Disney states that Chinese government officials have approved a plan to build a theme park in Shanghai.
The cost of the park is estimated at $4 billion, which would rank among the biggest foreign investments in China to date.
Disney already has a theme park in Hong Kong. This is Disney’s smallest park, which opened in 2005 and did not do well at the start. Changes have been made and reportedly attendance has improved, but it is by no means the jewel in the Disney crown.The problems were it was too small, too expensive and up against some formidable opposition.
Perhaps Disney will be able to take that experience from Hong Kong and apply it to a much larger theme park in Shanghai. But it will still have to remember that Shanghai is not Florida and the brand is seen by teenagers — an important segment of the market — to be old hat.
The park will be in the Pudong district across the Huangpu River from the Bund section of Shanghai. Pudong is a world class business district which, sadly, has the Oriental Pearl Tower, opened in 1995 and sets new standards in architectural ugliness.
The site starts off with many advantages. The biggest being that Mainland Chinese have to get visas and special permission to visit Hong Kong. But not Shanghai.
It will be massively helped by the opening of a superfast and efficient railways system. Connected to Shanghai by a high-speed magnetic levitation (Maglev) train that can reach up to 450 km per hour, the theme park could become the city’s main point of attraction.
The key question is whether it will attract visitors in sufficient numbers to repay the massive investment. The answer is probably yes, but it is still more of a gamble than it appears at first sight.
Because, unlike Florida and California, it has to contend with the weather. It can get dashed cold in the winter and taking a group of kids to Disney will be very expensive and not all that enjoyable.
Seeking Alpha believes that Disney in Pudong will be a tremendous hit and a source of major profits. It states, “This move to Shanghai will likely be Disney’s biggest opportunity since Walt first created Mickey & Minnie.”
Perhaps. Possibly. Maybe.
China currently has 2,500 theme parks, 60% in the red. According to a survey by the Horizon Group, a strategic research and consultancy firm, about RMB150 billion ($22 billion) have been invested in the 2,500 theme parks, but only about 10% are actually making a profit.
Asian News IT reports that in recent years, some have actually had to close like Guangzhou’s World Park, Hangzhou’s Future World and Wuajiang’s Froebelland Park, with losses of about $3 billion.