Two years ago, Wang Jianlin, once China’s richest man, referred to his network of theme parks as a “wolf pack” that would chase Walt Disney and its Shanghai Disneyland from China. Last week, Shanghai Disney unveiled a major expansion of its $5.5 billion park, now the most popular in China. Wang, by contrast, is out of the business altogether, having sold his theme-park holdings to raise cash for his real-estate company.

Wang’s rollercoaster descent is, in part, a tribute to Disney’s global appeal. But it also reveals shortcomings in government policy -- and shows just how far China’s entertainment companies must go to match Hollywood’s standards.

As far back as the mid-1990s, large-scale theme parks began opening in China’s bigger cities. By the early 2000s, smaller ones were a common site across the country. 

The ones I visited around that time featured imported, secondhand rides, questionable safety, and middle-class families keen to entertain their only children. But it wasn’t long before the business began to professionalize and expand. By 2016, China’s roughly 2,700 theme parks were attracting more than 200 million annual visitors and $4.9 billion in revenue.

Yet only 10 percent of those parks were profitable. The problem was that most operators weren’t interested in fun. Instead, they were interested in land. This was thanks to well-intentioned public policy: In the early 2010s, local governments offered to reduce the skyrocketing cost of land for developers willing to build parks and other civic amenities as part of broader real-estate developments.

Enter Wang and his Dalian Wanda Group, one of the biggest and best-connected developers in the world. Having succeeded at building housing, shopping malls, and hotels in most major Chinese cities, Wang had plenty of development experience. He had a vision, too. As a patriotic army veteran, he wanted to build attractions that celebrated Chinese culture -- not Mickey Mouse. And he wasn’t joking around: He committed about $30 billion to build as many as 20 parks.

But Wang was soon in over his head. While Shanghai Disney drew 11 million visitors in its first year, Wang’s $510 million park in Wuhan, expected to attract 3 million annual visitors, was attracting about 200 a day in 2016. (It has since closed.) Other Wanda parks had similar results, and Wang sold the business last year.

In retrospect, it may seem obvious that an experienced theme-park operator like Disney would triumph over a trash-talking real-estate developer. But Wanda’s failures ran much deeper. Most important, it lacked Disney’s reservoir of globally appealing intellectual property -- including characters such as Mickey Mouse and the Avengers -- and instead relied on more traditional themes. 

Traditional culture is certainly popular (and marketable) in China. But a theme park needs more than, say, “Hubei in the Air,” a not-so-inspired virtual flyover of the Wuhan park’s home province. Until China develops its own intellectual properties -- and it surely will -- Disney, Universal Studios and other global entertainment giants will have a distinct advantage.

China’s government isn’t oblivious to this dynamic. Last month, it warned theme-park operators about rising risks and said that state planners should play a bigger role in guiding new projects. It aims to raise standards and -- just as important -- rein in ballooning debts. Incentives for bundling parks into other real-estate developments are also coming to an end.

In the short term, that’s good news for Disney and other foreign operators that have the capital to spend big and the characters to make a theme park come alive. They and their local partners are likely to prosper until Chinese companies develop a compelling catalog of their own characters and fantasies. That won’t happen overnight; it took Walt Disney almost 30 years to go from Mickey Mouse to the first Disneyland. But if nothing else, the journey promises to be entertaining.


By Adam Minter

Adam Minter is a Bloomberg Opinion columnist. -- Ed.