Gearing up for Disney Shanghai

A paddy field near Shanghai has rice plants grown to form the shape of Mickey Mouse to celebrate the Disney Shanghai Resort which will open next year.
A paddy field near Shanghai has rice plants grown to form the shape of Mickey Mouse to celebrate the Disney Shanghai Resort which will open next year.PHOTO: REUTERS

LOS ANGELES/SHANGHAI • You speed along an empty highway, past a little town of rice paddies and vegetable stands, and watch the famous castle rise up as you approach. Black-clad guards in flak jackets clear you ahead of a red steel archway. Next stop: the Shanghai International Tourism and Resorts Zone.

The Disney Shanghai Resort, which takes up about a fifth of the zone, is less than half an hour by car from the financial district of China's wealthiest and most populous city, but it feels like a kingdom all its own.

More than 1,500ha of the zone are vacant, set aside by the Chinese authorities as part of a decades- long plan to draw tourists here. Whether it will be a magic kingdom depends on how shrewdly Shanghai and the Walt Disney Co build and sell this 2,000ha playground.

China's economic growth is slowing and Beijing's national crackdown on corruption has warned people off of the conspicuous consumption and overbuilding that flourished in the boom years.

Disney chief executive officer Robert Iger has called it the greatest opportunity the company has had since Walt Disney himself bought land in Central Florida in the 1960s.

Said Mr Dennis Speigel, a theme-park consultant from Cincinnati in the United States, fresh from a trip here: "This is a really big deal, a bona fide effort by Shanghai to turn itself into a world-class tourism destination. They're counting on Disney to be the driver of that."

You can tell. Ahead of the park's opening, the Chinese government just declared a renewed campaign against ripping off branded merchandise - specifically, Disney's.

The Burbank, California, company, which posted strong financial results a week ago damped by its international parks - including the Shanghai park (delayed by many months and now slated to open in spring) - has been stung by criticism that it built Disneyland Paris too big and Hong Kong Disneyland too small. The US$5.5-billion (S$7.8-billion) Shanghai park will open with two hotels, compared with seven in France.

Disney's local partner - the state-owned Shanghai Shendi Group, which will own 57 per cent of the resort and contribute about US$2.1 billion of the equity - is under pressure to get it right too, after China's long period of real estate speculation.

The only other significant tourism project now under construction in the zone is a luxury shopping mall being built by Value Retail, a British-based developer.

It will open next to the Disney resort and be similar to the one the company operates near Disneyland Paris.

If Disney and Shanghai can strike the right balance, they could transform the place into the Orlando of Asia, said Mr Speigel.

About 70 per cent of China's theme parks lose money, 20 per cent break even and 10 per cent are profitable, according to professor Paul Fang at Jiao Tong who teaches theme park studies.

Disney says that 330 million people with enough disposable income to visit the park - which features the tallest Disney castle in the world and a focus on Chinese culture - live less than three hours from its gates. The theme park could be the largest in Asia, topping Tokyo Disneyland's 17.3 million visitors a year, said Mr Chris Yoshii, vice-president for economics in the Asia-Pacific region for the consultancy Aecom.

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A version of this article appeared in the print edition of The Straits Times on November 17, 2015, with the headline 'Gearing up for Disney Shanghai'. Print Edition | Subscribe