November 4, 2009
By BROOKS BARNES
LOS ANGELES — After a courtship of about 20 years, the Walt Disney Company has won approval from the central government of China to build a Disneyland-style theme park in Shanghai, Robert A. Iger, Disney’s chief executive, said Tuesday.
The agreement for a Shanghai Disneyland is a landmark deal that carries enormous cultural and financial implications. Analysts estimate the initial park — not including hotels and resort infrastructure — will cost $3.5 billion, making it one of the largest-ever foreign investments in China.
The initial resort, with a mix of shopping areas, hotels and a Magic Kingdom-style theme park, will sprawl across 1,000 acres of the city’s Pudong district — with the theme park occupying about 100 of those acres. It would be a little bigger than Disneyland in Anaheim, Calif., and on par with the parks in Paris and Tokyo. It is expected to open in five or six years.
Disney’s plans are ambitious: If further development of the resort happens as expected over the coming decades — still a big if — it will encompass more than 1,700 acres and have a capacity rivaling Disney World in Florida, which attracts about 45 million annual visitors.
The company’s goal is to create an engine that will drive demand among China’s 1.3 billion residents for other Disney products, from video games to Broadway-style shows to DVDs. Disney typically relies on the creation of new Disney TV channels to pump its brand abroad, but China’s limits on foreign media have made that impossible. The approval, notably, did not come with concessions from China on the television front.
Mr. Iger called the approval “a very significant milestone” in a statement, taking care to praise China as “one of the most dynamic, exciting and important countries in the world.” A spokeswoman declined to elaborate on details. Throwing open its doors to such a uniquely American — and permanent — entertainment experience is a milestone for China, which has aggressively protected its culture from Westernization in general and Hollywood in particular. Only 20 non-Chinese films are allowed to be shown in theaters each year, for instance, and those are often edited.
“Disney, perhaps the most iconic American brand of all, is supercharged in this department,” said Orville Schell, director of the Asia Society’s Center on U.S.-China Relations.
It was unclear what convinced China to finally approve the deal after years of off-again, on-again talks. The prospect of creating tens of thousands of jobs at a tough economic moment might have played a role, Mr. Schell and other analysts said.
Others have speculated that the timing involved President Obama’s inaugural visit to China later this month.
Mr. Schell said he saw something more at work. “It’s a signal that now they will tolerate a certain kind of Western investment,” he said.
Disney will own about 40 percent of the Shanghai resort, with the remainder owned by a holding company formed by a consortium of Chinese companies selected by the government, according to people with knowledge of the plan but who were not authorized to speak publicly.
Only the Magic Kingdom-style portion of the project needed Beijing’s approval; Disney will now negotiate with Shanghai authorities on construction plans, but that is considered a matter of process.
Details about rides are still being worked out, but there are to be a smattering of classic attractions and new rides developed specifically for Shanghai, perhaps incorporating Chinese stories and history.
Disney is often accused of force-feeding its products to international markets and thus homogenizing culture. The company’s heavy-handed creation of Disneyland Paris in the early 1990s, for instance, was a public relations disaster; French farmers with pitch forks protested Disney.
But the company, under new leadership since 2005, has worked to erase that imperious reputation by bending to the quirks of local markets and taking on local partners. Where appropriate, it has incorporated local customs; the decision to serve alcohol at Disneyland Paris helped turn that resort into a financial success.
Disney has opened a chain of language schools in Shanghai, taking care to promise that the goal is to teach children to speak English, not to indoctrinate them with Princesses 101. (The company’s characters, however, are very visible at the centers.)
Disney, which already does more business in China than most foreign media companies, has more than 600 employees in Beijing, Shanghai and Guangzhou. Merchandise like plush toys and Mickey Mouse apparel is sold at about 6,000 branded locations.
The company delivers about a dozen hours of television programming (“Mickey Mouse Clubhouse”) to local stations each week, and its Broadway unit has toured “The Lion King,” among other shows.
But Disney executives have set a high bar for international growth, saying publicly before the recession that about 50 percent of the company’s annual profit could originate overseas within a few years; now it is about a quarter of revenue and operating income.
The company picked Shanghai largely because of its transportation network; moving guests in and out of a huge resort and feeding them while they are there pose enormous logistical challenges. About 300 million potential customers live within two hours of the site, located between the city’s airport and downtown.
“Strategically, we know that our theme parks represent a huge tent pole for the Disney brand wherever we put them,” Jay Rasulo, chairman of Walt Disney Parks and Resorts, said in August during an interview about the division’s growth plans.
The announcement marks the culmination of a courtship that began in July, 1990, when Zhu Rongji, then the mayor of Shanghai, made a trip to the original Disneyland in Los Angeles with four other Chinese mayors and came home determined to have a Disneyland in his city. Mr. Zhu rose through the ranks to become premier of China from1998 to 2003 and was a consistent champion of the project, said Michael Rowse, the Hong Kong government official who played a central role in negotiating the establishment of Hong Kong Disneyland, which opened four years ago.
The Shanghai approvals come as Disney works to keep its domestic theme parks healthy amid the global economic downturn. Unlike most theme park operators, Disney has managed to keep attendance high by applying steep discounts to hotel rooms and dining.
Keith Bradsher contributed reporting from Hong Kong.
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