|
Published: November 3, 2009
It’s been in the works
for more than a decade, but The Walt Disney Co. (NYSE: DIS)
finally got the approval it needed from China’s government to
build a theme park in Shanghai.
Disney’s fourth park outside the United States will be the first
on mainland China, giving the company a new avenue to market its
popular properties in the restriction-laden Red Dragon. The
park, to be located in the Pudong district between Shanghai’s
main international airport and its downtown area, will target
China’s growing middle class.
“Shanghai Disney would be a huge boom,” Shaun Rein, managing
director of China Market Research Group told Bloomberg News.
“You have 80 million people within 3 hours’ driving distance.”
Still, a densely populated area doesn’t necessarily make for an
economic slam-dunk. Take Disneyland Hong Kong, for instance:
It’s easily accessible to about 60 million people in the
Guangdong province and burgeoning Macau, but it drew just 5.2
million people in its first fiscal year, 2005-2006 -- short of
Disney’s goal for 5.6 million visitors.
Things didn’t get much better in the following two years, as
visits dropped to 4 million and 4.5 million, respectively.
Meanwhile, nearby Ocean Park in 2008 enjoyed its fifth straight
year of more than 5 million visitors, Fortune magazine
reported.
It’s generally accepted that Disney’s shortcomings in Hong Kong
and its other international locations were due to a failure to
adapt to the local cultures.
“I wasn’t trying to kill the Mouse,” Ocean Park Chairman Allan
Zeman told Fortune. “They’ve done it themselves.”
Indeed, it’s often said that Disney force-feeds its products to
international markets, thus homogenizing culture.
“Ocean Park is more fun -- Disneyland is more for kids,” Ocean
Park visitor Frankie Tong told The New York Times Wednesday.
“Disneylands are more or less the same in places all over the
world -- Disney is more American.”
Disney’s new leadership, under the direction of Chief Executive
Officer Bob Iger changed this unofficial policy, adapting to the
uniqueness of local markets and partnering with locals. The
company also incorporated local customs. (Serving alcohol at
Disneyland Paris helped turn it into a financial success.)
The coming theme park in Shanghai represents a new way for
Disney to stoke demand for its properties without much
government scrutiny.
Unlike Western nations that consistently snap up the many forms
of Disney media, including movies, video games and television
shows, China keeps a tight grip on the media crosses its
borders.
For example, only 20 foreign films are allowed into China each
year, reducing Disney’s chances of showing its popular movies
there.
Disney’s Shanghai park “gives Disney an opportunity to monetize
its brand without necessarily having to produce filmed content,”
David Bank, an analyst with RBC Capital Markets Corp. told
Bloomberg.
A theme park sans regulatory hurdles is “the real key to making
money in China for the media companies,” he added.
“The cultural implication is significant as Disney theme parks
represent a certain kind Western thinking,” Chinese University
hotel and tourism management associate professor Leung Wai-kin
told Bloomberg in a phone interview. “It doesn’t mean the
government agrees to it but at least it’s comfortable with it.”
Reports indicate the new 1,000-acre park will cost Disney $3.6
billion. Disney’s theme park business is second only to its
media arm, and saw its profit decline -19% to $521 million in
the second quarter as consumers curbed their spending.
-- Bob Blandeburgo
Associate Editor
Money
Morning |
