[½»Á÷] ¡¾Discussion¡¿Shanghai Disneyland breaks ground

China Daily

SHANGHAI - Construction of the long-awaited Shanghai Disneyland theme park started on Friday, injecting new momentum into China's biggest city economy.

The move comes as the eastern financial hub's economic growth has lagged the national average in the past three years and the project is poised to give the development of the city's service industry a shot in the arm, experts said.

In a ceremony at the future site of the theme park, Shanghai's Communist Party Secretary Yu Zhengsheng and Walt Disney Co's President and CEO Robert Iger announced the start of the construction, marking the culmination of prolonged negotiations that started in the late 1990s.

"Disney is the world's classic urban tourism product its launch in Shanghai will help raise the development of tourism, culture and creative industries to Shanghai and even the Yangtze River Delta to a higher level," said Shanghai's mayor Han Zheng in a speech during the ceremony in the city's Pudong New Area.

The ceremony began with traditional Chinese drumming, followed by a performance by a Chinese children's choir accompanied by 20 Disney characters, including Mickey Mouse, Donald Duck, Snow White and the Seven Dwarves - all dressed in traditional Chinese costumes.

The theme park, Walt Disney's first on the Chinese mainland and sixth worldwide, will have an initial investment of 24.5 billion yuan ($3.7 billion).

An additional 4.5 billion yuan will be used to build two hotels with 1,220 rooms and retail, dining and entertainment facilities.

A lake, outdoor recreational facilities and parking and transportation hubs will also be built in the Shanghai Disney Resort covering around 3.9 sq km in the city's eastern suburb.

Financing will consist of 70 percent equity and 30 percent debt.

Three joint ventures - two owner companies and a management company - have been set up between Walt Disney and Shanghai Shendi Group Co, a wholly government-owned joint venture specifically created last year for the development of the Shanghai Disney Resort.

Shendi holds a 57-percent controlling stake in the two holding companies, and a 30-percent minority stake in the management company.

Investment and profit will be split between Shendi and Walt Disney in proportion to their stakes in the owner companies.

After its opening in about five years, the Shanghai Disney Resort will attract 7.3 million visitors annually, the government said.

Iger, who was appointed as Disney's chief in 2005, also gave some hints about what attractions the Shanghai location would feature that separate it from the other five, most prominently the Storybook Castle.

"Visitors will say 'wow look at that big castle' when they first see it," said Iger of the Storybook Castle, the largest among the six parks.

In addition, the traditional Main Street entrance leading to the castle will be replaced with a large green space, Iger said.

"It will spur the development of Shanghai's tourism-related industries, create jobs and help train talent. The park will serve as one of the drivers of Shanghai's economic growth," said Liu Zhengyi, deputy head of the Administrative Commission of Shanghai International Tourism and Resorts Zone.

Xia Lingen, a tourism department professor with Fudan University in Shanghai, told local media that the launch will raise the proportion of tourism in the city economy by up to 2 percentage points.

The Wall Street Jounal

Walt Disney Co. and its Chinese government-owned business partners broke ground on Shanghai Disneyland Friday morning, a crucial development for a company intent on bolstering its presence in one of the world's fastest-growing markets.

The theme park is part of a bigger $4.4 billion Disney resort that is to include hotels, restaurants, retail shops and other amenities. The groundbreaking took place at a ceremony attended by Disney Chief Executive Robert Iger and several government officials and featuring entertainment by local children and others.

The effort to win government approval for Shanghai Disneyland has taken well over a decade of negotiation, which Mr. Iger called "a long and interesting process."
The deal, recently approved by the Chinese central government, gives 43% of the resort project to Disney and 57% to a trio of state-owned businesses, collectively known as the Shanghai Shendi Group Co. Ltd. The project's costs¡ªand profits¡ªare to be divided along those proportions.

Disney is to operate the theme park, which is expected to take five years to complete.

Mr. Iger said that Disney's ambitions for the region extend far beyond the Shanghai theme park, even if achieving them requires patience. "We'd love to develop multiple other businesses in China, certainly in television," Mr. Iger said, speaking by telephone from Shanghai. "We're growing our games presence. We're growing our retail presence. We're growing our English-language learning presence. None of it is directly connected to this development, other than we view China overall as a great market."

The Shanghai resort could nonetheless serve as an important toe hold for Disney. The company considers its theme parks the epitome of the Disney brand, offering experiences and rides that can't be replicated, even in a piracy-saturated market like China.

Disney's parks and resorts division accounted for nearly 27% of the company's revenue in the most recent quarter, second only to a television and radio division that includes ABC and ESPN. Shanghai Disneyland is to be its sixth park world-wide.
With songs in Mandarin and drummers in dragon-festooned outfits, Friday's brief groundbreaking ceremony featured as much Chinese culture as Disney's.

Shanghai's Communist party secretary, Yu Zhengsheng, was introduced before Mr. Iger, the city's mayor before Disney's parks and resorts chairman. Mickey Mouse appeared in the final moments, along with youngsters in Disney hats.

"Shanghai Disney Resort will be both authentically Disney and distinctly Chinese," Mr. Iger said.

He said the park will feature Storybook Castle, the largest and tallest built anywhere by Disney, as well as two hotels and shopping. A video impression of the future park showed fireworks blasting above lakes and amusements.
The city's mayor, Han Zheng, said the resort "will improve Shanghai's international profile" as a tourism destination. A Commerce Ministry official termed it China's largest ever foreign service sector investment and said it will help make the national economy more consumer oriented.

Outside the purpose built ceremonial hall, excavators stood at the ready in the vast flatlands that formerly were small villages near the city's international airport.

Among the things that didn't accompany approval of the resort project: The ability to broadcast Disney programming on Chinese television airwaves, something the company has long coveted, and initially sought as part of a package along with the theme park.

"At one point there was a negotiation that envisioned a deal that would go beyond just a park business," Mr. Iger said. "We ultimately concluded that was complicated and probably impractical."

The members of the Shanghai Shendi Group that are collaborating on the resort include a real-estate developer, a hotel manager and a Shanghai Media Group affiliate known as Shanghai Radio, Film and Television Co.

If Mr. Iger gets his wish for a television presence, Disney could find itself competing¡ªor collaborating¡ªwith Shanghai Media Group.