Mickey Mouse in the Communist Kingdom
But many will say that Disney doesn’t need to worry because it is, well, an experienced theme-park operator. The Shanghai Magic Kingdom, however, will not be the company’s first in the Middle Kingdom. There’s already one in Hong Kong, and, to put it politely, it’s been a dud. Interestingly, the Shanghai park will also be located in an out-of-the-way area near an international airport, but presumably, the Burbank-based company has learned lessons from its rocky experience in Hong Kong.
Maybe. There is one flaw common to the structures of both the Hong Kong and Shanghai business arrangements. The Hong Kong government is the majority owner of the park there, holding 57 percent with Disney owning the rest (ownership percentages will change in about a year due to a refinancing). In Shanghai, Disney will own only about 40 percent with the remainder held by local enterprises favored by the Chinese central government.
And why is minority ownership a potential problem? The Hong Kong park, open since September 2005, has suffered from being tiny — it is the smallest of the five parks (the others are in Anaheim, Orlando, Tokyo, and Paris). Yet because Disney does not control management — in fact, the Hong Kong government has final say over just about every aspect of the park there — it has had to persuade bureaucrats to expand the facility to attract new visitors.
For instance, to add three new attractions, Disney had to negotiate for almost two years with officials having no business experience. Why did the talks take so long? The local government needed to show that it had squeezed Disney, which is perceived as having out-negotiated the city in prior discussions. The slow pace of the talks allowed Ocean Park, a local attraction featuring dolphins and pandas, to upgrade facilities and siphon off substantial numbers of paying customers.
In Shanghai, Disney will not be in business with any government — at least nominally. Yet it is likely either the central government in Beijing or the Shanghai municipality — perhaps both — will be calling the shots from behind the scenes. And these governments have interests that do not exactly coincide with Disney’s. For instance, Shanghai has a greater interest in developing land around the park than in ensuring the profitability of a foreign company that is not appreciated in all corners of the mainland.
So Disney may have learned less from its experience in Hong Kong than analysts think. Nothing is easy in China — especially when the government makes the decisions.
Hong Kong is semi autonomous, it is not part of China. Mainland visitors are tightly regulated and cannot cross into HK at will, but receive regulated permission by Mainland Government.
The error was placing Disneyland in Hong Kong to begin with. HK is not a family fun destination, I lived in HK for several years, not too many families came with the intent to see a smaller cheaper version of Disneyland. It is very small, and lacking in attractions. It was a bad business decision because it only went halfway.
Basing Disneyland outside of Shanghai, is a good business decision. China median income grows each year, the “middle class” in China will be larger than total population of the USA within 5 years. People will flock to a well planned amusement park that caters to Chinese taste.
Theme parks in China are mostly cheap imitations of world class parks. The ones planned and built well make money. The cheap imitations fall by the wayside. Its no different than any other business venture.
A fully functioning Disneyland organized and planned along Chinese taste will be extremely successful, in addition to selling clothing and accessory lines that children will demand.
Disney’s been making lots of changes lately… have you seen the new Mickey Mouse? http://www.newsy.com/videos/mickey_gets_a_makeover
The worst part of it is that as, I understand it, the superbestest part of Walt Disney World, Pleasure Island’s Adventurer’s Club (think the Tiki Room if you’re over 21), will have its artifacts sent to Hong Kong Disney and that a version of the Club will open there — but not where it has a major cult following with Orlando-ites and regular (frequenting returning) grownup visitors. Damn them.
We will hang you by the Mouse tail you sell to us!
Russia runs there own Disneyland, what could happen?
A shortage of Mice.
So if Communist Chinese cannot cross into HK at will, that means the hundreds of thousands of Chinese here in Australia and New Zealand have been pre-screened by the Communist Chinese government… I wonder what the Communist Chinese government’s purpose was in sending these hundreds of thousands of Communist Chinese pre-approved sleepers here?
alex, the middle class in China, however you define it, will not equal the population of the United States within five years. I wish it would, but that would take growth rates that are not possible.
akorozco, thanks for the link. I had somehow missed the news of the Mickey makeover.
Bill, I will have to go to the attraction when it opens in Hong Kong. Thanks for the tip.
Chairman Cao, very clever. Thanks for updating Lenin.