Disney Banks on Shanghai Park and China Tourism to Reverse Slide

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Shanghai Disney

“Incredibly exciting.” “Absolutely phenomenal.” “Awed.” “Breathtaking.” “Truly extraordinary.” “Exceeds our most ambitious expectations.”

Those were just some of the terms used to describe Shanghai Disneyland by Disney Chairman and CEO Bob Iger in the company’s Q2 2016 earnings call this week. To say Disney is banking on the $5.5 billion China resort is an understatement. The resort and theme park open on June 16, and you can watch the countdown on the park’s website.

But it’s more than just an amusement park. Shanghai is to Disney what Shanghai was to the opium trade. A port of call that represents a strategy for tapping into the Chinese market to generate billions of dollars in profits. But this time, no shots will be fired, no armies will be stationed and China will be a willing partner.

Shanghai Disney Resort theme park China

Shanghai Disneyland is currently operating a trial period with a few thousand Chinese guests allowed inside. Not all are Chinese though, as Matthew Finnimore got inside and has been enthusiastically posting to social media about the unique experience, including a music video showing off the park tagged #ThanksShanghai.

His video of the groundbreaking Pirates of the Caribbean ride went viral in the US. (This was not an accident. Finnimore’s LinkedIn page lists him as a Florida Disney employee though he does not disclose that on any of his social media accounts.)

Other Disneyland fans in the West have been sharing Finnimore’s and other Chinese social media posts from inside the park as well. It’s all part of Disney’s plan.

A core element of Shanghai Disneyland is that it will be, in Iger’s words, “Authentically Disney and distinctly Chinese.” This means food aimed at Chinese palates, of course, but also the Disney product itself will be more Chinese. For example, the park will include a Mandarin-language live production of The Lion King Broadway musical.

It will also woo Chinese (and other) tourists with bigger and better attractions—a showstopper Pirates of the Caribbean attraction, the world’s biggest Disney Storybook park castle, even the world’s biggest LEGO store, with China being one of the brand’s best-performing markets last year.

Finally, Iger spoke about the recent China success of Disney’s Marvel superhero franchises and its new Zootopia film. The CEO told analysts that in Shanghai Disneyland, “There will be all kinds of opportunities particularly for character interaction with Marvel characters” and that Disney was moving to get “Zootopia characters in our park in China sooner than we had initially anticipated.”

He added said that there is “clearly a growing interest in our intellectual property” in China. While Iger was referring to the most recent Disney IP and properties like Marvel, Star Wars and Pixar, he was right about a far deeper history. Ironically, Disney is finally able to cash in thanks to decades of IP abuse.

In 1987, I was 12 and living in China with my teacher exchange parents. We watched 30 minutes of Mickey Mouse and Donald Duck cartoons every Sunday night. These were the only Western children’s programming on Chinese TV in Liaoning Province. This was in a time of separate foreign exchange currencies and Friendship Stores. Outside of Shanghai, Beijing and Guangzhou there was no Coca-Cola, no KFC, no Pringles. We were desperate for any connection to America and it came every Sunday evening for 30 minutes. The show was certainly not licensed by Disney.

Jump ahead 30 years and thanks to trademark violations, China now has two generations familiar with Disney IP. That’s a huge leg up on other Western brands that did not get started in the nation until, at best, the late 1990s.

All of this excitement about Shanghai Disneyland has not equally excited Disney shareholders. After the Q2 call, Disney shares were off by more than 5 percent. A day later, DIS was clawing back to slice those losses. But as Barron’s notes, Disney’s Shanghai adventure has been great for other stocks. Shanghai Composite Index stocks for related businesses like Shanghai-headquartered China Eastern Air and taxi provider Dazhong soared.


 

Abe Sauer covers entertainment, product placement, China and more for brandchannel. Follow him on Twitter.

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