Gaming firms play for big stakes

Zhongshan has 30 percent share of global market for amusement products

For a city that was named after Sun Yat-sen (Sun Zhongshan in pinyin), the leader of the 1911 Revolution that ended imperial rule in China, Zhongshan has really come of age in the investment sweepstakes.

Much like the revolutionary leader who played a key role in the modern Chinese history, Zhongshan is also providing the right growth impetus for the booming gaming and entertainment industry in China.

Such is the city's dominance in the industry that it is safe to say that seven out of 10 gaming and amusement products sold in China have been developed in Zhongshan. The city also has a 30 percent share of the global market for gaming and amusement products.

"It is a fast-growing industry that relies heavily on technology and cultural innovation for sustained growth. Zhongshan is trying to be the main manufacturing and export base for the industry in China and also be a brand synonymous with gaming and entertainment," said Feng Yurong, the city's vice-mayor.

According to Liu Jingwang, chairman of the China Association of Amusement Parks and Attractions, the industry took shape after the first amusement park in the mainland, Changjiang Amusement Park, was set up in Zhongshan in 1983.

Deng Zhiyi, president of the Zhongshan Game & Amusement Association, said that the number of businesses has been increasing rapidly in the past three years. There were some 20 gaming and amusement product makers in Zhongshan three years ago. The number of such companies has more than doubled since then, while the products made by companies from Zhongshan account for more than 80 percent of the share in big amusement parks, he said.

Such rapid development has, however, not been without its problems. Local companies have to constantly adjust their growth strategies and develop more innovative products to stay ahead of the competition.

Ye Weitang, president of Golden Dragon Amusement Equipment Co Ltd, said that the intense competition is also prompting companies to develop their own niche markets.

Established in 1989, Golden Dragon is one of the largest amusement product makers in Zhongshan, producing more than 400 different kinds of amusement machines, such as redemption machines and mechanical facilities.

With a total production area of 88,000 square meters and around 200 engineers, the company's products are used in over 2,000 amusement centers across the world.

The company has also set up a sourcing platform in Gangkou town, Zhongshan, for around 100 million yuan ($16 million). Spread over 65,000 sq m, the platform aims to provide various services like trading, display, e-commerce and logistics for other companies in Zhongshan.

The first stage comprising 12,000 sq m started operations in 2008. The second stage will open this year and involve 20,000 sq m, and an investment of 80 million yuan.

"Our role is more like a resource integrator and we will intend to capitalize fully on our advantages."

Ye said that they built the trade center to integrate industry resources and avoid homogeneous competition.

"Companies will make less profits if they make only similar products. But if we can evolve a system of labor division, then all the companies can expect higher returns from their respective market niches."

There are currently more than 80 companies in the park, sharing their products with Golden Dragon.

These companies will make the regular entertainment and gaming products, while Golden Dragon will be responsible for the high-end ones.

"Our strategy is 'high investment and high returns'," Ye said. "We will explore the high-end products market and create a strong presence for our high-end brands."

The company is expected to register sales of more than 400 million yuan in 2012, with an annual growth of 30 percent.

"This year, we will concentrate more on comics and mechanized products, such as 3D trains, where people can watch 3D movies on a rollercoaster."

He said that although the R&D investment runs into several million yuan, the returns are equally substantial.

"Gaming equipment prices may often exceed 10 million yuan in China, while it could reach $10 million in overseas markets."

Liang Guoqiang, general manager of Zhongshan G-Look Amusement Machine Co Ltd, said that the company's long-term plan is to integrate more Chinese cultural elements and export more of its products.

Established in 1997, the company manufactures a variety of coin-operated equipment and amusement machines, and is specialized in children's rides, carousels and gaming machines.

Liang said that overseas markets have always been a focus since its establishment in 1997.

Deng, also chairman of Golden Horse Amusement Equipment Co Ltd, said that Golden Horse is trying to develop a modern entertainment industry, as well as propping up traditional manufacturing.

"As tourism in China is booming, we will be fully devoted to these two segments," Deng said.

Golden Horse has almost three decades of experience in designing, producing and installing amusement equipment. Established in 1983, Golden Horse was the first gaming and amusement company in Zhongshan. It has 600 employees and a factory spread over 60,000 sq m.

In recent years, it has been a major provider for big amusement parks, such as Happy Valley in Shenzhen and Chimelong Tourist Resort in Guangzhou.

The company has also been spending a great deal on its amusement parks. A new landmark Ferris wheel built by the company will open in the summer of 2013. The total investment in the project is about 30 million yuan. Deng said that the Ferris wheel will be 108 meters tall and the capsules will be equipped with games developed by Golden Horse.

By 2014, the company will also renovate the old Changjiang Amusement Park into a new Changjiang Water World with three areas, including a water world, a family amusement park and a cinema.

Besides these companies, industry leaders are also active in global markets. There are around 10 companies that are busy with international exhibitions and trade fairs all year around. Golden Horse is one of them.

"We have started to participate in the global market actively in recent years. Every year, we will attend five to six international exhibitions worldwide to promote our products," Deng said.

Ye said that the global market for gaming and amusement products is around $100 billion, with China's share amounting to about $6.4 billion. "I believe that Zhongshan companies will have a big role to play in the development of the global market for gaming and entertainment products."

Deng admits that such a possibility could soon be on the cards as Chinese companies are slowly making products that are comparable with those made by their foreign peers in both quality and price.