When China began to open up to the West in the 90s, the world’s major brands went calling, in search of the partnerships they needed to get their products in front of what – it was becoming clear – would be the biggest market in the world.
The Chinese were urbanising fast, growing a huge, affluent middle class and adjusting their communist ideology to fit the modern world – the potential opportunities were off the chart.
For some, moving into China was a straightforward process retailers are nimble enough to get up and trading in no time.
It wasn’t long before Gucci, Prada and many other high-end brands were present in China’s big cities. For Disney, however, massive infrastructure was needed for it to fulfil its ambitions, and that meant an unbelievably complex journey.
As Disney Shanghai opens for business, it’s clear the creation of the resort has turned out to be a life’s work for many in the team. Even more so because the opening of this phase is just the beginning of the journey. In this issue of Attractions Management we celebrate the opening, with our supplement which starts on page 60.
Projects of this size are a long-term play when it comes to investment. Disney initiated its move into China more than two decades ago and has effectively missed the first boom years. Growth in the economy is slowing, but this won’t matter when the appetite for the product is factored in. The demand is such that the resort will trade at capacity from the off.
And what capacity it is. The Shanghai International Tourism and Resorts Zone, within which the Disney resort sits, covers 25sq km (9.7 sq mi), with a core area of 7sq km (2.7sq mi), including 4sq km (1.5sq mi) for Phase One of the Shanghai Disney Resort. This leaves plenty of room for subsequent phases. Disney is forecasting 12 million visitors in year one – we think mthis is conservative – growing to an eventual 30 million.
A generation ago, the average Chinese citizen lived a life of subsistence, with little to spend on leisure, but the new middle class is emerging so fast Disney CEO Bob Iger says the company has identified an ‘income-qualified audience’ within a three-and-a-half hour travel radius of more than 300 million people. “It would be as though the whole population of the US could afford a ticket to Orlando and could get there within three-and-a-half hours,” he said. Couple this with the fact that the one-child policy has been relaxed to two and it’s clear the stars are aligning.
A final piece of information that proves the Chinese market has come of age is that peak ticket prices for Disney Shanghai are higher than both Tokyo Disney and Disney Hong Kong.
Disney learned hard, valuable lessons from Euro Disney a projected which went through several rounds of wretched refinancing – so the business case for this new development is clearer. And there’s more to come. The build-out will continue for years, with three parks the goal for Shanghai. This opening is just the beginning. Behind the scenes, the work continues.
Will Disney Mumbai follow? Disney Moscow? Maybe one day the final act of soft power will be to open in the former Soviet Union.
Liz Terry, editor. Twitter: @elizterry
