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JUNE 14, 2016 VARIETY.COM
20
Disney Plants Stake in China
With Opening of Shanghai Park
Amid its efforts to promote a
‘distinctly Chinese’ experience, the
company faces stiff competition
By PATRICK FRATER
FROM A VISIT TO DISNEYLAND by Shanghai’s
mayor in 1990 to the planned opening
of the $5.5 billion joint venture on June
16, Shanghai Disney Resort has been more
than 25 years in the making. That quarter
of a century stretches from an era when
China was more rural and agricultural than
not, through a period of massive urbanization
and industrialization, to a post-boom
slowdown, with a new middle class that is
increasingly switched on to a service-led
economy.
Walt Disney Co. chairman/CEO Bob
Iger has called the park the entertainment
giant’s “greatest opportunity since buying
land in Florida.” Forecasts are for 15 million
visitors in the first full year of operation;
this compares to the 19 million who
visited Disney World in Orlando, Fla., in
2014, according to the Themed Entertainment
Assn.
Disney is taking pains to stress that the
park will be “distinctly Chinese,” a phrase
Iger used repeatedly in a presentation May
18 at the MoffettNathanson Media and
Communications Summit. As part of an
effort toward “making sure that the people
who visit this park feel that it is theirs,”
the Shanghai park eliminated the Main
Street USA feature, which appears at all five
other Disney parks: Orlando and Anaheim
Shanghai
Stats
Disney has
upped its
investment in
the park since
it was first
announced.
$3.6b
Expected cost
as announced
in 2009
$5.5b
Final cost
$56
Lowest ticket
price
15m
Visitors
expected in
first year
in the U.S., as well as Hong Kong, Paris, and
Tokyo. Frontierland, another traditional
element derived from the American West,
was also eliminated. Iger said that Disney
shows have been reconceived and designed
by Chinese artists, and he touted a massive
teahouse in front of the Disney castle featuring
local art and architectural elements,
and food from across the country.
Disney’s desire to plant a solid stake
in the world’s largest market comes amid
growing competition from Chinese firms
in the theme-park sector, including Dalian
Wanda (which is building upward of
15 theme parks), Huayi Brothers, and
Carnival Group (in Qingdao now, with
plans for another 10 parks), as well
as Six Flags (Tianjin, 2018), Universal
Studios (Beijing, 2019), and DreamWorks
Animation, which will open a joint venture
park in Shanghai next year. Locating the
park in Shanghai gives Disney access to
a local population of 330 million (within
three hours of the park), as well as two
international airports.
Disney says internal decisions were
taken in 2014 to build a bigger park than
was initially envisaged in 2009. The
company says the expansion — not
public safety concerns following a stampede
on Dec. 31, 2014, that killed 36 in
Shanghai — was the reason the park’s
opening, originally expected in 2015, was
pushed back.
In addition to causing delay, the extra
building work bumped up costs, which
went from the $3.6 billion announced in
2009, to $4.7 billion, and finally to $5.5 billion.
Costs are shared proportionally by the
park’s owners — the Walt Disney Co. holds
43% of the ownership company, and Shanghai
Shendi Group (itself formed from two
state-owned enterprises) holds a majority
57% stake. Financing comprised 67% equity
and 33% debt. Disney owns a controlling
70% stake in Shanghai Intl. Theme Park
and Resort Management Co., which operates
the resort.
Those equity splits appear to reflect Chinese
concerns about foreign ownership of
major infrastructure, as well as Disney’s
determination to fully control its intellectual
property in a country where piracy has
been rife and Western brands have been
cautious about handing over their crown
jewels. (Disney was granted a year of special
copyright enforcement running until
October 2016.)
The risks of operating in China were
made clear to Disney in March, when the
company quietly shuttered DisneyLife,
a family-friendly, subscription TV channel
launched in December 2015 in partnership
with China’s Alibaba. The channel
was hindered by new regulations limiting
foreign content and Sino-foreign media
partnerships.
Disney China executives would not comment
for this story ahead of a planned
press junket June 14-16.
Shanghai Disney will have two ticket
pricing tiers, peak ($76) and off-peak
($56), plus concessions for children and
the elderly. That makes it one of the most
expensive theme parks in China, and a significant
outlay given the average $7,000
GDP. It is also the lowest cost of the six Disney
parks worldwide.
Those prices were described last month
as too high by Wang Jianlin, chairman of
Dalian Wanda group. Wanda, which has
expanded from property into leisure and
entertainment, and has made Wang the
richest man in Asia, has set theme parks as
a central plank of its diversification strategy.
Wang used a televised interview on
CCTV to suggest that Disney should never
have come to China, and to criticize the
park’s pricing structure. The war of words
continued when Disney accused Wanda’s
new Nanchang theme park of misusing Disney-owned
Captain America and Snow
White characters.
But Wang’s remarks that “one tiger is
no match for a pack of wolves” serve up a
reminder that foreign companies operating
in China will always be playing a game
that is partially rigged in favor of the local
team.
Talking Points
• Disney is stressing its efforts at appealing
to Chinese tastes through the park’s attractions,
entertainment, architecture, and food.
• The company’s first park in China faces
competition from local firms, including Dalian
Wanda — which has been openly critical of
the venture — and U.S. rivals such as Six Flags,
Universal Studios, and DreamWorks Animation.
IMAGINECHINA/AP