Macau to Find a Way to Diversify in the Changing Landscape
Casinos and gambling establishments across Macau have lost their unique position of holding all the cards when it comes to economic prosperity in Macau. The industry is changing, and Macau may soon become a city with a completely new face. Officials granted 6 new casino licenses over the past couple of months, but experts predict sweeping changes is coming to the fundamental business model of Macau.
The slot machines and other gambling hardware underpin much of the local Macau economy. This over-reliance is a changing paradigm that has become the new agenda focus for business and political leaders in the region. ©Bru-nO/Pixabay
Beijing has been pushing Macau for several years to find a way to reinvent itself, the over-reliance and dependence on overseas gambling revenues has left the industry precariously poised on failure if the legal situation changes. The Chinese government will push the casino-centric city this year to clean up its gaming sector by introducing new regulations, particularly targeted at stopping the outflow of capital from mainland China into the casino tables of the Macau strip.
One route for achieving this will be to diversify the city’s dependence on gambling revenues as the sustainment of its local economy. Macau is a city that has plenty of regional opportunities to draw from, and the former Portuguese colony will now have to understand and discover a means to drive revenue growth across the board through new opportunities outside of gambling. This could include but is not limited to leisure, hospitality, conferences, and conventions. Building an infrastructure to support this new economic vision is a move that has already been set in motion.
Diversifying the city’s economy is crucial to the change in perception about Macau that Xi Jinping is trying hard to implement. The Chinese leader is interested and persistent in his common prosperity agenda for the whole country, this means converging the enormous wealth gap that transpired throughout the decades of breakneck growth and bringing about a new moral standard that will be applied to all walks of business, politics, and life.
Times Are Changing for Macau and its Inhabitants
The days when construction workers in the city would come off the back of a long shift and try their luck on the casual walk-in casino huts around the harbor are long gone. The stark contrast around these bottom-up & traditional gambling concepts and the 42 glamorous casinos that now populate the city couldn’t be any starker. The massive transformation that has undergone throughout Macau is by no means an accident, but the result of decades of strategic investments to transform this city into a cash generating behemoth.
Luxury décor, opulence and ostentatious design features have become the hallmarks of Macau’s gambling and casino sector. But whilst the billions have been flowing into this former fishing village, many locals and politicians across the mainland have been grumbling that enough is enough. Those voices are only getting stronger, and the free-pass that Macau previously enjoyed is seemingly coming to an end much earlier than anybody previously imagined.
Beijing is clearly at the end of its patience when it comes to allowing China to enjoy such an opulent state of affairs. There is seemingly no rope left for the city to extend when it comes to the creativity behind its financial position. Money-laundering, shell-companies, junket operators, and a local mafia to keep the industry in check is all bad optics for a regime that is determined to clean up its act. The over-reliance on casinos to be the source of economic stimulus for Macau is the issue that many are now trying to resolve.
Following the last year of incredible profits in 2019, it seems like a natural time for Macau to now take its pivot into a new portfolio of industries. Macau will have to learn to become something else other than a hub for international gambling high rollers. The government is seemingly taking the strategy to first dilute the importance of gambling within the city, and then completely abolish it all together. The weight of gambling on the city’s balance sheet will need to be urgently reduced for this objective to be successful.
