Dalian Wanda Group says it will invest RMB 63 billion ($9.45 billion) to build a tourism and sports complex in Jinan, a gritty industrial city of just over 7 million people in northern China’s Shandong province. The combination theme park, sports facility, shopping and hospitality complex will be the mainland real estate and entertainment conglomerate latest in a series of tourism destinations, according to media reports.
This will be Wanda’s 13th large-scale tourism project in China with the 290 hectare development expected to emphasise sports to attract mainland visitors, Bloomberg reported. The project will feature a 10,000-seat arena designed to host sporting events, and Wanda hopes to start construction in 2017 with completion expected in 2021.
Wanda’s owner, Wang Jianlin, has made clear his attentions to challenge Walt Disney, which opened its first theme park in Shanghai earlier this year. China’s richest man told Reuters that he intends to build 20 entertainment complexes in China and believes Disney is not going be able to compete with his parks.
Counting on the Home Field Advantage to Beat Disney
Wanda continues to reposition itself as an entertainment player after building China’s largest chain of malls, with both sports and theme parks forming a growing segment of the company’s portfolio.
Shortly before Disney’s Shanghai resort welcomed visitors in June, Wanda opened a 200-hectare complex in Nanchang in Jiangxi province that boasted a theme park, movie theatre, aquarium and a shopping mall. That Wanda City is said to have cost the developer RMB 21 billion ($3.2 billion) to build.
Similar Wanda City complexes are being developed in Harbin, Hefei and Wuxi with the developer preferring to build in secondary cities where land prices are cheaper.
However, the strategy hasn’t been a complete success. The Wuhan Wanda Movie Park, which opened in 2014, was abruptly closed in August for renovations. The project was hailed by Wanda as the first movie theme park in the world and cost RMB 7 billion ($1.05 billion) to build. It has been reported that visitor numbers at the park had been steadily decreasing in the months leading up to the closure.
Wanda has also invested heavily in sports brands in the last two years, paying a reported $52 million in January 2015 for a 20 percent stake in the Atletico Madrid football club. Just one month later, Wang and Wanda spent 1.05 billion euros ($1.17 billion) to buy Infront Sports, a marketing firm belonging to a nephew of former FIFA head Sepp Blatter, and in August 2015 put out $650 million to buy the parent firm of the US Ironman triathalon competition.
Domestic Tourism More Than Fun and Games
In betting on theme parks, Wang is the most aggressive of a host of players looking to help China’s growing middle class spend their leisure yuan, as the government predicts that the country’s $610 billion tourism industry will double by 2020. Theme parks and entertainment complexes look set to benefit from the boom with industry consultancy Aecom predicting China’s theme parks could see as many as 220 million visitors in the next few years.
Wanda and Disney are not the only two companies wanting a piece of the amusement park market, which was estimated to bring in $3.3 billion in 2015. Several major players are set to enter the market during the coming years.
US-based Six Flags has partnered with mainland developer Riverside Investment Group to build Six Flags Haiyan in the Zhejiang province that will open in 2019. The two are already planning additional parks in China.
DreamWorks Animation, known best for movies Shrek and Kung Fu Panda, has teamed with Hong Kong’s Lan Kwai Fong Group and China Media Capital, a government-backed investment fund to develop the Shanghai Dream Centre, a 460,000 square metre entertainment project in Shanghai’s Xuhui district, project in the city’s southwestern Xuhui district that involves an investment of a reported $2.4 billion.