Success in Shanghai by Jiao Xiaoyang
In the midst of China’s struggling amusement industry, a striking park called Suzhou Amusement Land has found the right balance—strong foreign investment and delicate dealings with the local government.

It’s hard to live in China’s opulent Shanghai region without hearing the uplifting ad slogan that goes “Disneyland is too far away. Go to Suzhou Amusement Land!” The slogan, coupled with the park’s mascot, a small cartoon lion, appears conspicuously in weekend TV programs, newspapers, billboards, and buses in Shanghai and in the neighboring provinces of Jiangsu and Zhejiang.

Situated at the foot of the Lion Hill in Suzhou, in Jiangsu Province, a two-hour drive west of Shanghai, the 150-acre park, also known as SAL, provides a rare place in the region where people indulge in thrilling rides and marvelous landscapes. At the entrance of the verdant Happy World, SAL’s main block in the east of the hill, an exquisite bridge spans the lake in the park’s center. Near the end of the bridge, cable cars carry passengers to the top of the 656-feet-high Lion Hill to enjoy a bird’s eye view of the skyline of Suzhou’s bustling new district.

While many theme parks in China have had to close soon after opening, SAL has risen as one of the country’s most successful parks since it opened in July 1995.

Its first project, the 22-acre Water World, opened in the summer of 1995 and racked up 600,000 visitors within 40 days after opening, setting a record in China’s amusement park industry.

The second project, Happy World, completed two years later, boasts the only flying coaster in China, and has brought in a cumulative 5 million people and $40 million in ticket sales.

SAL’s success is not representative of the entire Chinese amusement industry, which is suffering from a deficit problem. Although official industrial statistics are not available, insiders agree that of the 460 or so amusement parks in the country, more than half are in the red. Overstaffing and poor management are among the problems.

Bi Jianbin, secretary general of the China Association of Amusement Parks and Attractions, believes that when eyeing China for a new park, incoming investors must have a clear picture of the market environment before they sign the check.

“Amusement parks are not a restricted investment area (i.e., the law and government regulations do not restrict investment in amusement parks) in China,” he says. “Usually, local governments only consider whether the location of these projects tallies with their overall city planning and whether there are too many parks in their jurisdiction. But investors must assess the risks very cautiously,” says Bi, who is also president of the Beijing SBL Amusement Equipment Co. Ltd.


“In the beginning we thought we could cater to people at all ages,” says Bao Weiyi, general manager of SAL. “But gradually we realized that it’s impossible to hog the whole cake in the market, and we had to shift our focus.”

But nailing down a market isn’t the only challenge. SAL’s recipe for success has included, among many other things, offering new attractions, hosting festivals, and holding events lacking at competing parks.

Take the 10-day beer festival SAL holds every summer, for example.

Liu Quan, a Beijing-based young securities broker who attended Suzhou University from 1996 to 2000, still remembers the joyful scene: “I remember last time I went to the beer evening I saw Xue Cun (a rap singer whose funny songs are wildly popular among Chinese ‘netizens’),” Liu says. “I had some beer and I felt very comfortable standing in the cool breeze of the summer night. The moon and the park’s lights cast on Lion Hill, the lake, and the foreign-style buildings, which made me feel like I was in a fairy-tale scenery.”

In addition, the festival includes live entertainment and a raffle drawing that sends 10 customers home with a small gold bar (worth $400).

The ticket for the beer festival was only 15 yuan, compared to the regular ticket price of 60 yuan ($7.20). The beer was also available at a reduced price because of beer producers’ sponsorship.

To Bao, the beer festival, which has been held for seven years, is more about image than income. “Considering the ticket discount, gold bars, and other costs, the income of the beer festival draws even with our expenditure. We just want to create some occasion to please customers,” he says.

A Fledgling Industry
Amusement parks sprang up in Chinese cities in the early 1980s, when the country had just ended the decade-long Cultural Revolution and began to focus on economic growth. The Beijing Shijingshan Amusement Park and the Shanghai Jinjiang Amusement Park were two success stories at that time.
But as people traveled more and cultivated more refined tastes, the old parks gradually lost appeal. Theme parks such as SAL and Shenzhen Happy Valley, as well as some waterparks, came into vogue in the mid-1990s. Additionally, two port cities, Shenzhen and Tianjin, each bought a retired Soviet aircraft carrier to transform into theme parks.
The success of these newer parks is due in large part because they’ve been developed jointly by local and foreign investors with close ties to the government, allowing for more financial flexibility. Such ties to the government can afford a park a number of benefits, including greater ease in navigating regulations and bureaucracy, as well as a steady and sizable stream of ticket sales. When a government partners with a park, it often bolsters its investment by regularly purchasing large blocks of tickets for its employees and guests.
In addition, as China’s dynamic economy continues to grow, a number of local and regional governments are pursuing plans for expanding economic development. The government may view a new park as a key factor in ensuring the future vitality of a developing local economy. If a park is able to cultivate a partnership with the government at the outset of such a plan, then the park might receive substantial benefits such as a well-situated tract of land invested as stock, tax advantages, and integration into the local power and transportation infrastructure.
Bi agrees that these partnerships work well in China.
In the case of SAL, one of the investors, a state-run company called SNDD, provided the land parcel needed for the project as stock, while several other foreign investors put up cash (companies from Hong Kong, Macau, and Taiwan, for example, are considered “foreign investors” in the mainland and can thus enjoy certain benefits when investing in projects on the mainland). The land price later soared by nearly tenfold with the boom of the
new district.
“The local government did not spend money, but they reaped a mature land parcel that would otherwise be left idle,” Bi says. “The other individual investors saved a lot of capital for land cost. It’s really a win-win solution.”
In contrast, several solely foreign-funded theme parks established in the late 1990s had negative results. Shanghai American Dream Land and the Grand Link in Qingdao (Tsingtao), a port city in East China’s Shandong Province, known for its production of beer, were developed but closed soon after opening because of huge losses. These losses might have occurred for several reasons: high costs, little prior knowledge of the customer base and what they could afford to pay for a ticket, and lack of a local government partner that could provide land and other benefits.
Bi adds that parks—foreign or local—should handle relations with government offices tactfully.
Although China introduced a market system a decade ago, the inertia of bureaucracy still lingers. For example, local bureaus in charge of technical supervision require amusement parks
to submit detailed blueprints of new rides they’re going to buy, a time-consuming formality that has often soured parks’ purchase plans.
Also, civil servants in some local government departments, including the police, the business administration, and tax authorities, sometimes extort amusement parks for free tickets, gifts, wining and dining, and even money.
“I think park managers should be dexterous to maintain a balance between their parks’ interests and the relations with the government. As a Chinese saying goes, ‘harmony brings wealth,’” Bi says.

Feeling the Stones
Bao says originality matters when attracting the wealthy classes to East China. For one, the park’s design was on the cutting edge. “Strangely, there wasn’t a decent theme park at that time,” he says, recalling when the plan of SAL arose in 1992. Even though most Chinese parks built in the 1980s were modeled after Japanese styles,

SAL’s investors sought state-of-the-art American and European designs. SAL, a $66.5 million joint venture among several Chinese companies, chose Toronto-based Forrec to design the park. Forrec and the park decided on an “Asian Disneyland” theme, a combination of modern parks’ excitement and the tranquility and elegance of classic Chinese gardens. SAL’s success is also due in large part to its extremely advantageous location—it’s a short drive from key cities such as Shanghai, Nanjing, and Hangzhou. More than 7 percent of the country’s 1.3 billion people live in this region, and the per capita income reaches $1,100 annually, almost triple the country’s average.

The 2,000-year-old town of Suzhou alone attracts millions of tourists every year for its renowned silk embroidery and ancient gardens and pagodas. Suzhou’s booming new district, where SAL is located, is home to factories and offices of several multinational businesses.

SAL has been proactive in its marketing, which is intended to win over customers’ hearts. After all, more than 60 percent of SAL’s patrons are repeat visitors.

Also, in China, many of the older parks rarely add new attractions after establishment, which is a given in most parks around the world. SAL procures one or two new rides nearly every year as a matter of course. When funds are short, the park might exchange a ride for a share in future ticket income.

As per good business practice, the park also conducts ongoing research to maximize the park’s offerings. SAL has worked with the Suzhou University of Science and Technology to issue a questionnaire to local people for comments.

“In running amusement parks there aren’t many set examples in China we can follow, and we have to cross the river by feeling the stones,” Bao says.

Generally, SAL offers cheap package tickets for local families and special discounts to students from area universities. This spring when the flu-like SARS epidemic plagued the whole country, SAL cut its ticket price by 75 percent to encourage local citizens to visit the park. “I think these activities serve as intangible advertisements for our park,” says Bao.

The intangible ads may have even eclipsed the tangibles. SAL’s annual advertising budget is only 5 million yuan ($600,000). “Every cent has to count, and we always launch ads after careful analysis of every particular activity,” says Wei Zhonghai, SAL’s press and public relations manager.

For example, the park has bought TV ads in the past to promote the beer festival, and print ads were purchased for a tourism festival the park hosted.

But Wei admitted that SAL has taken great advantage of the Shanghai Orient TV station, which is also the park’s shareholder. And it’s no surprise that the park’s trademark slogan is always slated during primetime television every weekend in Shanghai.

In its early years, SAL employed several small advertising agencies in Suzhou and Nanjing. But after acquiring some experience, the park began talking directly to the media.

Xie Ying, a department manager with CTR, China’s largest media and market research company, joint-ventured by China Central Television and an international market research group, TNS, says she and her colleagues rarely saw amusement parks launch ads on

the national TV station or hire major marketing agencies. “Generally speaking, Chinese people are not rich, and you can’t expect many to fly to a park from far away, so domestic parks have to focus on local markets,” she says.

Amusement as a Luxury
Some say that as bureaucratic obstacles and corruption decrease, amusement parks should make more efforts to adapt to the market.

“I think a major obstacle to the growth of China’s amusement parks is the low income level,” says Tao Huai, China manager of the U.S.-based Premier Rides Inc. He has been in the amusement park business for about 15 years.

A SAL ticket equals almost a twentieth of the monthly income of an average Chinese citizen in major cities, let alone the majority of the country’s population living in less-well-off small towns and in the countryside. The ratio—a full SAL ticket is about 3 percent of China’s per capita disposable income—is much higher than that of a Disneyland ticket to Americans’ average income.

Moreover, travel is still a luxury to many Chinese. Although the government has granted numerous traditional holidays each year, most vacations are taken during three major holidays dubbed “golden weeks”—the Labor Day (May 1), the National Day (October 1), and the Spring Festival (New Year in the Chinese lunar calendar). During these three weeklong holidays, airports, railway stations, hotels, and scenic spots are thronged by holidaygoers who would be loath to spend money and time traveling on ordinary days.

“Every year so many Chinese visit the Disneyland in Los Angeles and Tokyo as a lifetime experience, and I believe they don’t care about the ticket price,” Tao says. “But if foreigners build a park in China without having distinctive edge over the locals, they would probably suffer failure.”

Universal Studios is currently building the Chinese mainland’s first top-tier theme park in Shanghai’s sprawling Pudong area. In addition to its ongoing construction of a Disneyland in Hong Kong, Disney is also considering building a theme park on the mainland.