Disney’s Magic Kingdom comes to the Middle Kingdom

By Melanie Lee

SHANGHAI (Reuters) – Walt Disney Co broke ground on its long-awaited Shanghai Disneyland theme park on Friday, banking on its global brand and fairytale attractions to draw millions of visitors and boost its profits in the region.

Mickey and Minnie Mouse, dressed in traditional Chinese garb, took to the stage with Cinderella and Snow White to launch a Magic Kingdom-styled park tailored specifically to China.

Disney’s first theme park in mainland China and its third in Asia will cost 24.5 billion yuan ($3.7 billion). Hotels, additional entertainment and retail facilities will be built at a cost of 4.5 billion yuan ($687,825).

Disney had long sought to build in Shanghai, China’s financial hub, and a wealthy city of 22 million that is ringed by the prosperous Yangtze River Delta, home to tens of millions more potential visitors.

“Today is a very, very special day in the history of Walt Disney,” Robert Iger, chief executive of Walt Disney Co, told a news conference.

“For many years, Disney has had a great affinity for China and has been interested in sharing its great products and services with the people of China,” Iger said.

Shanghai Disneyland will cover 3.9 square kilometers and will feature the largest Disney storybook castle in the world and have a huge 405,000 square meter lake. The entire resort will house two Disney-themed hotels, outdoor recreation areas and a large entertainment, retail and dining facility.

“When they come to the park, we want them to say: ‘Wow look at that big castle’,” Iger said of the key feature of the park.

Situated in an eastern suburb of Shanghai, the park aims to attract 7.3 million visitors annually when it opens in about five years. Disney said the target market population for the park is 330 million people, the number of whom live within a three-hour drive or train ride of Shanghai.

The investment amounts will be split between Disney and the Shanghai Shendi Group, with Disney holding 43 percent of the shares of the owner companies and government-backed Shendi holding the remaining 57 percent.

A joint venture management company will also be formed, with Disney having a 70 percent stake and Shanghai Shendi Group holding a 30 percent stake.


Disney’s foray into mainland China is the culmination of years of negotiation with the government. During the news conference, Chinese government officials and Disney’s Iger took pains to stress the level of cooperation and negotiation that had taken place between the two sides.

Disney does not have a television channel in China, where the media industry is tightly regulated. However, it runs several English training schools for children across Shanghai and Beijing.

The building of the massive park had also led to accusations by some villagers that they were evicted from their homes and not properly compensated by the government.

Disney has said the matter of relocation is one that is handled by the Shanghai government.

Disney opened Hong Kong Disneyland in 2005 and suffered years of slow attendance growth and net losses. In the park’s 2010 fiscal year, it suffered a net loss of HK$718 million ($92.4 million).

Shaun Rein, managing director of China Market Research said the problem with the Hong Kong park is that it is too small and lacks rides. Given that the average Chinese person did not grow up watching Disney characters such as Cinderella, the characters also lacked emotional resonance with visitors.

“The Hong Kong Disneyland didn’t seem like it had size and the Chinese like the biggest of everything,” he said, adding that his primary worry is that the Shanghai Disneyland would not be big enough. Disney’s third park in Asia is located in Tokyo.

Hong Kong Disneyland is undergoing expansion that will increase its size by 25 percent. It drew 5.2 million visitors in 2010 and more than 40 percent were from the mainland.

“Everybody in China is waiting for Disney to come here… It’s an event that everybody is just so excited for it to happen and so if it doesn’t match expectations, it will make people upset,” Rein said.

(Editing by Jacqueline Wong)

Disney’s Magic Kingdom comes to the Middle Kingdom