Allan+Zeman

Smooth operator
A Hong Kong entrepreneur shows Disney how to run a theme park

Oct 18th 2007 From [|The Economist]

“WE OWN Halloween,” says Allan Zeman. It would be a peculiar comment in most places, perhaps, but is well understood in Hong Kong, where October is a time when children flock to Ocean Park, an amusement park owned by the government. Its popularity is the result of a magical transformation wrought by Mr Zeman, a Canadian-born entrepreneur who originally made his money out of bars and women's clothes.

Four years ago Ocean Park was on its last legs, with attendance sliding and its facilities crumbling. A formidable new competitor, Disney, had arrived. Hong Kong's usual remedy for anything unprofitable is to flog it to a developer handy with the bulldozers. If 2003 had been a normal year, Ocean Park would have survived only as a memory. But the times were out of joint: in addition to the lingering financial crisis, SARS, a respiratory disease, had hit, and there were protests over the Chinese government's efforts to curtail civil rights. It was a bad moment to destroy something fun. In desperation, the island's then chief executive, Tung Chee-hwa, asked Mr Zeman to take over the park. Click here to find out more!

It was an odd choice. Before then Mr Zeman's main service to the public had been to transform warehouses into a wildly popular drinking district known as Lan Kwai Fong. Although Ocean Park was just a few minutes away from his office, Mr Zeman had never visited it. Startled by the offer, Mr Zeman said no, again no when it was repeated, and then no four more times. He relented after his sixth refusal, perhaps reasoning that since he had built successful saloons without being a drinker himself, he could run an amusement park without having taken a ride.

Four years later, the Mouse is stumbling and Ocean Park is thriving. At Disney's park attendance is widely reported to have fallen (the firm does not publish visitor numbers), whereas visitors to Ocean Park have increased from 3.7m in the year ending June 2004 to 5m for this year. Losses have become ever larger profits and Mr Zeman is walking on air, a Hong Kong hero who saved a local institution.

Mr Zeman's father died when he was young and he had to become independent. By the age of 16 he finished high school in Canada, having already earned more from his paper round, he says, than many of his friends' parents did from their businesses. He got a job as a shipping clerk for a Canadian lingerie company and then quickly moved into sales at another firm. Another job in women's-wear convinced him that the real problem—and hence opportunity—in the rag trade lay with Canada's trade unions, whose demands hurt profits. Aged 19, he opened his own business importing clothes from the more employer-friendly Far East. By 20, to avoid taxes, he was operating from Hong Kong. From lingerie to jellyfish

Again, Mr Zeman quickly spotted a problem—the quotas America placed on imports from individual countries—and a chance to make money. He opened an office in China in Hunan province, Mao's birthplace (it worked for Mao, says Mr Zeman), and then more than three dozen offices throughout Asia. That way he could aggregate all the quota allowances. Mr Zeman sold the firm in 2000 to its largest Hong Kong competitor for HK$2.2 billion ($282m) in cash and shares.

Lan Kwai Fong began simply because Mr Zeman needed to keep the boyfriend of a talented employee happy. He gave him a restaurant in a quiet old warehouse; it turned into a huge success and then Mr Zeman added dozens of others. It helped that Wanchai, the main area for nightlife in Hong Kong, was then a fading red-light district filled with seedy hostess bars. But before Mr Zeman arrived, no one had noticed the gap in the market.

When he got to Ocean Park, Mr Zeman painted buildings, repaired cracks and dreamt up new entertainments. Often they were small and basic, such as people dressed as dead trees for Halloween and booths for kids to play with water squirters. A better-financed theme-park operator might sneer at such attractions, but they delighted Hong Kong residents and the mainland Chinese who are coming to Ocean Park in ever greater numbers. For Halloween last year Mr Zeman dressed as the paper doll that accompanies the dead to the other world (a particularly spooky sight for the superstitious Chinese) and as a jellyfish for a spring event. The press couldn't get enough of him.

Mr Zeman also introduced new marketing schemes, like free admission for grandparents and babies or because of a particular digit in someone's Hong Kong identification card. Each free guest was a lure for others who paid. Ocean Park also built up a big collection of fish, which allows parents to believe that they are treating their children to an educational experience, not just roller coasters. A recent coup was persuading Beijing to part with two pandas for the tenth anniversary of Hong Kong's reunification with the mainland.

Meanwhile, Hong Kong Disneyland got things wrong. It tried to customise rides for the safety-conscious Chinese by, for example, making them slower, but that made its park dull. It made logistical mistakes with some promotions, alienating visitors who were locked out. Disney's fees are higher than Ocean Park's, but the theme-park giant does not have the same fame and pricing power in Hong Kong as it does in America. Ocean Park offers a summer camp and invites schools to visit—anything it can think of to lure people in. Disney is more controlled: it has for instance built two fine baseball fields in Hong Kong, which is short of playing fields, but has sharply limited their use.

It is easy to find critics of Disney in Hong Kong, but Mr Zeman is not among them. He believes that Disneyland is improving and that a healthy Disney park is a good thing for Ocean Park and for Hong Kong. The more entertainment, he reasons, the more visitors and the more customers. Might he even be willing to work his magic for the Mouse?

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