Will Disney's China Expansion Succeed?

Disney (DIS) is moving forward with plans to build its first ever park in mainland China, a $3.59 billion Shanghai park to open in 2014.

This planned park, hotel and shopping development, co-owned by the Shanghai government and Disney, would be one of the largest foreign investments in China. It's particularly notable considering the global economy is slowing and Disney is still struggling to get Hong Kong Disneyland to really click. The weakening economy may actually help this park move forward-- Disney says the park will create 50,000 new jobs.

This is no surprise -- Disney's been talking about this for years and year -- and it's not final yet. The latest is that Disney and the Shangha government agreed to submit a proposal to the Chinese central government. One piece missing from this proposal: any Disney-owned broadcast channels in China. Not having a Chinese Disney could make it hard to build awareness of Disney's brands and drive consumers to the park franchise. But building a park and getting more exposure on TV could help Disney be the one profiting from its brands, rather than the pirates.

Considering Disney's efforts to fill its U.S. parks despite the economic downturn, the mouse house is surely counting on the recession to end soon.

Comments

[Firat Ünlü:]

Should do really well, from what I can tell Chinese people like Disney figures and don't mind crowds which is in contrast to me European who feels like his time is being wasted even when just queuing five minutes in the supermarket ;)

Jan 12 11:32 AM

[DIS Observer:]

Disney's track record on (a) international parks and (b) new parks is truly awful. Disneyland Paris is still saddled with debt. Hong Kong Disneyland employs constant discount promotions and still can't get close to its original annual attendance targets. And, of course, California Adventure in Anaheim is a flop. The fact is that the company would be considerably more profitable if it had never made these capital expenditures. (Remember, Disney does not own the one successful overseas Disney resort -- Tokyo Disneyland.) So, I am astounded that Shanghai, or anyone else, would be interested in such a venture.

Jan 12 02:26 PM

[DIS Observer:]

Disney's track record on building (a) overseas parks and (b) new parks in general is truly awful. Disneyland Paris continues to suffer from crushing debt. Hong Kong Disneyland cannot get close to its original target attendance, despite heavy discounting. And of course, California Adventure is a flop that is about to soak up $1 billion more in investment. Given these realities (remember, Disney doesn't own the only successful overseas resort - Tokyo Disneyland), I find it incredible that Shanghai or anyone else would be interested. The fact is that Disney would be a much more profitable company if these substantial capital expenditures had never been made.

Jan 12 02:50 PM