China's Wanda prepares for battle with 'old brand'

AP News
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Posted: May 25, 2016 9:06 AM

BEIJING (AP) — Mickey Mouse has a new and deep-pocketed challenger: China's shopping mall king.

The developer that bought Hollywood studio Legendary Entertainment is preparing to fight Disney to lead China's - and possibly the world's— theme park industry.

Wanda Group and its billionaire founder, Wang Jianlin, are inaugurating a sprawling entertainment complex Saturday in China's southeast three weeks before the June 16 opening of Disney's first mainland Chinese park in Shanghai.

Wanda's 20 billion yuan ($3 billion) site in the city of Nanchang has an outdoor theme park and teacup-shaped buildings that house a shopping mall, cinemas, restaurants, a film park and the world's largest ocean park. It has 10 hotels.

Wanda has lots of cash and a huge home market but lacks Disney's brand power and decades of theme park experience.

Still, Wanda exudes confidence it can win.

Publicly laying down a challenge, Wang told Chinese state TV in comments broadcast Sunday he plans to "overtake Disney" as the biggest global tourism company by 2020.

"The frenzy of Mickey Mouse and Donald Duck and the era of blindly following them have passed," said Wang. Disney is "entirely cloning previous intellectual properties, cloning previous products, with no more innovation."

Disney said in an emailed reply to The Associated Press that Wang's comments were "not worthy of a response."

Wang's boldness is a sign of China's growing cultural confidence after three decades of explosive economic growth.

The ruling Communist Party is eager to see China create pop culture to rival Hollywood. There was much angst when DreamWorks' first "Kung Fu Panda" movie came out. Commentators demanded to know why China couldn't make a hit film about its own national animal.

The battle of the theme parks also demonstrates the growing importance of China's public, who have evolved quickly from a nation of farmers and factory workers to one of the most important consumer markets.

The government is in the midst of a marathon effort to nurture self-sustaining economic growth by encouraging consumer spending to reduce reliance on trade and investment. Tourism plays a key role in that.

The outlook for theme parks in China is rosy. Annual visitor numbers are forecast to more than double from 133 million in 2014 to 282 million in 2019, according to Euromonitor International, a research company.

Wanda already has three theme park resorts in China that also include other facilities such as shopping malls, theaters and a ski resort. Nanchang is the first of a planned series of "Wanda City" sites meant to mix culture and tourism.

Wanda boasts its "multiple-business model" of rides, film, culture and shopping is an advance over Disney's more narrowly focused entertainment.

"Disney is an old brand, while Wanda is a new one," said Wanda spokesman Liu Mingsheng.

Wanda plans to build 15 to 20 Wanda Cities by 2020, according to Liu.

The company's competitive spirit isn't confined to its home turf. Wanda also has ambitions to beat Disney globally.

Wanda signed a deal in February with French retailer Auchan Group to develop a 3 billion euro ($3.4 billion) project called EuropaCity adjacent to Charles de Gaulle Airport in Paris. That will mean competition for Disneyland Paris.

Both EuropaCity and Shanghai Disneyland have attracted attention from national leaders in France and China, reflecting the huge scale of their investment and hopes for tourism to drive economic growth.

Wang met with French President Francois Hollande to discuss the 80-hectare (200-acre) project in Paris, which is due to have a theme park, hotels and a conference center.

For its part, Disney's chairman and CEO, Robert A. Iger, was granted a meeting with Chinese President Xi Jinping in Beijing last month. Xi, who rarely meets foreign business leaders, expressed his congratulations for the planned Shanghai opening.

Wanda, founded in 1988, started out building apartments and shopping malls. Operating cinemas led it into film and then sports promotion.

Wang has said that path follows the transformation of China's economy from one reliant on investment in factories and housing to a consumer market fueled by sales of clothes, entertainment and other goods.

This year, the company acquired Legendary Entertainment, maker of the "Batman" trilogy, for $3.5 billion, becoming the first Chinese company to control a major U.S. film studio.

In 2012, Wanda bought U.S. cinema chain AMC Entertainment Holdings, becoming the biggest global movie theater operator.

At home, the company is creating an $8 billion movie studio complex in Qingdao on China's east coast.

Last year, Wanda bought Swiss sports marketing company Infront Sports & Media, which produces World Cup broadcasts for FIFA, and took a 20 percent stake in Spanish football team Atletico Madrid.

Disney can draw on a brand built up over 90 years through classic movies and instantly recognizable characters. But Wanda is counting on a wider array of malls, cinemas and other leisure activities to attract more people to its theme parks - and keep them dry year-round.

"I personally feel that the climate isn't advantageous to open an entirely outdoor theme park in Shanghai, with heavy summer rainfall, the rainy season lasting dozens of days, and the winters also quite cold," Wang said, referring to Shanghai Disneyland.

He said Disneyland's high prices would also drive away customers.

The Disney resort, a joint venture between The Walt Disney Co. and Chinese state-owned consortium Shanghai Shendi Group, is one of the largest foreign investments in China. It encompasses Shanghai Disneyland, two hotels, gardens and a shopping, dining and entertainment district. Disney says most attractions are indoors.

The site of Wanda's first park, Nanchang, is the capital of Jiangxi province, a largely agricultural province and one of China's poorest.

It is designed on a Chinese theme, with buildings shaped like blue and white porcelain tea cups. Wanda City "is the new global culture and tourism brand that Wanda is striving to build," spokesman Liu said.

The company has already broken ground on 10 more locations.

Wanda's model could attract more visitors, especially older ones, "who may be more interested in traditional culture, rather than theme parks," said Fangting Sun of Euromonitor International.

The mix of indoor and outdoor attractions can offer "better experiences regardless of weather and time," while shopping and cinemas might encourage visitors to stay longer and spend more, Sun said.