Growing Asian middle class fuels theme park boom

Visitors take pictures on the opening day of Resorts World Sentosa Southeast Asia's first Universal Studios movie theme park in Singapore in March 2010.

Photo: AFP

SINGAPORE - When Singapore first announced it was building a Universal Studios theme park, skeptics wondered if the complex would draw enough crowds to be commercially viable.

But just six months after opening, Universal Studios Singapore has already welcomed more than one million visitors, and other countries in Asia are building even bigger theme parks.

Asia has become the new frontier for large-scale outdoor entertainment complexes thanks to growing affluence in large emerging economies like China, India and Indonesia, and cheaper air travel.

"The industry is moving to Asia," said Christian Aaen, Asian regional director of research firm AECOM Economics, which specializes in entertainment and leisure industry analysis.

"With key fundamentals in place such as the growing middle class and incomes in Asia as well as demand for entertainment and leisure time, this is the perfect product for tourism and economic development," he told AFP.

Tokyo Disneyland and Disney Sea, the Universal Studios park in Osaka and South Korea's homegrown Everland ranked among the world's top 10 theme parks in terms of visitors last year, according to industry consultancy Themed Entertainment Association (TEA).

Encouraged by Asia's promise, Universal Studios signed a deal in January to build its largest theme park in the world in South Korea at a cost of around US$2.67 billion.

When completed in 2014, the resort will be bigger than Universal Studios' four other parks in Hollywood, Florida, Osaka and Singapore combined.

Disneyland has not fared well in Hong Kong -- with a 70 million Hong Kong dollar ($9 million) loss last year, according to the South China Morning Post -- but it is going ahead with a new franchise in Shanghai, with construction expected to start in November.

Denmark's Legoland is setting up its first Asian branch in Malaysia's Johore state close to Singapore, hiring builders to use the famous little plastic bricks to replicate national and state landmarks.

A recent Asian Development Bank (ADB) report said the region's middle class was growing at an exponential rate and poised to become the world's single biggest group of consumers.

In 2008, some 1.9 billion people were broadly classified by the ADB as part of the middle class in Asian developing countries, more than triple the group's size of 565 million in 1990.

China in particular saw its middle class boom, with statistics showing the share of the Chinese population with daily incomes of six to ten dollars surging from 4.8 to 25.5 percent between 1995-2007.

In India, people in that income bracket increased from about 29 percent in 1993-94 to 38 percent in 2004-05, the ADB report showed.

Wealthy Singapore, which has only five million people, is a major beneficiary of Asia's increasingly mobile middle class families.

Nearly 1.1 million tourists entered Singapore in July -- a record high, thanks in part to Universal Studios -- with Indonesia, China, Malaysia and India in the top five countries of origin along with Australia.

"As developing Asia's people secure their middle-class status, its emerging consumers are very much expected to become the next global consumers and assume the traditional role of the US and European middle classes," the ADB said.

AECOM's Aaen said the opening of Universal Studios in Singapore "marked the beginning of the new decade where Asia will dominate and remain the primary region for future growth of the industry".

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Asia's booming middle classes unmasked: study

Indian customer at the a clothing showroom in New Delhi

They are every marketeer's dream and the future of the world economy -- now Asia's aspirational middle classes have been laid bare in a major new study focusing on their astonishing growth.

The Asian Development Bank forecast in the study released Thursday that the spending power of middle class consumers -- anyone consuming between $2 and $20 a day -- would increase by eight times in the next 20 years.

"The Rise of Asia's Middle Class" also sought to shed light on the characteristics of this burgeoning cross-section of society, concluding that they share many traits with their counterparts in the wealthy West.

They are more likely to be educated, live in urban areas and have fewer children and more progressive values. But they are also prone to over-eating and under-exercising and are keen buyers of cars and household electronics.

Their rise "may present many challenges, but it will also open up new and unprecedented opportunities for the region and for the world," the ADB concluded.

Not surprisingly, the biggest increase in middle-class Asians, who are estimated to number 1.9 billion now, will be observed in the two Asian giants with the largest populations, China and India.

China has so far been much more successful in elevating poor people, with 817 million or 63 percent of its population in the higher category in 2008, reflecting its much larger economy.

India's middle classes numbered 274 million in the same year, just a quarter of its vast 1.1-billion-strong population, according to data cited by the ADB.

Both countries will have more than a billion people in the higher income group by 2030, though China's population is expected to be significantly wealthier, other statistics showed.

"Projections suggest that by 2030 much of developing Asia will have attained middle class and upper class status," said ADB chief economist Jong-Wha Lee in the foreword to the study.

Rising incomes in Asia are expected to be the main motor for the global economy as consumers buy increasing numbers of refrigerators, cars, mobile phones and holidays.

Consumers in the West are in the process of reducing their personal debt and saving more after their borrowing-fuelled binge of the last decade, meaning their impact on growth has been reduced.

In contrast, Asian consumer spending was clocked at $4.3 trillion in 2008 and is forecast to grow to $32 trillion in 2030 to reach 43 percent of the world's total, the ADB said.

"As the region emerges relatively stronger than other parts of the world from the last two years of (economic) turmoil, it appears set to assume a much bigger role in the global economic structure and recovery," Lee added.

The social and environment implications of such an explosion of consumerism are significant, however.

Climate change, environmental degradation, competition for water resources and land pressures are just some of the potential downsides of the rise of vast numbers of people seeking the material comforts familiar in the West.

There are also major public health considerations, the ADB underlined, with the Asian middle classes already showing signs of adopting entrenched Western habits of eating food that is high in calories and fat.

Diabetes, heart disease and cancer are on the rise.

"All indications are that in the next 20-30 years, Asia will be faced with an increasing number of chronic diseases on a scale previously unseen," the report said.

There is also a risk that major economic disruption -- another financial crisis, wars or large natural disasters -- can reverse the movement of people into higher income categories, the ADB said.

But the trend is clearly positive, with increasing personal wealth creating a virtuous circle of enterprise.

The report cited numerous example of how companies were increasingly innovating to produce low-cost items for the Asian middle classes, something it dubbed "frugal innovation" exemplified by India's Tata Nano car, the world's cheapest automobile.

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