Asian casinos will try just about anything to attract Chinese gamblers

Vincent Yu  / Associated Press

Mainland Chinese visitors gather at the lobby of the Galaxy casino in Macau

Bloomberg (by Liza Lin):

At the oceanfront Ramada Plaza hotel on South Korea’s Jeju island, about a hundred Chinese gamblers huddle around felt-topped tables, wagering as much as 5 million won ($4,500) at baccarat. Shouts in Mandarin — “Beautiful!”, “Good!” — ring out as bettors with winning hands slam their cards on the green table-tops.

Asian casino operators from South Korea to Australia are pulling in China’s gamblers as the country’s corruption crackdown scares many away from Macau, the world’s biggest gambling hub. They are capitalizing on a downturn in the city’s gaming industry, which last month suffered its worst drop ever.

Operators such as Paradise Co. in South Korea are hiring Mandarin-speaking staff and offering VIP treatment including free flights, limousines and hotel stays to big spenders. Echo Entertainment Group Ltd. of Sydney and NagaCorp Ltd. in Cambodia cater to the junket operators who organize trips for Chinese gamblers with perks such as higher commissions, lower taxes and private jets.

Premium mass players can be recognized as VIP players and treated better than in Macau,” said Lee Hyuk-Byung, vice chairman of Paradise, in an interview in Seoul. “And we have other attractions in Korea such as culture, fashion, food.”

Macau casino revenue fell last year for the first time and may decline another 8 percent this year, according to analysts surveyed by Bloomberg. By contrast, South Korea and the Philippines will grow 16 percent and 33 percent respectively this year, gaining from the spillover of Chinese gamblers, Deutsche Bank analyst Karen Tang wrote in a note.

Plastic Surgeons

President Xi Jinping has urged Macau, the only place in China where casinos are legal, to diversify from gambling. Macau’s government imposed more scrutiny over junket operators, as mass market gambling also weakened amid China’s economic slowdown, and new restrictions on visas and cigarette smoking.

The anti-corruption measures are discouraging some people from traveling to Macau, and as a result we are seeing a slight shift in travel from Macau to other destinations,” said Aaron Fischer, a Hong Kong-based analyst at CLSA Ltd. “Vietnam and Philippines will likely benefit as they are the closest. Korea will pick up people in the northern parts of China.”

Gamblers who bet at least $50,000 at Paradise’s casinos qualify for freebies usually available only to VIP players, Lee said. In Macau, the minimum needed to get similar perks from junket operators is about $500,000, according to CLSA data. The company also draws Chinese gamblers to the celebrity-obsessed country by touting its pop culture and offering recommendations of top Korean plastic surgeons, Lee said.

Operators have more risqué offerings too. A gambler who exchanges 300,000 yuan ($48,000) worth of chips can receive free flights to Jeju, tours with a Mandarin-speaking guide, and the companionship of a “third-tier” Korean actress or model, according to an e-mailed brochure from Shanghai-based tour operator CNS. A CNS travel agent, who would only give her name as “Xiao Qi”, confirmed the services when contacted by phone.

Shanghai and Shenyang

It’s illegal for foreign companies to advertise casino operations in China and Paradise avoids public solicitations, Lee said. Its staff reaches out to high-stakes gamblers recommended by existing customers and makes frequent trips to major Chinese cities including Beijing and Shanghai, he added.

Companies are able to sidestep China’s ban on casino marketing by advertising non-gaming aspects such as a concert or entertainment show held on its venue, said Grant Govertsen, an analyst at Union Gaming Group in Macau.

Junket operators own restaurants, night clubs, they sponsor golf tournaments and other getaways,” Govertsen said in an interview. “There is plenty of stuff a junket could advertise in a mass-market sort of format.”

Still, foreign operators’ efforts to attract China’s gamblers have caught the notice of local authorities, which announced last month a crackdown on representative offices that “attract and recruit Chinese citizens” to casinos.

Peking Duck

Manila’s members-only Signature Club in Melco Crown Entertainment Ltd.’s City of Dreams casino has entrance signs in both English and Chinese, while Mandarin-speaking staff direct guests to cashiers, shops, and restaurants. The neighboring Solaire Resort and Casino owned by Bloomberry Resorts Corp. has suckling pig and Peking duck on the menu, catering to Chinese palates.

There are a lot of excuses to go the Philippines; we always promote the Philippines not on the casino but the whole package,” Cristino Naguiat, chairman at gaming regular Philippine Amusement & Gaming Corp., said in an interview.

Even with the crackdown in China, we still had higher volume in terms of gross gaming revenue and in terms of junket and VIPs,” he said last month in Manila.

Too Many Chinese

South Korea is preparing to welcome more Chinese gamblers after tourist arrivals from the country rose last year to 6.1 million, with new casinos planned including at Incheon Airport.

On Jeju island, junket operators have set up shop to offer gambling chips on loan, a service common in Macau that helps bettors sidestep China’s limits on taking currency out of the country.

Competition between the island’s eight foreigner-only casinos has led to a flourishing of more than 100 unlicensed junket operators and their agents on the island, said Seo Won- Seok, a hotel and tourism management professor at Kyunghee University in Seoul.

As Chinese gamblers become more important, there’s a need to better regulate the growth of the junket operators that bring them, he said.

Our casino industry may be too dependent on the Chinese market and that means there is always risk from China’s government policy,” Seo said. “I think that’s the downside — too many Chinese in Korea.”

 

 

Chinese web firms delete more than 60,000 accounts as new rules loom

Wall Street Journal: (by Josh Chin)

Chinese Internet companies have deleted tens of thousands of user accounts as the country prepares to enforce new registration rules that will further cement government control over online discourse.

A total of more than 60,000 accounts across a number of Chinese Internet platforms were deleted in recent days, chiefly because of misleading or harmful usernames, the Cyberspace Administration of China said in a statement dated Thursday. Among them were accounts that masqueraded as government departments, carried commercial names such as “Come Shoot Guns” and “Buy License Plates,” spread terrorist information or sported erotic avatars.

Unverified accounts falsely claiming to represent state media were also shut down, the agency said, adding that it covered everything from microblogs to chat accounts to online discussion forums. Companies listed as having taken part in the cleanup included top U.S.-listed Chinese tech giants Alibaba Group Holding Ltd. , Tencent Holdings Ltd. , SinaCorp. and Baidu Inc.

The comprehensive creation of a clear and bright Internet space requires active and positive conduct from enterprises,” the regulator’s statement said.

The new rules aim to further tame the country’s already tightly controlled Internet by prohibiting the use of deceitful or harmful identities and requiring Internet users to submit genuine personal information when registering for online services. They were announced earlier this month and go into effect March 1.

China has attempted to implement similar limits in the past, with mixed success. The current effort, however, arrives at a time of intense ideological and political tightening as Chinese President Xi Jinping moves to reassert Communist party dominance over public discourse, particularly online.

Venture capitalist and Chinese blogging pioneer Isaac Mao warned that requiring users to register with their personal information to use any Internet service would stifle expression and creativity online.

It definitely has a chilling effect,” Mr. Mao said. “In the long run, freedom of speech and freedom of innovation will be dramatically harmed.

Weibo Corp. ’s microblogging service deleted 5,500 accounts, according to the regulator’s statement. They included accounts that spread information related to the East Turkestan Islamic Movement, a separatist group from the northwestern region of Xinjiang.

Tencent canceled instant messaging and other social media accounts related to gambling, firearms, fake invoices and fake food-safety information, the regulator said.

Neither company immediately responded to requests for comment.

Some analysts have warned that the new rules could make things challenging for Chinese Internet companies by increasing operational costs while reducing total user numbers.

Yet tighter registration might also improve the quality of their users, said Xiaofeng Wang, a senior analyst at Forrester.

Marketers and consumers have become more mature. They’re getting past the stage where they care only about the total number of users,” she said. “They’ve realized the important thing is the actual, active users.”

Baidu dismissed the idea that the deletions would have an impact on its business. The search giant removed more than 23,000 accounts from its popular PostBar, or Tieba, discussion forums, mostly for promoting “vulgar” culture or featuring erotic avatar images, the agency said.

It’s a vanishingly small percentage of the total number of Baidu PostBar accounts, which number in the hundreds of millions,” said Baidu spokesman Kaiser Kuo. He declined to comment further on what the company was doing to comply with the new requirements.

The regulator didn’t say whether Alibaba had deleted any accounts, but said the company had set up a special working group to manage usernames on its various platforms. Alibaba declined to comment.

Ms. Wang said further restrictions on speech could hurt the attractiveness of social media platforms, but said that companies were unlikely to resist. “With the Internet, you always have to obey certain rules if you want to operate a business in China,” she said.