Companies

Shanghai plans to avoid a 'Mickey Mouse' operation

By Shi Yingying (China Daily)
Updated: 2011-01-19 13:56

SHANGHAI - Political consultants to the Shanghai municipal government urged the city to get more deeply involved in its joint venture with Walt Disney Co before signing the final agreements on Shanghai Disneyland.

Tu Haiming, president and general manager of Shanghai Hodoor Real Estate Development Company and a member of Shanghai People's Political Consultative Conference, said the city should avoid a similar scenario to that which occurred at Hong Kong Disneyland, which took five years to turn a profit.

"We need to try to lower the risk of building a money-losing park and the solution lies in participating in more of Walt Disney's most profitable businesses such as the Disney Channel, the Disneyland Hotel and Disney's English teaching program in China," said Tu in a proposal to the city's political consultative body.

In the same proposal, Tu noted that Shanghai's upcoming Disneyland is 57 percent owned by Shanghai Shendi Group, a State-owned company specifically established for the project in August, and 43 percent owned by Walt Disney Co.

"The distribution ratio between US and Chinese investors (in the project) is exactly the same as it was with Hong Kong Disneyland," said Tu.

Hong Kong Disneyland, which opened in 2005, reported its first pre-tax profit on Tuesday, after more than five years of operation.

Its pre-tax profit for the 2010 fiscal year, which ended on Oct 2, was HK$221 million ($28.4 million), compared with a loss of HK$70 million in the previous fiscal year, the company said in a statement.

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"The concept of cost-control should be built into the Shanghai project right from the initial stage," said Tu. "Shanghai Disneyland should be a good compromise between the needs of its Chinese customers and being pure American.

Chang Qing, another member of Shanghai People's Political Consultative Conference, said: "We don't need to import an American theme park to Shanghai - if Disney wants to stay here, it needs to be creative in terms of including Chinese culture".

Compared with Hong Kong's Disneyland, the Tokyo Disneyland model has instead proven to be a winner.

Oriental Land Company, Walt Disney Co's Japanese partner, has entered into a licensing agreement with the US-based company at a cost of $51 million a year.

Disney licensed its names and characters and acted as a consultant in the park's construction and operation. It is also involved in the associated hotels.

Qi Xiaozhai, director of Shanghai Commercial Economic Research Center, said Tu's proposal provides valuable insights.

Facilities for meetings, conferences and exhibitions in the nearby area will be promoted in Shanghai's southeast corner as the upcoming theme park finds its home in Pudong, said Qi.

Shanghai Disneyland, which will be finished in 2014, will be the US entertainment giant's third theme park in Asia after Tokyo and Hong Kong.