Is Disney's Shanghai Dream A World Of Make Believe?

Walt Disney Co. execs hope to cast a spell over China, but they're going to have to use more than just fairy dust to do it. The Chinese government recently cleared the American cultural giant to build a theme park in China's richest city, the first foray for Disney onto the Chinese mainland.

Though getting permission to build in Shanghai is a step forward, it doesn't guarantee a happy ending for Mickey and crew. Shanghai Daily reports that Disney's biggest competitiors aren't exactly worried about potential competition:

"We are (sic) born here and grew up here, and we know what the Chinese people want," said Ren Kelei, president of Happy Valley, the newest and biggest of Shanghai's theme parks.

Disney's success is built on generations of kids weaned on its movies and plethora of products. In China, which allows just 20 foreign films into the market each year and where kids grew up surrounded by top quality Hong Kong and Japanese animation, earning brand loyalty is going to be a significant challenge for Disney. Even illegal DVD stores in Beijing tend to stock Disney subsidiary Pixar's films over Disney fare, if they stock any Western animated movies at all.

China's lack of interest in the Magic Kingdom is evident in Hong Kong Disneyland's dismal sales. Blamed largely on visa restrictions that make travel to Hong Kong difficult for most of China's vast population, the slow death of HK Disneyland is more likely due to its irrelevance to its market. People in China just don't care that much about Disney. And building an expensive theme park in an expensive city in a country where the average citizen, though richer than before, is still far from flush, is not likely to change that.