Chinese Theme Park Industry Continues to Grow Despite Pandemic

At the sprawling 140-acre Yinji Animal Kingdom in China’s Henan province, visitors can feed giraffes, take a river safari in an amphibious vehicle, ride a Jinma roller coaster, twirl in a Zamperla Disk’O, or splash down on the log flume. In the evening, parkgoers gather in the center of the kingdom by a massive “Tree of Life”—a sculpted, musical fountain by day and backdrop for a multimedia spectacular after dark. Built by a regional developer at a cost of 7 billion yuan (CNY), Yinji Animal Kingdom is one of a dozen new theme parks that opened in China last year.

Despite construction interruptions, social distancing restrictions, and the financial challenges associated with the COVID-19 pandemic, China’s theme park industry expanded in 2020.

Twelve new theme parks opened—on par with previous years—while nine parks closed or suspended operations, according to research by AECOM, a multinational infrastructure firm.

“Most of the parks in the pipeline tried to keep to their schedules as much as possible,” explains Beth Chang, AECOM’s executive director of economics, who estimates that new park launches were delayed, at most, by six months due to work stoppages.  

Chang, who co-authored the company’s “2021 China Theme Park Pipeline Update” with economist Rachel Li, is not at all surprised by the pandemic-era growth. “If you work in this market long enough, you understand that the Chinese government is determined to keep the economy going,” she says. “If a park has already told the government that it will be opening by a certain time, then it needs to open.”

Growth vs. Decline

Thanks to an expanding middle class, a rise in disposable income levels, and strong demand for themed entertainment, China remains the fastest-growing attractions market in the world.

AECOM calculates that there are 156 theme parks in China, including some projects that have temporarily ceased operations, up from 128 theme parks two years ago. It expects another 80 parks to open by 2025. Developers are slated to invest up to CNY 300 billion on the projects.

Not all is rosy, though. Market pressures, heightened by the pandemic, have given rise to a “survival of the fittest” as weaker parks with poor operational performance drop out of the marketplace. Over the past three years, 20 theme parks have closed, according to AECOM’s database tracker.

“These parks suffered from a lack of resilience in the face of the pandemic, with some being forced into accelerated bankruptcy or temporary closure to reassess their development direction,” Chang notes. Some parks suffered from poor site selection, a result of being tied to a real estate deal, while others did not offer an attractive product. 

Most parks that close are older, smaller, and built with less investment than their newer competitors; however, there are exceptions. BRC’s Fruit Warrior Planet near Chengdu ceased operating after just three years, despite promoting a local intellectual property, while Sunac Xishuangbanna, a CNY 15 billion project in Yunnan province, shut down five years after opening and just one year after being acquired from Wanda by Sunac. 

In order to survive, some operators have adopted new business models, such as pay-as-you-go. Nearly one in five Chinese theme parks do not currently charge an admission fee. Sunac, for example, has converted a number of former Wanda parks, which were built as gated theme parks, into nongated attractions. 
“Shifting to nongated operations is not the right approach for all parks,” AECOM warns. “This business model is most successful in high-density urban locations that attract strong footfall.”

This shift poses news challenges to the Chinese theme park market, as revenue and capital expenditure both tend to be lower for nongated attractions. In addition, research shows Chinese parkgoers spend significantly less than their Western counterparts on in-park expenditures like food, drinks, and merchandise.

Looking Ahead

Chang expects China theme park attendance to reach 70%–80% of pre-pandemic levels this year. Revenue will lag behind attendance, though, as parks offer discounts and more promotions to attract consumers. AECOM estimates it will likely take another two years before the number of parkgoers returns to 2019 levels. 
Still, Chang sees new opportunities for domestic players and international vendors alike. 

“There are 156 theme parks out there, and we absolutely believe demand can support more. But we need to have better parks,” she explains. “Some of these 156 parks are old, and their product needs to be upgraded and renewed. So, definitely, for the next 10-20 years, there’s still a lot of demand for amusement-related buyers.”
International vendors may face a disadvantage, though, due to rising price differentials between their products and domestic ones. “Recently, during the planning and design processes, we have more clients asking us to suggest rides that are manufactured in China, in order to control their budgets,” Chang notes. “So, we often suggest buying one fancy piece from overseas, and then to purchase the rest domestically.”

“A pandemic will not prevent people from pursuing a better life,” she adds. “For those parks that made it through 2020, this is a demonstration of industry resilience and vitality. As the impact of the pandemic subsides, excellent theme park projects will once again emerge and continue to contribute to China’s economic development trajectory.”