Opinion | Ocean Park failures: how government policy is both the cause and the cure

Having encouraged a China-centric business model, the government can set things right by ensuring park bailout conditions include diversifying clients, allowing profits to fund conservation, and a focus on serving locals first

Reading Time:3 minutes

Ocean Park’s struggles reflect the challenges of the wider Hong Kong economy – a small, open economy overreliant on Chinese demand. Photo: Winson Wong

Published: 6:30am, 26 May 2020Updated: 6:32am, 26 May 2020

Before we look at the pros and cons of injecting HK$5.4 billion (US$696 million) in emergency funding into Ocean Park from public coffers, it is worth examining the reasons for its financial failure: its China-centric business model, imprudent corporate governance and financial budgeting, and a poor marketing and branding strategy.

Ocean Park’s struggles reflect the challenges of the wider Hong Kong economy – a small, open economy overreliant on Chinese demand. Since 2003, the theme park’s business model has been to focus on mainland China, and this over-reliance on a single income source has contributed to its state.

Putting all one’s eggs in a basket is extremely unwise. Yet, given the blessings of the Closer Economic Partnership Arrangement, such as the individual visitor scheme, income from mainland tourists was easy money. As a result, park management became complacent, lacking motivation to innovate and diversify the income stream, sowing the seeds for an unsustainable income path.

Hong Kong has thrived economically since the second world war not just because if its China ties, but also because of its high degree of internationalism and the rule of law. Ocean Park’s focus on competing for tourists with other mainland cities failed to capitalise on Hong Kong’s comparative advantage, such as its reach in global markets.

Both current and previous management should be held responsible for the financial situation.

But apart from the financials, the negative image of tour groups flooding the park is ingrained for many locals. Ocean Park’s deteriorating reputation has, in part, instigated a fall in local visits, while its lack of innovation meant it was becoming less attractive to foreign tourists.