Visitors check out a new game during a product launch in Zhongshan, Guangdong province. The city has become the center for games and entertainment products in China. Lin Jing / China Daily

Gaming, entertainment companies in Zhongshan jump on R&D bandwagon to stay ahead

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 development of modern China, 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 for gaming and entertainment," says Feng Yurong, the city's vice-mayor.

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

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

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

Ye Weitang, president of Golden Dragon Amusement Equipment Co Ltd, says 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 about 200 engineers and 1,000 workers, 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; 12.3 million euros). Spread over 65,000 sq meters, 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 meters started operations in 2008. The second stage will open this year and involve 20,000 sq meters, 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 says 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, that are sharing their products with Golden Dragon.

These alliance 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 says. "We will explore the high-end products market and create a strong presence for our high-end brands."

The company is expected to clock 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, whereby people can watch 3D movies on a rollercoaster."

He says that though 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, says 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 kiddy rides, carousels and redemption machines.

Liang says that overseas markets have always been a major focus for the company since its establishment in 1997.

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

"As tourism in China is booming, we will be fully devoted to these two segments in the near future," Deng says.

Golden Horse has more than 28 years 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 meters.

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 invested by the company will open in the summer of 2013. The total investment in the project is about 30 million yuan. Deng says that the Ferris wheel will be 108 meters tall and the capsules will 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 market. 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 overseas," Deng says.

Ye says 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.

With the fast development of mobile Internet and portable entertainment devices, fewer young people are willing to play games in game centers or amusement parks.

Liang says that while this trend does pose challenges to the industry, the target consumers are different.

"There are mainly two kinds of players at these gaming centers. The first set pf players are those who want to have fun while the second set comprises those who want to show off. Portable devices are ideally suited for the first set of players. However, the second group still needs public places to showcase their skills and talents," Liang says.

Ye, on the other hand, believes that it is important for the industry to separate itself from the simple games that are available on portable devices.

"It is like watching TV at home and a 3D film in the cinema. We provide a sophisticated feeling of virtual reality and a game for the whole family. It is something that cannot be replaced by a handheld device. If that were so, then people will no longer come to amusement parks," he says.

Since 2008, Zhongshan has been regularly holding the annual China International Games & Amusement Fairs. After several years of brand building, the CIGAF has been officially recognized as part of the Guangdong province's culture enhancement plans (2011-2020) and a key trade fair in China.

The gaming and entertainment industry cluster in Gangkou town has played an important role in the development of the gaming and entertainment industry in Zhongshan. Spread over 666,000 sq meters, the Zhongshan Gaming Industry Base was formally set up in 2007. In 2008, the town was recognized as the China Gaming Industry Base by CAAPA.

This year, the town plans to build a G&A industrial park of 277,000 sq meters to provide a base for the R&D, manufacturing, exhibition and sales activities of over 100 companies. The first stage of construction will involve 210,000 sq meters, with an investment of 1.5 billion yuan.

Chen Youxing, the mayor of Gangkou, says that the town will lay more emphasis on the industry in the future. Statistics from local authorities show that there are about 3,000 employees in the town, making annual sales of more than 3 billion yuan. Gangkou plans to boost the total production value to 10 billion yuan by 2015, with an annual growth of 50 percent.

"After five to 10 years, we will change from 'made in Zhongshan' to 'created in Zhongshan', and the city will gradually shift from hardware manufacturing to innovation and design, and also be the center for gaming and amusement equipment production and R&D, and also a center for international trade and tourism."

Looking at the broader picture and eyeing the development pipeline, most of the companies are also drawing up plans to augment their capital bases.

"If the manufacturers are willing to adapt themselves and fully utilize the excellent policy environment, good times are on the cards for the whole industry," Deng says.

linjingcd@chinadaily.com.cn

(China Daily 01/04/2013 page16)