Madison Owens

Dr. Larry Gales

MGMT 7017
6 November 2019

The Walt Disney Company: Mickey Mouse Visits Shanghai – Case Analysis

Executive Summary
The Walt Disney Company (DIS) is an empire known for their incredible stories, characters, and
theme parks. With the creation of Shanghai Disneyland (SDL), DIS takes on one of its largest
investments yet. They have had much success with their parks in Anaheim, Orlando, Paris, and
even Hong Kong, but with Shanghai being the largest city in China, this was a new undertaking.
Despite a recent financial crisis, some past cultural snafus, and the threat of two impending
theme park openings, SDL was able to create a blend of Disney magic and Chinese culture that
contributed to a successful grand opening and continuing operation.

Lessons from Previous International Ventures

The key lessons that DIS learned through the creation of their various parks are that they need to
pay explicit attention to, and work to incorporate, the country’s culture into each park. In
addition, acknowledging the demographics of each country greatly affects the population that
will visit the parks.
For example, Disneyland Paris lost out on revenue and irritated visitors with their no-alcohol
policy as it is very common for the French to partake in a glass of wine during lunch. In addition,
French citizens were turned off to the American marketing strategy of size and spectacle. It was
seen as imperialistic and capitalistic by the French and created bad press for DIS.
In addition, DIS realized from its venture with Hong Kong Disneyland (HKDL) that connecting
with particular demographics can have a large effect on the success of your establishment. After
realizing that HKDL was too small and trying to reach too large of a population, especially in a
country with an emphasis on collectivism, they made some strategic changes. Firstly, ticket
prices decreased to reach the lower income visitors and to cater to what Hofstede’s framework
refers to as a low indulgence culture that may prevent some families from buying tickets.
Secondly, instead of offering a large variety of Chinese, Japanese, Indian, and American-style
foods, DIS realized most of the patrons were more familiar with Chinese food and mainly
focused on offering that within the park.

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 Changes like these can create somewhat of a “fish in water” problem as they seem insignificant
to Disney management because they are not their norm. However, by upholding cultural
mindfulness, DIS was better able to connect to their patrons and make coming to their parks a
more enjoyable experience.

Differences in Shanghai Disneyland

SDL was a larger undertaking than any of their previous parks. The sheer size and financial
commitment set aside SDL from its predecessors by way of $5.5 billion and the largest park to
open on opening day. In order to ensure that this venture went off without a hitch, DIS made sure
to acknowledge the culture of Shanghai and infuse it into the park while staying true to their own
brand.
One of the larger changes that was made to SDL in comparison to earlier ventures was the effort
to educate the population about Disney before entering the parks. Disney stories and characters
were not as popular in mainland China as they are in other parts of the world. Therefore, visitors
to SDL could meet Mickey Mouse and other characters at the front gate and learn their various
stories before entering the park. As this was a first for any Disney Park, it gave the visitors a
better idea regarding what Disney is all about and how to enjoy the experience to its full
capacity.
In addition, DIS offered their live productions in the Putonghua language. Making attractions
more accessible to the Chinese people enforced the importance of Chinese culture in the overall
success of the park. For example, 12 Disney characters were featured as the 12 animals in the
Chinese zodiac and some of the spires of the Enchanted Storybook Castle were painted with
lucky cloud patterns. These small adjustments showed the importance of Chinese culture to the
community and encouraged a connection between Disney and the Chinese people.

Concerns for Shanghai Disneyland

A key concern that exists regarding SDL is the Chinese stock market slump in 2015. It is risky to
start a large financial undertaking during a financial crisis, especially one that depends on the
ability of the community to afford ticket prices. In addition, the fact that the Shanghai Shendi
Group (Shendi), a joint venture company of government-owned businesses, holds 57% of the
equity in Shanghai Disney while DIS only holds 47%. With DIS maintaining 75% of the voting
power for operations of the park, issues could arise if DIS makes a decision that Shendi does not
agree with. This issue is only worsened by the fact that China’s government has high levels of
bureaucracy and corruption. Distinguishing a representative from Shendi and a representative
from DIS to serve as delegates for each group could provide additional collaboration and allow
each group to see disagreements from each other’s perspective.

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 Risks Associated
As SDL is the largest one-time investment in mainland China’s tourism industry as well as the
largest park to open on opening day, there is a lot of risk associated with the population of
individuals that will show up. With China’s previous one-child policy, there is a much larger
majority of adults to every child. Therefore, after the initial surge of interest, there is a possibility
that there will not be enough children to drive family events, vacations, or day trips that usually
occur at Disney parks. In addition, there is a chance that the large majority of adults visiting
eventually become bored in a park that caters to children’s stories, especially when mainland
China’s population is not as familiar with Disney as the other park locations. The cultural and
market concern here is that population of visitors might not be enough to sustain such a large
financial commitment. A recommendation would be to provide more activities that would attract
adults, such as the ability to “drink around the world” in Orlando’s Epcot.
A risk with the market of Shanghai is that Universal Beijing and Polar Ocean Park, two large
theme parks, were in development just as SDL was ready to open. The chance of generating
enough sales to supplement the large financial investment for SDL could continue to diminish
because the market could become too saturated. A recommendation would be to ensure that SDL
opens as far in advance of the other two parks as possible. This way, they will at least generate
substantial, initial interest without having to compete with the other parks. In addition, feedback
surveys and comment cards could provide valuable insight from patrons that could give SDL an
edge over new theme parks in the area.

Shanghai Disneyland: The Present

SDL reached over 10 million visitors within their first year of operation, far surpassing that of
Hong Kong Disneyland. In addition to the cultural sensitivity they tried to immerse within the
park, SDL was the first park to include tiered pricing which could have contributed to the large
bump in sales as the tickets were more affordable than previous parks. However, according to
Professor He Jianmin, director of the tourism management department at Shanghai University of
Finance and Economics, the outstanding interest in the first year would most likely lessen
slightly thereafter.
“We have to admit that, after all, not all people here are willing or able to spend hundreds of
yuan on a visit to the Disney park. It will likely see mild growth in the future despite the rosy
performance in the first year.”
Professor He Jianmin was not incorrect as the number of visitors would only increase by about
800,000 in 2018. Still an impressive number compared to Hong Kong who reported losses for
two consecutive years, but not enough to rival Disneyland Tokyo or Paris.

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 Gales, Larry. “Module 3: Chinese Business Culture- Applying Business Models in Asia.”
Module 3: Chinese Business Culture- Applying Business Models in Asia. 6 Nov. 2019,
Cincinnati.
Ren, Daniel. “Shanghai Disney Takes the Mickey out of Hong Kong.” South China Morning
Post, 19 May 2017,
https://www.scmp.com/business/companies/article/2094937/shanghai-disney-hits-10-
million-visitors-beating-hong-kong.
“Shanghai Disneyland Park.” Wikipedia, Wikimedia Foundation,
https://en.wikipedia.org/wiki/Shanghai_Disneyland_Park#Attendance.

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