China's richest man already invests in soccer and movies, two famously fickle businesses. Now Wang Jianlin's Wanda Group, and local partner Auchan, plan to invest Euro 3.1 billion ($3.4 billion) in a huge leisure complex outside Paris. If the French capital's Disneyland is any guide, this could be a wild ride.
The 80-hectare EuropaCity, designed by star architect Bjarke Ingels, is due for completion in 2024. The project will include theme, snow and adventure parks, plus an urban farm, exhibition and performance halls, and the obligatory shops, hotels and restaurants.
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It's not clear how much Wang will invest, or when. But several themes are clear. For a start, the commitment is further evidence of the tycoon's huge appetite for global leisure investments, following forays into film production, cinemas, triathlons, sports rights, and Spanish football. It also underscores his particularly keen interest in amusement parks as a way of diversifying away from offices and shopping malls. Wanda has been building these across China, amid a wider sector boom.
There is a Sino-French angle too. Wang's compatriots are taking more and more holidays: CLSA analysts foresee 200 million overseas trips by 2020. France is already popular and could become more so. Only America beats it as a "money no object" destination for Chinese tourists, CLSA says. A shiny new complex, with backers who understand Chinese consumers, could be a big winner.
Still, a sorrowful shadow with big ears looms. Euro Disney, operator of Disneyland Paris, has been a financial horror show since listing in 1992. US parent Walt Disney led a Euro 1-billion recapitalisation last year. Other operators have also taken investors on white-knuckle rides: US heavyweight Six Flags emerged from bankruptcy in 2010, though the stock has since soared.
The upsets reflect the industry's funhouse economics. Building rides is expensive, so parks often have heavy debts to service, while fixed costs for staff and upkeep are high. So they need to attract many free-spending visitors. If a recession, competition, or a nasty accident crimps demand, the financial impact is severe. To be sure, EuropaCity has much broader ambitions than a classic theme park. Still, Wang clearly believes he can outdo Disney at one of its flagship foreign locations. That would be a real thrill.
