April 14, 2016 12:00 pm JST

KidZania pushes an Asia-first investment strategy

KEN MORIYASU, Nikkei staff writer

Young Indonesians try their hand at pharmacy at a KidZania in Jakarta. (Photo by Masayuki Terazawa)

MEXICO CITY   April has been a busy month for KidZania and its president, Xavier Lopez. The 52-year-old founder of a chain of amusement parks where children can try out different jobs, flew from Busan, South Korea to Sentosa, Singapore to open the company's 22nd and 23rd parks.

    Mexico has only a few brands that are household names -- Corona Extra beer arguably tops the list among dads. But children around Asia are putting KidZania on the map as well. At KidZania, they can fight fires, drive Toyotas, try a flight simulator, squeeze juice, make Domino's pizza and recycle plastic, just to name a few of the activities on offer. It has become a popular destination for school excursions, although most children and their teachers are probably unaware that the company behind all the educational fun is Mexican.

     Of the 23 parks the company has opened since 1999, 10 are in Asia. After launching the first two KidZanias in Mexico, Lopez opened the company's first overseas park in Tokyo in 2006, followed by Jakarta in 2007 and Koshien, in western Japan, in 2009.

     Other Asian locations include Seoul, Kuala Lumpur, Bangkok, Mumbai and Manila. "Sixty percent of the world's population lives in Asia," Lopez said, explaining his decision to make Asia the focus of the company's overseas expansion. "Asia has very large cities -- such as Tokyo, Yokohama, Shanghai, Beijing, Jakarta, Manila -- with lots of children. We like big cities at KidZania."

     Asian parents are also willing to invest in their kids' education, Lopez said. "Japan, China -- they really want their children to be tigers. Parents put time and money and resources into their children."

     Missing from the list are China, Hong Kong and Taiwan, places KidZania is keen to enter but where it has had difficulty finding the right local partner. "There are 300 million children in China. There is no place on Earth with so many children," Lopez said.

     Chinese children have so far had to make do with a facsimile of the KidZania experience. "Up to 50 copycat KidZanias have emerged in mainland China already," Lopez said.

ASIA FIRST   Mexican companies have been active investors abroad. Mexico's annual outbound foreign direct investment averaged $10.2 billion between 2005 and 2014, according to United Nations figures. That is more than Chile's $9.8 billion, Brazil's $4.8 billion and Colombia's $3.8 billion. Most of that investment has gone south to Latin America or north to the U.S.

     Lopez has taken a different approach in targeting Asia first. "If something is successful in Tokyo, then you can expand to the rest of Asia. It is the same with Dubai in the Middle East," he said. Now that Lopez has worked out his business model, he is looking to the U.S. market, where he believes there is potential for 16 KidZania parks.

     In many Asian countries, KidZania is one of very few Mexican companies to have a presence, usually alongside Cemex, a building materials company that does business in 50 countries worldwide. Cemex has been operating in the Philippines since 1997 and is preparing to float shares in its Philippine subsidiary. If it succeeds in raising $500 million, as reported in the media, it will be the biggest initial public offering in the Philippines since 2013.

     Cemex has also been unloading some of its Asian assets. In March, the company announced an agreement to sell its cement operations in Bangladesh and Thailand to Siam City Cement for $53 million.

     Corona, the beer famous for being served with lime and being made exclusively with water from Mexico, is now part of Belgium-based Anheuser-Busch InBev. That leaves KidZania, Cemex and Gruma -- the world's largest manufacturer of corn flour and tortillas, with a factory in Shanghai that supplies corn chips and pizza ingredients to McDonald's, Pizza Hut and Kentucky Fried Chicken -- as the three major Mexican brands known outside the country's borders.

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