For the exclusive use of Y. Liang, 2020. UV7197 Rev. Oct. 3, 2016 The Walt Disney Company: Mickey Mouse Visits Shanghai We’re building something that’s authentically Disney and distinctly Chinese. It definitely will be Disneyland in China, but we’ll obviously be respectful of the Chinese culture and relatable to the people of China.1 —Walt Disney Company (DIS) Chairman and CEO Robert A. Iger Even for a company built on the creative risk-taking culture instilled by founder Walt Disney, the 2016 opening of Shanghai Disneyland (SDL) was an audacious bet. The sixth global Disney resort would occupy nearly 1,000 acres of land in Shanghai, China—twice the acreage used in the Anaheim, California, Disneyland (DL) and almost eight times the size of Hong Kong Disneyland (HKDL) at its launch in 2005. The Shanghai resort, the first in mainland China, would feature several themed lands such as Tomorrowland, Treasure Cove, Disneytown, and the Enchanted Storybook Castle, which would be the biggest and tallest Disney castle ever. Indeed, it wasn’t just the exhibits that were large: “We’ve never built a park as big as this to open on opening day,” said Chairman and CEO Robert Iger. “This is the biggest.”2 DIS and its investors were excited about the SDL opening for a good reason: demographics. The resort would be located in the Pudong district of Shanghai, easily the wealthiest of all of China’s districts. A massive 330 million people lived with a three-hour driving radius of the resort site, compared with 19.6 million who lived within the same radius at DIS’s most profitable park, Walt Disney World (WDW) in Orlando, Florida. DIS had also learned much from mistakes made in the past launches of Euro Disneyland (EDL) just outside of Paris and of HKDL that it was excited to apply to the Shanghai resort. Still, risks remained. Construction complications had delayed the opening almost a year longer than expected and cost overruns and alterations had increased the final price tag of the project from an estimated $4.0 billion to $5.5 billion. (The Chinese economy had also hit a rough patch following the Chinese stock market slump in the summer of 2015.) With the world watching, could DIS deliver the classic Disney theme park experience with the right cultural balance to appeal to its largely Chinese customers? Could it stay true to its brand values and be relevant to consumers in Asia? 1 Chris Palmeri, “Rethinking Disneyland for the Chinese Family,” Bloomberg Business, July 20, 2015, http://www.bloomberg.com/news/articles/2015-07-09/shanghai-disneyland-is-customized-for-the-chinese-family (accessed Oct. 15, 2015). 2 Faryn Shiro, “Disney Shanghai: Go Inside $5.5 Billion Theme Park in China,” ABC News, July 15, 2015, http://abcnews.go.com/Lifestyle/disneyshanghai-inside-55-billion-theme-park-china/story?id=32456306 (accessed Jan. 15, 2016). This public-sourced case was prepared by Stephen Maiden, Case Writer; Gerry Yemen, Senior Researcher; and Elliott N. Weiss, Oliver Wight Professor of Business Administration. The case was written as a basis for class discussion rather than to illustrate effective or ineffective handling of an administrative situation. Copyright  2016 by the University of Virginia Darden School Foundation, Charlottesville, VA. All rights reserved. To order copies, send an e-mail to sales@dardenbusinesspublishing.com. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without permission of the Darden School Foundation. This document is authorized for use only by YUJEN Liang in Spring 2020 MGT 112 Zimmermann taught by JILL ROSENOW-FARWELL, University of California - San Diego from Mar 2020 to Jun 2020. For the exclusive use of Y. Liang, 2020. Page 2 UV7197 Global Theme Park Opportunity Following the success of DIS’s first two U.S. theme parks, DL (founded in 1955) and WDW (founded in 1971), the company sought to replicate its formula globally. While the idea of expanding to Europe was discussed as early as 1976, DIS’s first international theme park was Japan’s Tokyo Disneyland (TDL), launched in 1983. DIS structured TDL as a lower-risk partnership with Japanese Corporation Oriental Land Co., Ltd., whereby DIS earned royalties for licensing its intellectual property and designing the park but retained zero ownership of the venture. The park offered classic Disney themes while also highlighting Japanese culture and traditions.3 TDL’s first-year attendance figures tripled the number of guests who visited DL during its inaugural year, highlighted by an all-time one-day record at any theme park. TDL added $40 million to DIS’s profit in its first year. While TDL’s success was terrific, DIS thought it had left significant money on the table. It would not make the same mistake again. The next deal would require financial ownership not only of the theme park venture but also of the land surrounding it. DIS executives had not missed the fact that in the areas surrounding TDL and WDW, large real estate booms had occurred and commerce had flourished, but mostly to the benefit of others. The EDL search team considered more than 1,200 sites throughout Europe for its next theme park, analyzing climate, local work force, site size, location barriers, and anticipated government cooperation. Although the decision came down to Spain and France, some executives said that France had been Chairman and CEO Michael Eisner’s top choice all along and that Spain was used to reach a better deal with the French government. Attracted by the estimated 10,000 or more jobs that would be created by the project during a time of high unemployment, the French government offered several attractive concessions: a low acreage price; first right of refusal for the sale of 10,000 acres around the site; a reduced tax rate on ticket sales; an extension of the metro line to reach the park; $125 million in funds for a new line for France’s high-speed rail (TGV) to service the park and connect it with Brussels, Belgium; Geneva, Switzerland; and the not-yet-built Eurotunnel by 1994; additional highways to the site; and substantial discounted loans.4 On July 11, 1986, a deal between Jacques Chirac’s government and DIS was approved. The government would provide a $960 million, 20-year loan at a 7.85% interest rate and help secure $1.6 billion in floating-rate loans from a group of 45 banks, $1 billion in loans from Caisse des Dépôts, and $400 million from special partnerships to facilitate buying real estate and leasing it back. The French government would also provide $400 million for water, electricity, telephone, and other services. EDL would be the 71st amusement park in France. The French government allowed DIS to own 49% of EDL (in a limited partnership–like structure called Euro Disney SCA5) and offered 50% to public shareholders, but under French law, DIS could overrule majority shareholders through its wholly owned subsidiary, Euro Disney S.A. (gerant), which would manage EDL for a fee of roughly 3% of its total revenues for five years and 6% annually after that. For an investment of just $170 million, DIS was able to retain a significant share of the project and complete control over financing, development, and future operations.6 Euro Disney SCA was also allowed to buy land from the French government that it sold to a financing company for capital to build EDL, then the finance company leased the property back to EDL.7 Walt Disney Company annual report, 1985. Christian Renaut, “Disneyland Paris: A Clash of Cultures,” in Disneyland and Culture, eds. Kathy Merlock Jackson and Mark I. West (Jefferson, NC: McFarland & Company, Inc., 2011). 5 SCA stood for société en commandite par actions, which translated roughly to “partnership limited by shares.” 6 Shawn Tully, “The Real Estate Coup at Euro Disneyland,” Fortune, April 28, 1986. 7 Ron Grover, The Disney Touch (Hinsdale, IL: Irwin, 1991). 3 4 This document is authorized for use only by YUJEN Liang in Spring 2020 MGT 112 Zimmermann taught by JILL ROSENOW-FARWELL, University of California - San Diego from Mar 2020 to Jun 2020. For the exclusive use of Y. Liang, 2020. Page 3 UV7197 The first of three development phases for the project (called Phase IA) broke ground in 1989 and included Disneyland Park, Disneyland Hotel, Davy Crockett Ranch, infrastructure and support facilities, and a golf course. The idea was to find a middle ground between U.S., French, and European cultures by balancing Main Street, U.S.A., the Champs-Élysées, and the Friedrichstraße. As in all Disney theme parks, no smoking was allowed and no alcohol was served. Phase IB featured the construction of seven themed hotels and an entertainment center, which were sold to six special-purpose companies and leased back to EDL Hotels SCA in 1991. Phase IC (projected to open in 1995) would add several assets such as Space Mountain and Indiana Jones and the Temple of Doom, and a planned Phase II would eventually add more attractions, including a Walt Disney Studios park, an international mall, another rail station, and a downtown office district. Built to completion, EDL was expected to cost around $5.8 billion. While an initial work force of 8,000 was attracted to EDL’s willingness to pay 15% more than France’s minimum wage, vast differences of culture and opinion among the global work force and the special hiring laws in France required extra work in casting. Most employees had never been to a Disney theme park, and thus DIS had to teach its past and present traditions through video, lectures, storytelling, exercises, and group discussion. Conditions for employment for men fit traditional Disney guidelines: no facial hair, a conservative haircut that did not allow hair to cover the ears or extend past the collar, no visible piercings, no exposed tattoos, and no jeans. Women were not allowed to display extreme (unnatural) hair colors or makeup, long fingernails, or skirts more than 8 centimeters (3.2 inches) above or below the knee, and their shoe heels had to be between 2 and 10 centimeters (0.8 and 4 inches). On April 12, 1992, Eisner announced: “Je déclare Euro Disneyland officiellement ouvert!” A crowd of 20,000 guests showed up on opening day and more than 7 million customers visited EDL during the first nine months, a number that was on track to surpass estimates for the first year. But issues quickly began to surface. In a country where a glass of wine during lunch was expected, guests were astonished by the no-alcohol policy, and they spent about 12% less than the $33 per day on food and merchandise budgeted by DIS. Europeans were also more accustomed to eating at a set time, thus long lines would form at all the restaurants around 12:30. Guests also chose to stay in Paris hotels and make day trips to EDL, just 32 kilometers (about 20 miles) west in Marne-la-Vallée. EDL’s hotel occupancy was closer to 60% than the 80% to 85% budgeted. EDL’s workers also objected to the strict dress code, contesting it in court as a violation of French labor law. The higher training required for a larger-than-estimated 12,000 cast members (see Table 1 for Disney terminology) also meant that labor costs would be significantly higher than the 13% of revenues expected. In 1992, labor costs were 24% of revenues before increasing to a staggering 40% in 1993. The marketing strategy was also flawed, following an American model of promoting glitz and size ahead of attractions. Some of the French saw EDL as “American imperialism—plastics at its worst…It showed tremendous arrogance on Disney’s part.”8 8 Bruce Crumley, Christy Fisher, Stephen Downer, Dagmar Mussey, and Robert Ross, “Euro Disney Tries to End Evil Spell,” Advertising Age 65, no. 6 (1994). This document is authorized for use only by YUJEN Liang in Spring 2020 MGT 112 Zimmermann taught by JILL ROSENOW-FARWELL, University of California - San Diego from Mar 2020 to Jun 2020. For the exclusive use of Y. Liang, 2020. Page 4 UV7197 Table 1. Disneyspeak. Corporate World Customers/clients Employees Out front Behind the scenes Front-line employee Job interview Human resources Designers, engineers, architects, and technicians Disney Guests Cast members Onstage Offstage Host/hostess Audition Casting Imagineers Corporate World Job On the job Working Negative customer experience Positive customer experience Courtesy Rides Disney Role Performance Show Bad show Good show Performance tips Attractions Data source: Compiled from the Disney Institute and Theodore Kinni, Be Our Guest: Perfecting the Art of Customer Service, (New York, NY: Disney Editions, 2011). A global recession also hit not only consumer spending but the real estate market at the worst time. EDL had budgeted for sales associated with real estate development to comprise 22% of sales in 1992, 32% in 1993, 40% in 1994, and 45% in 1995, which proved wildly optimistic.9 Complaints also surfaced about EDL’s high ticket prices. By the spring of 1994, EDL was forced to financially restructure and make other operational changes. The work force was downsized by 950 administrative posts and the company adopted a more French approach with its remaining employees. A maximum work week was set with annualized hourly work schedules, earning DIS plaudits for its willingness to be flexible. Wine and beer was allowed at EDL. Ticket prices were lowered. Marketing changed its approach to position EDL as a stop on a month-long European tour rather than as a sole destination. DIS was required to spend $508 million to buy its 49% of shares, and it also spent around $240 million to buy and then lease certain park assets back to EDL in return for bank concessions and a $500 million bank-debt haircut. DIS also waived royalty and management fees for five years. The name was changed from EDL to Disneyland Paris—the Euro in the former name suggested commerce, whereas the link to Paris was one of romanticism and magical moments.10 Hong Kong Disneyland By 1997, Disneyland Paris had become a success, reaching revenues of more than $920 million, which encouraged DIS to announce its next international theme park venture in Hong Kong. The organization had learned much about global expansion. “Potential guest countries are very different markets,” Jean-Christophe Gandon, head of marketing and international development at Disneyland Paris, said. “Each requires different distribution and promotion.”11 After nine months of intense negotiation, a structure was created wherein the Hong Kong Special Administrative Region government would invest $2.9 billion in order to own 57% of the park, and DIS would own 43%. In China, Disney icons such as Goofy and Donald Duck were hardly household names—cartoons featuring Mickey Mouse only began appearing on Chinese Central Television in 1986. Still, DIS television programming and movie distribution had grown significantly in China since then, and the market was large. DIS was also attracted to China’s low labor costs and less costly construction materials. 9 Lyn Burgoyne, “Walt Disney Company’s Euro Disneyland Venture,” unpublished master’s thesis, University of Illinois at Urbana-Champaign, 1995, http://www.hiddenmickeys.org/Paris/English/LynEuroDisney.html (accessed Jan. 26, 2016). 10 Legislative Council Secretariat, “Information Note—Disneyland Paris: Some Basic Facts,” IN 1/99-00, November 10, 1999, http://www.legco.gov.hk/yr99-00/english/sec/library/990in01.pdf (accessed Jan. 15, 2016). 11 Case writer interview with Jean-Christophe Gandon, Paris, September 17, 2015. This document is authorized for use only by YUJEN Liang in Spring 2020 MGT 112 Zimmermann taught by JILL ROSENOW-FARWELL, University of California - San Diego from Mar 2020 to Jun 2020. For the exclusive use of Y. Liang, 2020. Page 5 UV7197 In contrast to its Paris experience, DIS only planned two hotels unique to the park, assuming many guests would make day trips from downtown Hong Kong, just 30 minutes away. HKDL also tried to take local culture into account. It consulted a fêng shui master about HKDL’s location, orientation, and design. Hotels were not designed with fourth floors because Chinese culture regarded four as an unlucky number. Recorded messages and signs were made in multiple languages: English, Putonghua,12 and Cantonese. Diverse cuisines were offered in the park: everything from Chinese fare to Japanese, Indian, and American foods. Despite adding local customizations, HKDL’s layout was based on that of the original DL in California. The park offered classic attractions such as Space Mountain, It’s A Small World, and the Haunted Mansion. At the entrance of the park, visitors passed through Main Street, U.S.A., a model of an early-1900s American town that was designed to resemble the DL version. Three other themed lands followed with star Disney attractions: Tomorrowland, Adventureland, and Fantasyland. Opening in September 2005, HKDL quickly ran into problems and only drew a disappointing 5.6 million visitors during its first year. Built on 68 acres, HKDL was the smallest Disney theme park—too small, it turned out. Public relations errors and refusing to let Chinese food inspectors into the park soured some locals’ opinions of HKDL. Many visitors were forced to wait in lines for hours in order to access attractions. Others were unfamiliar with the concept of a Disney theme park and unsure how to behave. Some guests entered the park, walked around for a few minutes taking pictures, and then left. Others lingered for a long time, causing long lines, too few seats, and food shortages.13 Within days of its opening, HKDL infuriated local pop stars, angered labor leaders, and was criticized by the government. In response, DIS resolved to further cater the globally exported ideas in the park to the local Chinese market, a process some called “glocalization.”14 First, HKDL lowered ticket prices, a nod to the lower income levels of the local visitors as well as a competitive response to China’s numerous other theme parks. Second, HKDL made several important adaptations to local customs. For example, HKDL improved its collaboration with important Chinese tour companies that had previously left HKDL off travel itineraries by offering a more generous commission structure and by better accommodating group dinners. On the Jungle Cruise attraction, visitors could choose to board a boat where the skipper offered live commentary in Cantonese, Putonghua, or English, with witticisms and jokes tailored to local cultural sensibilities. Food offerings were further localized with Chinese food primarily being provided. The number of hot dogs was cut and the amount of dim sum and noodles on offer was increased. A local chef even created a Chinese-style hamburger.15 Noting that Chinese visitors took an average of 10 more minutes to eat than Americans did, HKDL added 700 more seats to areas that offered food. The park followed the advice of its fêng shui consultant to make additional changes such as adding a curve to the walkway from the train station to the main park gate so that chi (energy) could not slip into the South China Sea. HKDL added more costumed staff who would roam about for “photo ops” to please Chinese photography enthusiasts. HKDL even began distributing brochures detailing how best to experience attractions. Finally, HKDL adapted its American labor practices to Chinese norms. Of the 5,000 original park employees, 1,000 quit quickly—a rarity in Hong Kong, where it was customary to stay at one job. Many workers complained about low pay, short meal breaks, long work days, and an insufficient staff. Cast members also complained about implementing the “Smile Factory” strategy wherein everyone was required to smile at customers within 60 seconds of their having entered HKDL. Chinese culture was less overtly expressive about feelings than American culture, and overly friendly people were looked at with suspicion in Hong Kong. As a result, HKDL relaxed its employee demands and a Hong Kong Disneyland Cast Members’ Union was formed Putonghua was a standard form of Mandarin. Ron Grover, Stephanie Wong, and Wendy Leung, “Disney Gets a Second Chance in China,” Business Week, April 18, 2011. 14 Jonathan Matusitz, “Disney’s Successful Adaptation in Hong Kong: A Glocalization Perspective,” Asia Pacific Journal of Management 28, no. 4 (2011). 15 Grover, Wong, and Leung. 12 13 This document is authorized for use only by YUJEN Liang in Spring 2020 MGT 112 Zimmermann taught by JILL ROSENOW-FARWELL, University of California - San Diego from Mar 2020 to Jun 2020. For the exclusive use of Y. Liang, 2020. Page 6 UV7197 to negotiate better pay and working conditions. And by 2015, HKDL had more than 7,000 cast members, which made it one of the largest industry employers in Hong Kong. Disney Enters Mainland China Even before the launch of HKDL, DIS was salivating over the chance to enter mainland China, a more convenient destination for the massive rising Chinese middle class. After six years of negotiation, Shanghai’s local government approved DIS’s plans to build its sixth theme park, SDL, in November 2009. 57% of the equity in the venture would be held by a joint-venture holding company of government-owned businesses called the Shanghai Shendi Group (Shendi), which had been formed to invest in SDL. DIS retained 43%, similar to the HKDL arrangement. DIS also retained full operational control of the park through 75% voting power within the management company that oversaw the entity, ensuring quality control and brand stability, both of which were important to being a top-five global brand. Put simply, Shendi was providing funding and land while DIS was providing funding and intellectual property. With as many as 12,000 employees working toward a spring-2016 launch, SDL was the largest one-time investment in mainland China’s tourism industry in history, at $5.5 billion. The imagineers (see Table 1) working to design the park conducted their work in Putonghua— all business at the park would be conducted in Putonghua and translated into English.16 Once an imagineer was assigned to work on a project, he or she stayed on it until the project concluded, acting as a check to ensure that original designs were implemented. Imagineering was mainly about “place-creation,” Imagineer Johnny Zhou said. He said that it meant creating a world out of nothing “with every possible means, either visually or aurally—a world in which visitors become immersed.”17 The organization started recruiting cast members in October of 2015 through job fairs held in Shanghai. With so much at stake, DIS had grown from its past global theme park experiences in shaping SDL (see Table 2 for revenues and attendance). HKDL had grown to 310 acres, more than doubling its acreage since its launch. SDL would be significantly bigger—nearly three times the current HKDL acreage, at about 1,000 acres. There was even potential to expand up to 1,730 acres with additional phased projects as dictated by demand. Despite the size of the resort, SDL planned only two hotels, the 420-room Shanghai Disneyland Hotel and the more value-priced 800-room Toy Story Hotel. Perhaps this was a result of the experience with EDL, which suffered from a lodging glut with its seven on-site hotels and a total of 5,765 rooms. Two hotels should ensure that SDL’s hotel occupancy exceeded 80%, DIS’s standard benchmark for return on invested capital. SDL would also feature plenty of local food such as dim sum on the menu at various prices. Table 2. 2009 Disney Park revenues and visitors. Country United States—California United States—Florida France—Paris Japan—Tokyo China—Hong Kong Number of visitors (in millions) 22 47.6 15 25.4 5.2 Revenue $10.7 billion $10.7 billion $1.7 billion $4.0 billion $385.8 million Data source: Grover, Wong, and Leung. 16 “Four Surprises About Disney’s New Theme Park in Shanghai,” ABC News Radio, July 15, 2015, http://www.wbal.com/article/117283/113/foursurprises-about-disneys-new-theme-park-in-shanghai (accessed Nov. 17, 2015). 17 Liu Xiaolin, “Chief ‘Imagineer’ Helping Create Disney Dreams,” Shanghai Daily, January 23, 2015, http://www.shanghaidaily.com/feature/people/Chief-imagineer-helping-create-Disney-dreams/shdaily.shtml (accessed Nov. 17, 2015). This document is authorized for use only by YUJEN Liang in Spring 2020 MGT 112 Zimmermann taught by JILL ROSENOW-FARWELL, University of California - San Diego from Mar 2020 to Jun 2020. For the exclusive use of Y. Liang, 2020. Page 7 UV7197 Modeling the park to incorporate observations imagineers made while visiting and people watching at the Shanghai World Expo in 201018 meant SDL was going to look and feel different from the other parks. Having scoped out visitor behavior at the Expo informed their expectations of what waiting customers would want to make the experience more pleasant.19 There would be plenty of shade and easier access, and fewer of the barriers found in other resorts. Perhaps most noticeably different was the absence of Main Street, U.S.A., which was normally a hub of traffic. “We eliminated Main Street—Main [Street,] which started at Disneyland and was designed after Walt Disney’s hometown of Marceline,” Iger said. “We didn’t think it would resonate here, even though we brought it to Paris and we brought it to Tokyo and we put it in Florida.”20 Instead, inside the main entrance, visitors would have a chance to meet Mickey Mouse and his friends and learn their stories before entering the other themed lands. This setup was a first for a Disney park. There would be six different lands—Adventure Island, Gardens of Imagination, Mickey Avenue, Tomorrowland, Treasure Cove (the first pirate-themed land in any of the parks), and Fantasyland (which would house the Enchanted Storybook Castle). Chinese culture would play a starring role in SDL. For example, 12 Disney characters would be featured as the 12 animals of the enormous Chinese zodiac on a wall display. Within the 11 acres of gardens near the center of the park, guests would find the Garden of the Twelve Friends (and the zodiac). At the center of a fountain would be a huge glass sculpture of a peony blossom, a symbol of good fortune and majesty. Some spires on the enormous Enchanted Storybook Castle at the center of the park would be painted with lucky cloud patterns. The castle would also be a first in that it will allow interaction with all of the Disney princesses.21 A shopping plaza named Disneytown was being constructed adjacent to the park to act as an overflow area and would feature the first live Putonghua-language production of The Lion King. Extended families often traveled together with few children due to China’s former one-child policy,22 thus there were likely to be as many as four adults for every kid in the park. With that in mind, SDL designed ample seating, viewing areas, open space, and restaurants in which older family members could rest while others enjoyed rides. DIS also anticipated big crowds around a handful of national holidays, since Chinese companies normally did not offer paid vacation time. To distract waiting customers and draw them away from rides at peak times, DIS was adding games and videos as well as scheduling parades and street performances. By the time SDL was getting ready to open, a Universal Beijing theme park and Polar Ocean Park in Shanghai were being developed to compete. According to a Comcast (the owners of Universal Studio) press release: “The new theme park will include attractions created exclusively for China, plus Universal’s most popular theme park experiences from across the globe.”23 Universal Beijing was scheduled to open in 2019. Polar Ocean Park was being developed and built by theme park developer and operator Haichang. Scheduled to be operational by the end of 2017, the Shanghai government hoped that SDL and Polar Ocean Park would help the city grow “to become the largest tourist destination in East Asia.”24 http://www.shanghaidaily.com/feature/people/Chief-imagineer-helping-create-Disney-dreams/shdaily.shtml. http://www.shanghaidaily.com/feature/people/Chief-imagineer-helping-create-Disney-dreams/shdaily.shtml. 20 http://www.wbal.com/article/117283/113/four-surprises-about-disneys-new-theme-park-in-shanghai. 21 Shanghai Disney Resort website, https://www.shanghaidisneyresort.com.cn/en/about/disney-unveils-new-magic-in-shanghai/ (accessed Jan. 20, 2015). 22 The one-child policy was ended in October 2015. 23 “Universal Theme Park and Resort Planned for Beijing,” Comcast press release, October 13, 2014, http://corporate.comcast.com/newsinformation/news-feed/universal-theme-park-and-resort-planned-for-beijing (accessed Jan. 15, 2016). 24 David Ren, “Polar Ocean Park to Join Disneyland at Centre of Shanghai’s Effort to Become Global Tourism Hub,” South China Morning Post, March 30, 2015, http://www.scmp.com/news/china/article/1750564/polar-ocean-park-join-disneyland-centre-shanghais-effort-become-global (accessed Jan. 11, 2016). 18 19 This document is authorized for use only by YUJEN Liang in Spring 2020 MGT 112 Zimmermann taught by JILL ROSENOW-FARWELL, University of California - San Diego from Mar 2020 to Jun 2020. For the exclusive use of Y. Liang, 2020. Page 8 UV7197 Preparing for the Shanghai Opening Although DIS made many mistakes in past international launches, the company had ultimately adapted to local tastes. (See Exhibit 1 for photos of each resort.) EDL registered annual net losses in 12 of its first 14 years of operation before growing into the most-visited tourist attraction in Europe, with more than 15 million visitors per year. HKDL had struggled to generate the kind of profits DIS was accustomed to until 2013. That year, visitors to HKDL increased, as did sales profits, perhaps motivating HKDL to announce that it planned to open its third hotel in 2017. DIS hoped that lessons from its other international ventures would shorten the time to SDL’s success. When DIS opened the world’s biggest Disney store in Shanghai’s Lujiazui area in May 2015, a line snaked down the street for a mile, demonstrating the power of the brand. Some projected that as many as 25 million annual visitors would be drawn to SDL.25 Still, the number of Chinese amusement parks, including water parks and other locations offering rides, had grown 40% since 2006 to 850. Competition was stiff for mainland Chinese leisure dollars. Could DIS get it right? 25 Bradley Seth McNew, “Preparing for What Could Be the Most Popular Disney Theme Park in the World,” The Motley Fool, April 28, 2015, http://www.fool.com/investing/general/2015/04/28/preparing-for-what-could-be-the-most-popular-disne.aspx (accessed Jan. 15, 2016). This document is authorized for use only by YUJEN Liang in Spring 2020 MGT 112 Zimmermann taught by JILL ROSENOW-FARWELL, University of California - San Diego from Mar 2020 to Jun 2020. For the exclusive use of Y. Liang, 2020. Page 9 UV7197 Exhibit 1 The Walt Disney Company: Mickey Mouse Visits Shanghai Photos of Disney around the Globe Disneyland, Main Street, Anaheim, California, July 2010 Source: “Disneyland Main Street,” posted to public domain under Creative Commons by “Alfred A. Si,” July 4, 2010, https://commons.wikimedia.org/wiki/File:Disneyland_Main_Street.jpg (accessed Nov. 17, 2015). Walt Disney World, Main Street, Orlando, Florida, May 2007 Source: “Main Street Magic Kingdom Walt Disney World,” posted to public domain under Creative Commons (CC BY-SA 2.0) by “Michael Gray,” May 24, 2007, https://commons.wikimedia.org/wiki/File:Main_Street_Magic_Kingdom_Walt_Disney_World_ (2452690822).jpg (accessed Nov. 17, 2015). This document is authorized for use only by YUJEN Liang in Spring 2020 MGT 112 Zimmermann taught by JILL ROSENOW-FARWELL, University of California - San Diego from Mar 2020 to Jun 2020. For the exclusive use of Y. Liang, 2020. Page 10 UV7197 Exhibit 1 (continued) Disneyland Paris, Main Street, U.S.A., Vehicle, July 2011 Source: “Main Street Vehicle,” posted to public domain under Creative Commons (CC BY-SA 2.0) by “Sean MacEntee,” July 2011, https://commons.wikimedia.org/wiki/File:Main_Street_Vehicule.jpg (accessed Nov. 17, 2015). Hong Kong Disneyland, Main Street, U.S.A., August 2013 Source: “Main Street USA at Hong Kong Disneyland, Hong Kong,” posted to public domain under Creative Commons (CC BY-SA 3.0) by “Deror_avi,” August 11, 2013, https://commons.wikimedia.org/wiki/File:Disneyland_Hong_Kong__Main_Street_USA_IMG_5510.JPG (accessed Nov. 17, 2015). This document is authorized for use only by YUJEN Liang in Spring 2020 MGT 112 Zimmermann taught by JILL ROSENOW-FARWELL, University of California - San Diego from Mar 2020 to Jun 2020. For the exclusive use of Y. Liang, 2020. Page 11 UV7197 Exhibit 1 (continued) Tokyo Disneyland, Main Entrance, August, 2006 Source: “Tokyo Disneyland,” posted to public domain under Creative Commons (CC BY-SA 3.0) by “ARICA,” August 26, 2006, https://commons.wikimedia.org/wiki/File:Tokyo_Disneyland_Main_Entrance.jpg (accessed Nov. 17, 2015). Shanghai Disney, NASA Aerial View, August 2015 Source: “Satellite View of the Shanghai Disney Resort Construction Site,” posted to public domain by “NASA,” August 10, 2015, https://commons.wikimedia.org/wiki/File:Shanghai_Disney_Resort_sat_view.jpg (accessed Nov. 17, 2015). This document is authorized for use only by YUJEN Liang in Spring 2020 MGT 112 Zimmermann taught by JILL ROSENOW-FARWELL, University of California - San Diego from Mar 2020 to Jun 2020.
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