By: Richard King
When many business people travel to China, we are focusing on projects and business opportunities related to the economic boom that is occurring there. We tend to forget that one of the most rapidly growing areas of economic activity in China is tourism.
I can remember my first trip to China in 1979, about the time China opened to the world. During that year, China received 250,000 international foreign tourists and there were strict limitations as to who would be allowed in. There were very few hotels and you could stay only at government guest houses. By contrast, in 2009, China received 6.5 million international tourists making it the fourth most visited country in the world. Projections are, by 2020, China will become the largest tourist country in the world. And, one of the major reasons for the growth in tourism is the surge of gambling in Macao, known throughout the world as the “Monte Carlo of the Orient.”
Macao is one of the two special administrative regions “SAR” of the People’s Republic in China (PRC). It’s on the west coast of the Pearl River about 60 km west of Hong Kong, the other SAR. Historically, as early as 1557, the Chinese signed an official agreement with Portugal, and Macao was governed by Portugal for over 400 years. It was returned to the PRC in December of 1999. Macao is the only place in China where casino gambling is legal. Gambling was actually legalized in Macao in 1847 to raise revenue for the government. The first casino concession was granted in 1937. And then in 1962, the government granted a gambling license to a syndicate formed by Hong Kong and Macao business men which monopolized rights to all forms of gambling. This license was extended in 1986 for another 15 years, but expired at the end of 2001. The following year ended the monopoly system and other concessions were granted to firms like Wynn Resorts, Las Vegas Sands, The Venetian Macao, Galaxy Entertainment, and MGM Mirage. Sixteen of the 33 casinos in Macao are still operated by the original group, controlled by Stanley Ho. This also led to new investment in tourism, hotels, restaurants and the like. Macao experienced tremendous economic growth with the implementation of this new economic policy. By 2006, Macao became the world’s largest casino city, grossing $7 billion dollars in gaming revenues annually. By 2008, the casino industry, in Macao, reached a high of $13.7 billion in revenues which is higher than Las Vegas and Atlantic City combined. By 2008, almost 80 percent of the cities revenues were comprised of taxes obtained from the casino industry.
Macao is now continuing to diversify its tourist attraction and promote the city as a destination beyond gambling. You might say they are adopting the “Las Vegas model” of a convention style tourist destination.
There is no question that the gambling scene in Macao will continue to attract visitors primarily from the Chinese mainland and Hong Kong. However, with the growing presence of American casino owners, we will see an increasing number of wealthy US citizens making their way to Macao. I believe the big challenge for China and Macao is to see if they can balance the Chinese appetite for gambling with convention and entertainment activities. It is also important to control the activities of the gangster element which tends to accompany gambling activity.
Richard King, Chairman Emeritus of Woodbury University
Director, Pacific Rim Programs at Woodbury University
Chairman/Founder King International Group
626 792 4729