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NYU Stern School of Business & HKUST Doing Business in China – Hong Kong
1. NYU Stern School of Business & HKUST
Doing Business in China – Hong Kong
Adam Behrman
Andre Botelho Bastos
Erin Coffey
Tonantzin Esparza
Ravi Shrivastava
Ashley Taylor
2. Presentation Outline
¤ Introduction to Ocean Park
¤ Industry and competition
¤ Key strategic issues
¤ Government Regulations
¤ Externalities
¤ Adaptability to Local Market
¤ Competition
¤ Recommendations
4. “A world leader in providing excellent guest experiences in
a theme park environment connecting people with nature”
• Opened in 1977 by Sir Murray MacLehose, funded by the Hong
Kong Jockey Club
• More than 7 million visitors per year in 2012 (ranked 13th overall),
with about 35 attractions and rides
• Marine mammal park, oceanarium, zoo, and amusement park
• Numerous annual events, including their signature Halloween party
• Forbes ranked Ocean Park the World’s 7th most popular
amusement park
5. Since his appointment as CEO in 2003, Tom Merhmann has
led Ocean Park in making a number of changes, including:
¤ Substantial improvements to food and beverage options in
the park, with the addition of the Bayview Restaurant and
the Terrace Café
¤ Numerous additional rides and attractions, including Asia’s
first floorless roller coaster, Old Hong Kong, and the Sea Jelly
Spectacular
¤ Improved movement of customers while inside the park on
the Ocean Express
Ocean Park plans to continue this redevelopment, by
updating older areas, building hotels on site and adding
new species. A direct connection to the MTR will also drive
attendance numbers of the park
The park’s 2005 Master Redevelopment Plan has
resulted in significant renewal and expansion
6. Ocean Park’s renewal efforts have increased park
revenues and contributions from non-admission spend
¤ Revenue has increased at more than 11% per year in the last 5
years, and is more than 3 times what it was in 2002
¤ While Ocean park has had a healthy surplus in recent years, overall
earnings have fluctuated, affected largely by park operations, but
also depreciation and financing
¤ Less than 70% of revenues are from park admission, down from over
80% in 2002; the remainder are largely from food and merchandise
0
200
400
600
800
1000
1200
1400
1600
2002 2007 2008 2009 2010 2011 2012
Revenue($HKmillion)
Other
Catering Income
Merchandise Income
Admission Income
9. Asia’s Theme Park Industry: Crowded & Competitive
Tokyo Disney
Resort
Universal
Studios, Osaka
Lotte World and Everland
Resort, Seoul
OCT and Aquarium,
Beijing
Qingdao Polar World
OCT and Disneyland,
Shanghai
Spendid China, Windows of
the World, Happy Valley,
ShenzenOcean World,
Guangzhou
Resorts World, Universal
Studios, Singapore
11. Government Regulations
¤ Laws and Regulations of mainland China are different from Hong Kong
¤ Ocean Park is fully owned by Honk Kong government
¤ Ocean Park board of directors is composed of 18 members
¤ According to their resumes, only 3 board members seem to have
network and experience with mainland China
¤ Ordinance do not allow Ocean Park to operate outside of Brick Hill
¤ Ocean Park CEO’s Mr. James, is trying to win this approval in the
following years
¤ Mainland China’s government could claim control of a park in
mainland
¤ Disneyland Shanghai to launch in 2015
¤ Disneyland Ownership:
57%
43%
Chinese Government
(Shanghau Shendi)
Disneyland
12. Externalities
¤ SARS epidemic outbreak in 2003 caused a sharp
decrease in attendance and revenues for Ocean Park
¤ Air pollution in Hong Kong is considered a serious problem
¤ Visibility is currently less than 8 Km for 30% of the year
¤ Mainland air pollution is even worse than Hong Kong
¤ Beijing last Saturday experienced its worst pollution
reading since the air quality monitor on was installed in
US embassy in 2008
This hazardous environment proves difficult to achieve
Ocean Park’s vision to connect people with nature
13. Expansion to Mainland China
¤ Coastal cities have theme/ocean parks (high competition) but
also have potential for higher attendance
¤ Challenge: Identification of low competition location(s) without
compromising attendance
¤ Mainland visitors comprise more than 1/3 of the visitors to
Ocean Park Hong Kong
¤ Challenge: Opening an Ocean Park in the Mainland might
cannibalize Hong Kong attendance
¤ Ocean Park in the mainland would have to be based on
Chinese culture
¤ Challenge: Differentiating the new park from its Hong Kong
location
14. Expansion Outside China
¤ Major tourism centers already have theme/ocean parks
¤ Challenge: Identification of tourism center(s) with room for another
them/ocean park
¤ Culturally different from Hong Kong
¤ Challenge: customizing offerings to resonate with local culture
¤ Animals are a core part of the Ocean Park experience
¤ Acquisition of exotic specimen can be challenging
¤ Will need to ensure availability of special materials needed for care
and treatment of animals
16. Recommendations for Expansion:
Clear Governmental Hurdles for Entry
• Pursue Amendment to company charter that allows Ocean Park
to expand into Mainland China
• Establish a relationship with local Chinese officials
• Use Ocean Park’s history and recent years of financial
surplus to demonstrate that Ocean Park is a serious
partner for the government and not just engaging in
land speculation
17. Recommendations for Expansion:
Adapt Product for Local Market
• Survey the local competitive landscape, determine key
weaknesses of area parks and exploit them
• Employ those familiar with the area in design/construction to
ensure authenticity in creating a park/events with local theme
• Use past experiences as a template on how to effectively target
underserved communities (e.g. senior citizens)
• Determine plan and frequency of attraction renewal
• Consider adding a focus on local conservation issues
18. Recommendations for Expansion:
Mitigate Externalities That Undermine Product Quality
• Create environs for live talent that address environmental
concerns/issues facing the local market entering
• Adapt conservation message to include a focus on the
importance of environmental concerns facing the local area
• Consider making the message about how individuals
can personally impact conservation to avoid
politicizing the issue and/or offending local officials
19. Recommendations for Expansion:
Neutralize Competition Within the Field
• Create a local campaign that leverages past marketing successes in
appealing to a wide variety of potential park-goers (From families to
teens to senior citizens) and park renewal: “Ocean Park. Every time is
different.”
• Re-evaluate gate pricing scheme within context of entry into a local
market. Set prices at amount that entices purchase without devaluing
overall product
• Utilize government relationships to ensure delivery of public resources/
goods that would bolster attendance(e.g. Train stations)