FEATURE: China gambles on resort to lure punters from Macau

Reuters, HENGQIN ISLAND, China

Mon, Oct 07, 2013 - Page 14

It is being touted as China’s answer to Orlando, Florida, a US$5 billion resort and theme park complete with a mega rollercoaster and a whale shark tank situated on a sleepy southern island next to the world’s biggest gambling hub, Macau.

Chimelong, which is set to partially open next month, is the linchpin of China’s ambitious plans to expand Hengqin into a leisure hub similar to the coastal US city globally renowned for its natural attractions and theme-park resorts by Walt Disney Co and Universal Studios.

And while some extravagant infrastructure projects in China have turned into white elephants, the odds are on Hengqin’s side, largely due to the support of the Beijing government and the island’s proximity to the millions of tourists who throng to Macau every year.

“I don’t have many doubts that it will be successful,” said Philip Tulk, director of equities research at Standard Chartered Bank in Hong Kong, referring to the island that the government designated as a special economic zone five years ago.

“The mainland people are looking for entertainment and travel options that are reasonably easy. They strongly desire new and interesting places to go and if Chimelong can deliver on that, it will be massively successful,” he added.

The construction boom on Hengqin, just a 10-minute drive from Macau, comes at a time when mega-resorts are being developed in Asia in places like Taiwan, South Korea, the Philippines and Vietnam to tap the region’s growing ranks of wealthy tourists.

Most of these visitors are Chinese and many choose to stay close to home, heading to Macau, the only place in China where casino gambling is legal and where gaming revenues grew by more than a fifth last month to just over US$3.5 billion.

Macau welcomed almost 30 million visitors last year, but the government’s plans to increase that number are being stymied by a lack of land and strained infrastructure and services.

Enter Hengqin, which is three times the size of Macau and which boasts long, sandy beaches and thick, mountainous forests.

“Macau is small and there are too many people. It needs to be expanded. Chimelong is a good complement. It is positioned as leisure tourism,” said Niu Jing (牛敬), director of the administrative committee, or local government, of the Hengqin New Area.


Hengqin has been part of the central government’s plan to develop the Pearl River Delta since 2008, and the island is being groomed as a test bed for political and economic projects between Guangdong Province and the special administrative regions of Macau and Hong Kong.

The Hengqin model also fits in with China’s plans to boost consumer spending to lift the economy and wean growth away from the manufacturing sector.

Local officials say Hengqin has so far attracted investments worth 240 billion yuan (US$39 billion) from companies like Hong Kong conglomerate Shun Tak, Italian luxury yacht maker Ferretti and Starwood Hotels & Resorts Worldwide Inc.

Ferretti, controlled by Chinese machinery group Shandong Heavy Industry, is building its Asia-Pacific headquarters on the island, as well as a yacht club and a navigation school.

Pansy Ho (何超瓊), Hong Kong’s richest woman and managing director of Shun Tak, calls Hengqin the perfect solution for Macau. The property-to-transport conglomerate is building a complex that will include offices, homes and a hotel on the island.

“We need to work on a plan to assimilate and to make sure that in the future, Macau would be in the center of things, but also integrated with the development and the future of the whole Pearl River delta,” said Ho, the daughter of Macau gambling godfather Stanley Ho (何鴻燊).

The government has banned gambling on Hengqin, but that has not deterred Macau’s billion-dollar casino operators.

Galaxy Entertainment Group Ltd (銀河娛樂集團) is considering investing in sports stadiums, golf courses and a marina on the island to complement its Macau casinos, Galaxy deputy chairman Francis Lui (呂耀東) said.

“The customer is wanting a bigger and bigger experience... and in Macau, we just don’t have the land and it would be too expensive,” he said. “So Hengquin is going to be very important for us.”


Hengquin is connected to Macau through two underwater tunnels. By 2016, it will also be linked to Macau in the east and Hong Kong to the north by a bridge. Rail services will also be extended to Hengqin.

Forests of cranes and scaffolding jut out from pockets of Hengqin as companies like Zhuhai Huafa Group Ltd and Shimao Property Holdings Ltd race to develop the island, where wooden stilt houses still dot parts of the shoreline.

Property prices have soared, with new houses near the central business district costing more than double the amount per square meter than in the nearby Zhuhai island.

Palm-fringed, six-lane highways line the island, while residential high-rises are cropping up as the pace of construction has picked up in the past year.

Home to fewer than 8,000 people now, officials forecast the island’s population to rise to more than a quarter of a million in seven years time.

The marine-themed Chimelong resort, headed by Chinese businessman Su Zhigang, is the biggest project to open on the island this year.

Its coral-hued towers, topped by blue onion-domes, will house 1,880 hotel rooms, a conference center, a spa and an indoor water park.

Macau University, which finished construction of its Hengqin campus in July this year on a site 20 times larger than its Macau location, will formally welcome students in February.

The university, which can accommodate up to 15,000 students, will be operated under the laws that govern Macau, and not Chinese regulations.

Major lenders such as Bank of China (中國銀行), Bank of Communications (交通銀行) and Agricultural Bank of China (中國農業銀行) have set up temporary offices in Hengqin’s central business district to help drive its development.

The island is also hoping to lure business with tax breaks and new financial policies that include allowing companies to develop offshore business in foreign currencies and piloting the exchange of the yuan, Macau pataca and Hong Kong dollar.

“The special thing about Hengqin is that it is a naturally isolated island, so the risk is controllable,” Niu said. “Hengqin, without exaggeration, is unique.”