#74 Shanghai Disneyland
News agency Reuters reported on Friday that Disney and Shanghai Shendi Group have signed an agreement on the establishment of a Disneyland theme park in Shanghai. On an area of about four square kilometers, a total investment of approximately $3.75 billion will bring Mickey & Co. to Middle Kingdom.This should have really been big news, but it wasn’t. The media didn’t jump on it, and even the stock markets didn’t seem to notice (yet). Why not? One possible explanation could be that no one is really certain yet what the expansion into Mainland China will do for Disney. Disney’s Hong Kong theme park hasn’t really attracted as many visitors as it has hoped so far, and has reported a loss last year. Then again, it doesn’t seem to be as big a blunder as Eurodisney has been for the longest time. So, nobody really knew if the Shanghai theme park will be a source of revenue or a source of ridicule for Disney.
Another explanation is that the news is really old news. As of now, the plans are to open the Shanghai Theme Park in 2014. Considering that the negotiations have been going on for about a decade, and given that even one year ago there have already been announcements about an agreement, why should anybody bother to look up from their cup of green tea now? Approval from China’s central government is still pending, and it’s almost certain that there will be more hurdles and milestones after that.
Everyone familiar with the story of Disney’s resort in Paris can only hope that this time Disney will look beyond the mere potential of a huge market. If Disney wants to be successful from the outset, it needs to focus on the cultural differences that stand between their business model and Chinese visitors.
November 12, 2010 @ 10:03 am
For Disney going into China is a huge opportunity to make profit in terms of increasing population and growing individual income because there is no Disneyland ever in China. Hong Kong is part of China, but is a very westernized region where western ideas are widely accepted. Therefore, if Hong Kong cannot attract enough visitors then entering the traditional eastern market such as China can be challenge for Disney. Plus, most of Chinese are anti-America like French. After the mistook happened in Paris, Disney have to be careful in penetrating Chinese market. Entering China it symbolizes western domination and culture influences and of course that Chinese government will involve.
On the top of that, the timing of entering Chinese market happen to be very sensitive based on current diplomatic relationship between U.S. and China. Chinese currency war during this phase could be a significant impact for Disney and so as lots of Chinese companies was rejected to do business within U.S. due to national securities concern. There are more of political involvement rather than just target the market itself.
November 12, 2010 @ 10:23 am
For Disney going into China is a huge opportunity to make profit in
terms of increasing population and growing individual income because
there is no Disneyland ever in China. Hong Kong is part of China, but is
a very westernized region where western ideas are widely accepted.
Therefore, if Hong Kong cannot attract enough visitors then entering the
traditional eastern market such as China can be challenge for Disney.
Plus, most of Chinese are anti-America like French. After the mistook
happened in Paris, Disney have to be careful in penetrating Chinese
market. Entering China it symbolizes western domination and culture
influences and of course that Chinese government will involve.
On the top of that, the timing of entering Chinese market happen to be
very sensitive based on current diplomatic relationship between U.S. and
China. Chinese currency war during this phase could be a significant
impact for Disney and so as lots of Chinese companies was rejected to do
business within U.S. due to national securities concern. There are more
of political involvement rather than just target the market itself.
November 16, 2010 @ 3:47 pm
Disney definitely has an opportunity for growth in China. Disney has also overcome certain government barriers in the Chinese market by establishing a joint venture entry mode into the market. Disney does not need to set up a new corporation in China under joint venture structures. The foreign investor and Chinese partner participate in the joint venture by doing business using the Chinese business license under a co-operative and contractual arrangement. Disney’s joint venture with China will give them a higher degree of marketing control which would shorten the time taken to obtain local market information. Disney is also overcoming some cultural market entry barriers through Magic Kingdom-style theme park with characteristics tailored to the Shanghai region. The article states that “Shanghai Disney would be a huge boom,” Shaun Rein, managing director of China Market Research Group, said. “You have 80 million people within 3 hours’ driving distance.” Disney has also placed the product conveniently close to a large population in the Chinese people. However, Disney seems to be targeting only the wealthiest of the Chinese middle class. This leaves the majority of the lower class segment out of the market. Disney will not truly be successful in China until it is able to establish the organization for both the lower and middle class consumer in China.
January 13, 2011 @ 6:05 pm
I agree on previous comments that the Shanghai theme park could be a huge source of revenue for Disney, but only if they do not mirror the American theme park concept one-to-one, but do make concessions to the differences in Chinese culture.
Shanghai is one of China’s major tourist destinations and the Disney resort will additionally benefit many other industry sectors, such as employment or real estate. However, many people worry that the performance of Shanghai’s Disney park might be as unsatisfactory at its counterpart in Hong Kong.
Indeed there were made serious mistakes in the implementation of Hong Kong’s Disneyland, where many of the shows are presented in English only, with many visitors of mainland China, who don’t speak English.
The basic and minimum adaptation to Chinese culture by Disney is to provide services not only in English but at least in one or two forms of Chinese. Furthermore the gastronomy in the park should include local food and specialties.
China scores relatively high on Hofstede’s dimension of Uncertainty Avoidance, which indicates risk-avoiding behavior and may result in an unwillingness to visit new attractions. The Chinese may be more likely to try out the park, if the price is relatively low at the beginning and it could be increased after the park has established itself.The high collectivism of Chinese culture can be an opportunity for Disney, as the theme park offers attractions, which can be visited in groups and the Disneyland generally is a place for the whole family.
Disney’s approach to launch its new park in Shanghai will be an interesting topic of future investigation and discussion. We will see if they manage to flourish and gain over the Chinese to populate the park.
October 25, 2011 @ 7:46 am
Shanghai Disney Resort is the newest theme park that the company is going to operate in China. However, the Walt Disney Company had some problems when the company opened the theme park in Hong Kong. According to the news from Business Week, the company underestimated the amount of visitors and the time that the visitors will stay in the park. It results in insufficient rides, seats, and food for visitors and it also causes a crowd problem in the park. Although the attendance of the park increased 13 percent, the Hong Kong Disneyland still lost $92.3 million in the end of last year. For Shanghai Disney Resort, the management team is going to plan to customize the park for the Chinese and try to prevent the cultural difference from happening again like Disneyland Resort Paris and Hong Kong Disney Resort. Therefore, in order to be successful in China, the company has to be really careful on not only the cultural differences for management but also the legal issues that Chinese government set.
November 22, 2011 @ 6:57 am
Obviously this could be a big earning potential for Disney. Most of the article was talking about what ifs but they should be focusing on how to. In order for companies to succeed, they must develop global strategies. By focusing on the global strategies and taking into consideration the perspective of people and their culture, Disney could make Shanghai Disney very successful. I believe that Disney should become familiar with the Chinese Culture if they want to speed up negotiations with the Chinese government. Disneyland in the U.S. is very popular, why? Because they did their research and learned about the prospective customers. Shanghai Disney can learn from Hong Kong’s mistakes for example the spoken language Chinese. Personally, I do not like going to a show that I cannot understand as I am sure most other people, whether they are from the U.S. or other cultures, would agree. It will be interesting to see future plans for Shanghai Disney since China is a high uncertainty avoidance culture. Since Hong Kong Disney went bust, it might be possible that the Chinese would not want to take the risk to buy a ticket to a park that could be awful.
December 30, 2011 @ 11:22 am
The common opinion in this blog seems to be that Disney can earn a lot of money if they do their homework appropriately. From my point of view it is difficult to understand why such a huge company like Disney can do the obvious mistake of transferring an American concept directly to foreign markets. Especially after the difficulties with Disneyland Paris they should have recognized that good preparation is essential. However, for some reason they repeated their mistake in Hong Kong.
Of course, thorough preparation is expensive and time-consuming but it would save Disney from many pitfalls which cause even more costs in future. Although it is advisable to do a market research, this is not the only solution. As mentioned in the comments above, the company could look at already present data like the dimensions of Hofstede.
If Disney is considered as a representative of the U.S.-American culture, the difference in Uncertainty Avoidance is not that big: The value for the U.S. is even higher (46 points) than the Chinese value (40 points.) Both cultures are used to accepting uncertainty. However, there are still three factors left:
Power Distance is very high in China, with a value of 80 points (compared to the U.S. with 40 points). This could become a problem if Disney sends American managers to the new Disneyland without preparing them for the Chinese management style. In cultures with a high Power Distance, employees are used to following orders whereas in the U.S. it is more appropriate to communicate directly within flat hierarchies.
The dimension of Individualism could directly influence the number of seats and the size of the theme park. As the Chinese culture is very collectivistic, it can be expected that larger groups will visit Disneyland than in the U.S. However, it has to be considered that Individualism and Masculinity are rather high. Therefore, it could also become necessary to sell more expensive merchandise products, as the visitors might have the need to show their neighbors that they can afford a visit.
The last dimension I would like to mention is Masculinity. Like with the dimension of Uncertainty Avoidance, the difference between China (66 points) and the USA (62 points) is rather low. However, this should also be considered when managing the theme park: managers from the U.S. will probably strive for high revenues while Chinese employees will long for the company’s – which is on the long term their own – success.
Finally it can be said that Disneyland has surely enough resources for a better preparation and maybe someday the media and the stock markets will react positively.
July 7, 2017 @ 3:02 pm
In order to establish a good business, Disney definitely has to focus on the Chinese culture, and forget about adapting the American model to this theme park. The wishes and needs are different in every country. Thinking about Hofstedes dimensions, especially the avoidance of uncertainty, it is difficult to get Chinese people to a new park, they are not familiar with yet. By promoting the park and building references through word of mouth, this dimension can be overcome. It is crucial to make the first steps and get people to notice. In general, Disney can become a huge success in China, since it is a well known brand and has the potential to adapt to the Chinese culture.
August 1, 2017 @ 10:29 pm
#74 Shanghai Disneyland
The establishment of Disneyland in Shanghai is a very happy event. This is a total investment of about $ 3.77 billion in the park, which is indeed very exciting, but on the cultural differences between China and the United States, as well as the interference of the central government, according to the previous study, I made a SWOT analysis of the project.
Advantages:
The main advantages are Walt Disney’s business philosophy and innovative ideas, as well as Walt Disney in the global marketing, which are unmatched by other domestic projects. Disney’s service philosophy, all with international standards, so for the market, Shanghai Disney’s marketing and business philosophy may be more dominated by other domestic theme parks (Lev-Ram, 2016).
Weaknesses:
1. Disney culture is different from national culture
Disney is in line with American values, cultural “foreign fast food”, whether it can attract the audience, Mickey Mouse, Donald Duck can PK China Sun Wukong, gourd doll.
2. There is no high-end animation industry
Shanghai Disney theme park, need to soft power – anime to support, Shanghai relative to the United States and Japan, can only say that in the initial stage, how to introduce advanced animation technology and talent, how to make the Shanghai Disney animation industry chain.
Opportunity:
Passengers arriving outside Pudong Airport can also be visa-free for 48 hours. Shanghai Disneyland for the number of visitors, will be far more than Hong Kong Disney. As the Chinese culture of global influence continues to enhance, to create Asian characteristics.
Threat:
Face Japan, Hong Kong Disney competition.
Shanghai and Tokyo, Hong Kong is not far from the three Disneyland, especially between Shanghai and Hong Kong will form a competitive situation. Tokyo and Hong Kong, have long been famous international cities, international financial center, they are supporting services, and animation soft power has certain advantages.
Shanghai Disney theme park is worth investing but should pay attention to the construction: First, can not copy the US model, to meet the Chinese cultural concept. Second, the ticket price is set at 200 Yuan, in line with China’s economic level. Disney’s impact on the surrounding economy will be enormous (Kang, 2016). Including the government’s interest income on loans, as well as for employment opportunities, the surrounding services sector will directly pull the region and the country’s economy to bring benefits.
References
Kang, J. (2016). Five Things You Need To Know About Shanghai Disneyland. Forbes.Com, 1
Lev-Ram, M. (2016). 5 Must-See Attractions at Disney’s Shanghai Park. Fortune.Com, 1.
December 18, 2021 @ 4:48 am
Disney knew that if they wanted to penetrate the mainland China market, they needed to do it carefully and in collaboration with a local Chinese company and/or government. It may have been years in the making but in the Summer of 2016 Shanghai, Disney became the 6th Disney resort park in the world. Disney knew that they had to do this opening and park right to avoid the issues and controversy that plagued the Disneyland Paris (aka Euro Disneyland) that opened in 1992, where the park was inundated with cultural clashes, financial woes and marketing snafus. Disney also had to do some major negotiating and settling in order to strike the deal in a state-controlled country such as China. For instance, Disney handed the Chinese government a larger percentage of its profit, gave the Chinese government a role in running the park and abandoned the idea of including the Disney Channel as part of the deal. Disney did all this as they saw the potential of the China-Shanghai market where the park was easily accessible to over 300 million people.
The lesson learned by the Shanghai Disney is that if a multinational company looks to be successful in the Chinese market, then they must cooperate with Chinese agencies/companies through partnerships, alliances or joint ventures. A slogan used by Robert Iger, former Disney CEO is “authentically Disney and distinctly Chinese” to focus on the fact that Shanghai Disney was still the same Disney we all know and love but with quite a bit of Chinese influence to appease government efforts to censor western culture in China to avoid westernization. The efforts by Disney to negotiate with the Chinese government worked as an article by CNBC from 2017 said Shanghai Disney was expected to be the most profitable Disney Park. https://www.cnbc.com/2017/06/16/shangahi-is-becoming-the-most-profitable-disneyland-park-in-the-world.html
January 6, 2022 @ 10:04 am
As previously mentioned throughout this blog, I also believe that Disney’s Shanghai Resort will rebound from its losses if it can learn from its mistakes with Disneyland Paris and Disneyland Hong Kong, which included strong cultural differences, lack in consumer research, lack in preparation to respond to the Chinese market as one cannot simply enter a foreign market before understanding them, political tensions, legal issues, and overall lack of western culture acceptance. While Disney Shanghai may have undergone underestimations in ticket sales, tourist visits, and general awareness as well as potential political and legal conflicts between the Chinese government, the Walt Disney Co. has overcome these issues as the Chinese government not only approved the resort in 2009, but also signed a joint venture agreement with Shanghai Shendi Group in 2010 to build the park and resort in Shanghai. Furthermore, in comparison to certain aspects of its resorts within the United States, Disney has customized many aspects of its Shanghai Resort, such as diversifying the languages spoken aside from English, incorporating an effective work culture which appeals to both countries as much as possible, and creating structures which match and aesthetically-appeal to Chinese culture and tourists as incorporating a culturally American-based theme park could have also resulted in failure and viewed as a source of ridicule, similarly to what occurred in Paris and Hong Kong. However, some challenges Disney’s Shanghai will potentially continue to face includes increased competition from other non-Disney theme parks both domestically and internationally, specifically amongst eastern countries like Japan, lack of general awareness and word of mouth as Disney does not have as many opportunities to showcase its business’s major marketing selling points in comparison to other businesses, and competitive prices; many potential consumers can possibly be unable to afford to travel to the park and pay for food or souvenirs within the park, so it will be important that the Walt Disney Co. create and implement competitive pricing strategies that will appeal to as many members of all social-working classes as possible.
February 5, 2022 @ 8:21 am
Based on the information of Shanghai Disneyland, it is a big challenge for Disney and Shanghai Shendi Group to create the joint venture and enter the Chinese market. First, the Chinese policy could influence the development of the Disney land. China is the bureaucracy. It could make a lot of trouble for the startup of the land. In addition, Disney land could have the conflict between the Chinese culture and Disney’s culture. However, it is a good opportunity for Disney to increase the revenues. In Asia, there are two Disney Lands, Tokyo Disney land and Hong Kong Disney land, before the Shanghai Disney land, but it is difficult for the Chinese to go to the two Disney lands. The Chinese people need to apply the applications to go to Japan or Hong Kong. Therefore, Shanghai Disney land will attract plenty of the Chinese customers. In the past 10 years, Disney proved that it decision was correct. In 2016, Shanghai Disneyland opened, and customers could enter the land. In 2018, there were 11.8 million tourists to enter the Disneyland. From 2020, because of the Covid 19, the number of tourists reduced a little, but I think the number of customers will continue increasing after the covid 19.