily 11/18/2009 page9)

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