In Shanghai, Disney aims high

The opening of Shanghai Disneyland in spring 2016 will mark the arrival of international theme park resorts to mainland China, affording Disney a chance to tap into hundreds of millions of people who might otherwise not visit Disney resorts in Hong Kong or Tokyo.

The $5.5-billion project, which Disney Chairman and CEO Bob Iger told CNBC was the company’s “most important project” at the moment, is a joint venture between Disney, which owns 43 percent and Shanghai Shendi Group, which owns the remaining 57 percent. Shanghai Shendi Group is a conglomerate of three companies, all of which are owned by the Shanghai government.

Last week Iger unveiled new details of the Shanghai resort, which will feature six themed lands—Adventure Isle, Fantasyland, Gardens of Imagination, Mickey Avenue, Tomorrowland and Treasure Cove. There are also plans to highlight Disney franchises Marvel and Star Wars. Most notably, this will be the most localized of Disney’s overseas resorts – which also include locations in Hong Kong, Tokyo and Paris—with elements from Chinese culture appearing prominently in the resort’s design.

The development, which covers nearly 1,000 acres in Shanghai’s Pudong District, will be three times larger than its Hong Kong cousin nearly 1,300 kilometres to the south. Workers have already topped off both of its hotels: the signature 420-room Shanghai Disneyland Hotel and 800-room Toy Story Hotel.

As Asia-Pacific’s third Disney Resort and China’s second, it has the inside track on Hong Kong to attracting mainland Chinese visitors, both due to location and the fact that mainland visitors do not need to apply for a travel document, as is the case with Hong Kong, which operates under different political and economic systems than the mainland.

The Hong Kong resort mainly serves Hong Kong residents, international tourists and visitors from the mainland, especially neighboring Guangdong province, which has a population of more than 100 million people and in 2013 became the first Chinese province to record a GDP of more than $1 trillion. The nine cities near Hong Kong that make up the Pearl River Delta region alone account for $700 billion in GDP, roughly analogous to Saudi Arabia’s economic output.

Why Shanghai? Beijing Next?
Setting up shop in Shanghai will put Disney at the heart of China’s most-dynamic economic hub, the Yangtze River Delta, which comprises Shanghai and the adjacent provinces of Jiangsu and Zhejiang. In 2014, Jiangsu joined the $1 trillion GDP club, with Zhejiang at $650 billion and Shanghai with more than $380 billion. The three regions, which are connected by some of China’s top transport infrastructure projects, have a combined population of over 155 million people.

Expectations for Disney’s Shanghai resort are high. Its Hong Kong resort is building its third hotel on the back of strong occupancy and spending by visitors. When the first Disney Store opened in Shanghai this past spring, the line of shoppers, many of whom camped out for hours, extended more than one kilometer, with staff eventually turning people away.

Assuming things work out for Disney in Shanghai, the big question will then be: What about Beijing? China’s capital city sits at the center of the country’s other top economic region. The competition appears to be staking its claim, with Universal Studios planning a resort and theme park in Beijing to open in 2019 and Six Flags planning a development next door in the city of Tianjin for 2018.