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Economy

Shanghai Disneyland to Open Soon

May 06 , 2016
  • Xu Qingquan

    Research fellow, Shanghai Academy of Social Sciences

Way before the Shanghai Disney Resort opens on June 16, aficionados of the world-famous theme park have started scrambling for opening-day admission. The demand was so big that the ticket system once broke down after the booking began on March 28. The price offered by scalpers was rumored to have peaked at 10 times the original rate.

The public interest in the Chinese mainland’s first Disney site was aroused as early as on November 5, 2010 when the agreement for its construction was signed. By the time the first phase of the project neared completion, everybody was curious what kind of a “unique experience” the exotic recreational site would bring to them as had been touted by the Disney ad.

The project is obviously the largest of all cultural exchange programs signed between China and the United States. It will certainly have far-reaching influences on the Sino-foreign cultural exchanges, the global market of theme parks and the development of China’s cultural and recreational industry. The influence on cultural tourism, hospitality industry, cultural creation industry and other service industries in the Yangtze Delta, especially Shanghai, is also obvious.

Various interest parties and culture consumers have different expectations for the Shanghai Disney Resort. The Walt Disney Company has long set its target for market expansion on the Yangtze Delta, the most developed, most tensely populated and most market-radiant area in China. The opening of the new site helps consolidate Disney’s position as one of the world’s top three theme-park companies, and the multinational’s operation in China is even likely to significantly avert the decline of its global business. Anyhow, no company can afford to ignore the world’s largest rising economy, whose immense population boasts a spongelike buying power; Disney is no exception.

In fact, sharp-eyed capital giants have noticed that China’s entertainment industry has been bucking the trend of worldwide sluggish spending since the outbreak of the global financial crisis in 2008. A “theme park fever” hit many cities across the country. In 2012 and 2013 alone, 14 new theme parks were opened. More than 60 are being built to make China the world’s largest in number of theme parks. Chinese companies with theme parks as their main or side business all fared pretty well in recent years. The Songcheng Group, Changlong Group and Haichang Group saw their business volumes growing 103.6 percent, 59.9 percent and 24.5 percent respectively year-on-year in 2014. The Huaqiaocheng Group succeeded in opening a chain of Happy Valleys in major cities across the country in the past eight years. These success examples caused envy and eagerness among capital giants in and outside the entertainment industry.

However, there were also cases of failure. A number of theme parks in China, the Capital of Joy in Beijing for example, suffered serious losses or even went bankrupt. The stark contrast seems to be a reminder that the tantalizing “American-style beef steak” of theme park, despite its delicacy in color, smell and taste and despite the consumer’s ravenous appetite and bulging wallet, is not necessarily to all tastes. Most important is the glutton’s digestive ability. The Hong Kong Disneyland, for example, once generated poor business because of being unaccustomed to local conditions.

Undoubtedly, the opening of the Disney theme park in Shanghai is a creative move — and will prove to be a milestone — in Sino-American cultural exchanges. First, it provides a large, comprehensive entertainment platform for the Chinese public to have a taste of American culture. A full assimilation of Chinese elements has imparted to it a distinctive glamour of different cultures co-existing in harmony. Second, it will change the market pattern of China’s theme parks, leading to redistribution of customers, which, in turn, will force theme park operators to upgrade their products for survival. The old-fashioned, unadventurous style of parks will eventually see a draining of tourists. Only those rich in innovative ideas can long endure patronized by waves of repeat customers. Disney happens to be good at innovation.

It is surely not easy to find a best business model to sustain to keep money-spinning for theme parks. Such venues make up only 30 percent of the entire industrial system of the Walt Disney Company, with the remaining 70 percent distributed across media, movie and their derivative industries, of which media networks accounts for 40 percent. That 70 percent, however, provides an inexhaustible source of innovation for the group’s theme parks. Of the 30 percent that is generated by theme parks, revenue from admission fees makes up only 30 percent, with the other 70 percent coming from visitors’ spending in shops and restaurants inside the park.

A noteworthy fact is that China’s culture consumers, including theme park goers, are fast maturing. Many Chinese tourists have been to Disney parks in Orlando, Tokyo or Paris. For them the fantasy resort is not as attractive as it used to be. The thrilling sensory experience, moving stories and gorgeous costumes and scenes can no longer easily win their applause except for those who have never been to the resort. Similar embarrassment is also seen in the movie industry. Hollywood blockbusters are showing a declining tendency in Chinese cinemas. Anyone in the entertainment industry who covet the lucrative market and who boast about their products must honestly meet their promise of “creating a unique experience for every customer.”

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