Shanghai to Open Up Possibility of Casino Cruiseship Hub?

From the latest news source released by Shanghai Municipal, China; the city of Shanghai will be opened up further, increases the pace to become an international shipping hub. Our Expert IR explains how this may affect the casino business in Macau and Philippines!

Essentially, the State Department of Chinese Central Government will soon come up with regulatory framework for foreign cruise operators to register cruise business entity in Shanghai as well as international cruise operations to be conducted.

In addition, Chinese government will establish a full-fledged cruise industry financial services, insurance, logistics, credit & financing in support of its pace of development of the cruise centre.

My assessment of this significant event is as follows:

(1) That the push for Shanghai to continue developing itself to be a major and influential economic hub of East Asia has intensified, as the central government showing forceful support.

(2) This is also the sign of giving strong focus on developing Shanghai’s financial services and capital market, using the cruise industry as a test bed. To achieve any significant impact, scalability and quick pace, Chinese government has to allow greater degree of deregulation of its domestic shipping & logistic market and hence, introducing the international cruise operators into its environment as the lead in factor.

(3) The initiative of deregulation of Shanghai’s shipping (& cruise) industry will bring about direct investment and logistical technologies for its maritime sector. This is a strategic move towards strengthening Shanghai’s competitiveness as East Asia’s shipping & maritime hub.

(4) The development of Shanghai into East Asia’s shipping & maritime hub has its goal linked with the reviving the maritime professional training in northeastern China’s Qindao and Da Lian. Both cities are historically the cradle of Chinese naval & maritime’s past and present. The two northeastern cities would provide the necessary training and logistic resources for joint ventures with foreign shipping and cruise operators into Chinese market.

(5) Creating a cluster of maritime (& cruise) service support, insurance/P&I and debt market in and around Shanghai and its municipal will transform the city’s commercial landscape as well as tourism in the region. The Chinese government might be looking at Shanghai as its 2nd major initiative /platform for economic transformation, moving away from property-heavy development scene which also carries much speculative activities. (The 1st major initiative of economic transformation is Guangdong province. It is trying to move away from low-cost manufacturing-based structure to higher value-add economy).

(6) The deregulation of Shanghai’s shipping/maritime/cruise industry for direct foreign investment would further benefit the city’s convention/trade fair/meeting and incentive tour market.

Amidst the above new business scenario that is unfolding, just how the foreign cruise operators such as Carnival, Royal Caribbean, Princess Cruise, etc. would react is to me, a clear signal that I personally would think that it is so difficult for them to ignore and resist.

As interesting as the abovementioned, how would Asia’s cruise industry react to such a phenomenon is to be watched. Star Cruises is currently going through fleet downsizing and diversification, which including its planned new casino-resort in Philippines and junket room operation in Macau. Whether the Chinese authority would welcome gaming-heavy cruise model to be officially into China’s economic reform test bed (Shanghai) is really everybody’s guess.

Another big question is, whether Star Cruises is in the position to open yet another new ground in China (Shanghai) with considerable investment risk amid its ‘risky’ (some analysts’ rating) Philippines project is to be watched. Shanghai authority would prefer a considerable size of investment commitment instead of just a touch-n-go show of interest, this time around. However, it was known that Star Cruises has been operating indirect and small scale sales & marketing station in Shanghai for long while as well as a not-too- successful training school there. It was also rumored that the relations between Star Cruises and Shanghai authority remains not-so warm as otherwise expected.

But in business, everything is a possibility.