Live Issue... Disney seeks to consolidate reputation in China

Not content with just the one Disneyland in Greater China, The Walt Disney Company has finally reached an agreement with the Chinese Government to develop a new theme park attraction in the Pudong district of Shanghai. Disneyland Shanghai will cost US$3.7 billion to build and is scheduled to open in 2014.

The news signals a remarkable comeback by Disney, whose characters first appeared in China in the 1930s but, for obvious reasons, struggled to make any headway for much of the latter half of the 20th century. In the 1980s the brand was expelled from China altogether.

After that setback, Disney operated out of Hong Kong , says David Wolf, CEO of Wolf Group Asia, and made “slow, but important progress” in importing products into China. “In 1996, Disney started working with a small US company to produce a Mickey Mouse radio show on China National Radio,” he says.

Since then it has grown in status to become one of the strongest foreign brands in China. “It has one of the highest brand loyalty and brand equity levels we have seen among foreign brands, along with Apple and KFC,” says Ben Cavender, senior analyst at China Market Research Group. “Both children and parents love the brand and think that it provides great edutainment.”

The entertainment company has managed to expand into areas such as education, with the launch of the Disney English-language teaching programme in Shanghai in 2008. The opening of a Disneyland, then, should be a good opportunity to consolidate this status.

Compared with the Hong Kong attraction, Shanghai Disneyland promises to be more squarely aimed at a Chinese audience. Unlike Hong Kong, Chinese consumers will not need a visa to visit the Shanghai attraction. And the huge number of people living within a few hours’ drive of the park bodes well for ticket sales.

Hong Kong Disneyland faced a number of challenges in its early days, including criticism of its small size. Cavender says Disney has learned from the challenges it faced in Hong Kong. “Disney has already announced that Disney Shanghai will be the largest in the world. That is a great first step, as Chinese like things big.”

Edmund Ng, business director of Greater China at brand specialist consultancy Cowan, also advises that a different strategy is needed to target mainland consumers. “Imposing the traditional Disney framework will not work. Chinese audiences are different, and these differences must be acknowledged. The planned theme park in Shanghai looks to address specific needs of the China market and has the potential to be a big hit. The park should also help increase demand for other Disney-themed products and services such as Disney English and Disney-branded clothing and paraphernalia.”

Unlike its experience in many markets, Disney has only limited (legal) distribution of its media content to reinforce its brand. It does not own channels in China and the amount of content that can be imported from the US is heavily restricted. It has built some relationships and collaborations with local partners to develop and air movies, and has allocated a budget to China to grow its local movie production in the future.

Wolf says the future of Disney in China is based on three factors. “We’re not going to see a Disney Channel in China any time soon, but Disney’s desire to replicate its identity in China in a locally appropriate fashion is based on characters, media and experiences. This doesn’t have to be in the form of animation. The brand needs to look at how it’s going to get mileage out of its global characters and how to adapt its stories to China to include content and Chinese characters.”

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This article was originally published in 19 November 2009 issue of Media.