Business Plan
for
Shanghai Disney
Tableof Contents
1. Introduction 1
2. The Reason to Choose Shanghai 1
2.1. Political 1
2.2. Economic 1
2.3. Social 2
2.4. Technology 2
2.5. Environment 2
2.6. Legal 2
3. Lessons Learned from Past Experience 3
3.1. Financial & Economic 3
3.2. Cultural & Environment 4
4. Differentiation Strategies 4
4.1. Differentiation in Scale 4
4.2. Differentiation in Cost 6
4.2.1. Pricing Differentiation 6
4.2.2. Additional Cost 7
4.3. Differentiation in Product 7
4.4. Differentiation in Culture 10
5. Disney Flavor & Chinese Characteristics 10
5.1. Architecture Style 10
5.2. Content Design 11
5.3. Eating Habit 11
6. Conclusion 12
1. Introduction
Walt Elias Disney, who was the most famous animation master designer in America, established the well-known Walt Disney Company. He created the cartoon characters Mickey Mouse, which is popular among the world. To bring happy to the world, the Walt Disney Company decided to build a theme park named the Disneyland.
The Disneyland has become the most popular theme park all over the world. The Disneyland is a part of the Disney amusement park, which has theme hotel, Disney downtown and some other amusement facilities.
2. The Reason to Choose Shanghai
To find out the answer to the question, PESTEL Model can be used to analyze the macro environment of the Shanghai Disneyland. The PESTEL represent six elements influenced the company, which are political, economic, social, technology, environment and legal.It should be noticed that it is just a model to analyze the environment, and is hard to classify every aspect into exact one element in reality.
2.1. Political
With the national become more and more powerful, the Chinese government embraces the foreign capital to invest in China. This shows the cultural confidence of the Chinese.
Although there are many Visa Waiver countries, many Chinese do not or cannot have a visa to leave the country. If the people who do not have a visa and want to visit a Disneyland, they could give up the ideas regrettably. Since the reason mentioned, the Shanghai Disneyland could attract these customers to visit it without any visa.
2.2. Economic
Since China became the world’s second largest economy, the disposable incomes of Chinese are much more sufficient compared with last few years. The decreasing of Engel’s Coefficient theses years shows that they are willing to spend more money on amusement facilities to entertain themselves, including visiting Shanghai Disneyland.
The transportation infrastructure of Shanghai saved plenty of money for Walt Disney Company, since it has more than 1,000 bus routes in the city. In the air route, it has Shanghai Hongqiao International Airport and Shanghai Pudong International Airport. In the rail route, it has metro, light rail, magnetically levitated train. The French government offered to extend the Paris railway to the Park at a cost of almost $350 million. Compared with French,the destination of No.11 Shanghai Metro Line is Shanghai Disneyland.
Magic city is another name for Shanghai, indicating that it is a charming city. Shanghai is one of the biggest metropolises in scale and area, and also the financial center of China, including all elements of financial market in China. It is no doubt that Shanghai Disneyland can attract more mainland tourist than Hong Kong does.
Instead of Disneyland Paris, the experience of being foreign settlement will make Shanghai embrace foreign culture more easily.
Between 1994 and 1999, China built more than 2,000 amusement parks. After 16 years, many of them went bankruptcy because of the out-of-date form. This will not happen to Disneyland as it has innovation of cartoon characters.
2.3. Social
China has had a one-child policy, whichmade parents reluctant to deny anything to their only child, such as visit to a theme park. (This can also be included in Political)
2.4. Technology
The improved technology of transportation is another element that Disney chose Shanghai, and can also be contained in Economic.
2.5. Environment
The weather in Shanghai is relatively moderate than Beijing or Guangzhou, which is warm in winter and cool in summer.
2.6. Legal
The legal system of China is reasonably perfect than it of France in 1985. It is hardly to see the situation that the Disney’s chairman was pelted by eggs in Paris.
3. Lessons Learned from Past Experience
In 2016, Disney had four theme parks in operation outside the United States: Tokyo Disneyland, Tokyo Disney Sea, Disneyland Paris, Walt Disney Studios Park, Hong Kong Disneyland and Shanghai Disneyland. Some issues have been appeared through the construction of Disneyland.
3.1. Financial & Economic
During the construction of Tokyo Disneyland, the Oriental Land Company proposed the park to Disney and owned the Park as the Disney did not want to provide any financing. Disney just received fees for its efforts during the construction phase, and it food sale. This kind of income is limited. For Shanghai Disney, it is better to get enough financing source to complete the construction and operation.
In building Hong Kong Disneyland, they expected that the Park will create 18,400 direct and indirect jobs in its first year of operation and 35,800 in later years. The Shanghai Disneyland should hire the local people or Chinese as the virtual tour guides to satisfy the Chinese visitors.
Through building the Disneyland Paris, transportation has become a significant problems of saving cost. A location near Paris had advantages because its central location enabled a large population to drive there easily. Because the park would employ thousands of people and attract large numbers of tourists, eventually, the French government offered to extend the Paris railway to the park at a cost of almost $350 million. Shanghai does not have these concerns, for it has metro and bus route headed for Shanghai Disneyland.
Hong Kong is Asia’s largest tourist destination and has a better infrastructure and higher family incomes than mainland cities. Does the ticket price of Shanghai Disneyland are affordable for mainland tourists or other visitors? The pricing policy should be considered thoroughly.
Between 1994 and 1999, China built more than 2,000 amusement parks, which may have impact on Disney business. Could the Shanghai Disneyland form its own differential competitive power?
3.2. Cultural& Environment
Before Disney signed an agreement with the French government, it began to have problems in French because people believed the park would contribute to the destruction of French culture and suffered a great deal of opposition. To stop this happening again, Shanghai Disneyland should investigate and survey about the acceptance of Disney culture of residents.
Although Disneyland Paris taken many safeguards to protect the park, the Parisian climate was too much colder than California’s and Florida’s to attract many winter visitors to the park. Before construction, the company should also consider whether the climate is suitable for visiting Disneyland in any season.
Different countries have different situation. We should not consider the success of Japan is suitable for China. Staying alarm and adjusting to changeable environment is a good idea to defense the risk and uncertainty.
4. Differentiation Strategies
4.1. Differentiation in Scale
Shanghai Disney Resort, located in Chuansha Newtown, Pudong New District, Shanghai City, covers an area of 7 square kilometers, which is almost 6 times of HongKong Disneyland and 3 times of TokyoDisneyland (as shown in Figure 1). As the world's sixth, the mainland's first Chinese Disney Park, the Shanghai Disney Resort has a Disney theme park of "Magic Kingdom" type, which owns two theme hotels and retail, catering, entertainment, parking lot etc. Shanghai Disney's fantasy fairy tale castle is the one of the highest and largest Disney castle in the world, and in the center, there is a breathtaking rotated ladder, leading visitors to step on a "roaming of fairy tale time" journey.
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Figure 1. Comparison in Total Area
It is not too hard to imagine why there is a wide gap in the total area among these three cities, Shanghai, Hong Kong, and Tokyo. Although all these three cities are acknowledged as an inch of land, an inch of gold, compared with another two cities, Shanghai has a distinguished advantage for the Hong Kong and the Tokyo have to establish the whole project by seareclamationwhich cost is extremely high. What’s more the whole area of Shanghai city is as large as 3 times of Tokyo and 5 times of Hong Kong, which forms a direct factor to the land cost.
In addition, the total investment scale of Shanghai Disney Resort amounts to 34billion yuan (US$55), andShanghai local government’s investment in the construction of the Disney foundation is also quite huge. According to the Shanghai International Tourism Resort Management Committee released the news, with the opening of the Shanghai Disney Park, the government of Shanghai international tourism resort supporting project construction has been basically completed,the 8 supporting road projects, which offer the direct access to the core area of the Resort has been completed, including Disney Avenue, West bus hub core project has been basically completed. China amusement park association secretary general Feng Yuguo said, Shanghai Disney resort investment scale has more than one hundred billion yuan, including the construction of theme parks and supporting infrastructure construction,
While the total investment of Hong Kong Disneyland is just about US$5.7 billion(as shown in figure 2).
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Figure2. Comparison in Total Investment
4.2. Differentiation in Cost
4.2.1. Pricing Differentiation
Based on the official data, the ticket price of Tokyo, Hong Kong and Shanghai Disney is USD59, USD64, and USD55 respectively, and it is clearly to see that compared with these two other Asia Disney lands’ ticket price, Shanghai Disney Resort is the cheapest one. What’s more, as referred above, the Shanghai Disney Resort have a massive park scale compared with the other two, therefore the Shanghai Disney Resort get a high cost performance.
However, considering the factor of these three cities’ annual disposable income, it will display a totally different situation. According to the official data online, the Tokyo annual disposable income in 2015 is 149,674yuan, the Hong Kong is 20,167yuan and the Shanghai is 49,867yuan, respectively. So, it is definitely find out that in Tokyo, the ticket cost accounts for a little in their annual disposable income (as shown figure 3(In order to make a distinct contrast, the ticket price is enlarged by 10 times.)).
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Figure 3. Comparison in ticket price to annual disposable income
4.2.2. Additional Cost
Additional cost includes the expenses on the transportation, catering and accommodation, and sometimes involves tips such as in Tokyo or Hong Kong. Taking the local price level into consideration, to the mainland costumers, especially the consumer lived in Yangtze River Delta, the Shanghai Disney Resort is the best choice for them to go.
4.3. Differentiation in Product
Known as the first amusement park in Asia, Tokyo Disneyland is divided into 7 areas those are the World Market, Adventure Park, West Park, Animal World, Dream Park, Cartoon City and Tomorrow Land. In the center of Disney front gate, we can see the main buildings "Cinderella city", and there are built a variety of playground and recreational hall around it, such as adventure palace, world famous legend palace and other landscape palace.
Hong Kong Disney is the world's fifth, second Asian, China's first Disney park. The park is divided into 7 theme parks, respectively: Main Street USA, Adventure land, Fantasyland and Tomorrow Land, Toy Story, Memphis and Mystic Valley stronghold, the Grizzly Valley. The park has a theme amusement facilities, entertainment, and interactive experience, catering services, commercial shops and kiosks.
Shanghai Disney park has six theme park: Mickey Avenue, Fantasy Garden, , AdventureIsland,Treasure Bay, the World of Tomorrow, ADream World, two themed hotels: Disneyland Hotel Shanghai, Toy Story Hotel; a subway station, Disney station; and there are many global first rides, wonderful live performances and a variety of wonderful experience of any age can gain happiness here.
What is worthy of emphasizing is that the Shanghai Disney Resort has 3 highlights:
The first garden theme park: as the first garden design theme park of world's Disney theme park, "the garden" is designed for the Chinese tourists who are indulged in landscape design. The garden features new viewing ladder so that visitors can watch castle stage and luminous phantom show.
Chinese - Zodiac Mural wall: Disney and Disney Picks will be the first time transformed intothe vivid China zodiac animal on the beautiful wall. Visitors will learn more about the story of Disney's friends in the "Twelve friends’ garden".
The first fantasy themed Carousel: tourists will enjoy on "fantasy carousel" in Shanghai Disney Park.
4.4. Differentiation in Culture
Japan is the world's animation kingdom, and it has a culture of cartoon which is in accordance with what the Disney wants to bring. And Disney Castle mystery tour is modified according to some historical legends of Japanese popular haunted house.In addition,after World War II, Japan got a lot of help from the United States, thus the Japanese have a strong identity and worship of American culture. Many Japanese people have a sense of esteem and identity to American culture, and Disney is a typical American culture. In this case, Disney entered Japan logically.In the design of Tokyo Disneyland, it highlights the Japanesearchitecturecharacteristics and creates a picnic area to cater the Japanese eating culture.
To a great extent, the Hong Kong Disney Resort keeps the American style a lot. But, it seems that, unlike the Japanese develop a deep feeling towards the American culture, Hong Kong is not so infatuated with that and due to the lack of cultural identity, the development of Hong Kong Disneyland is limited and the revisit rate is very low.
As a representative of Asia culture, Chinese culture is distinctively different from the American culture, and most of Chinese is not so familiar with the Disney Cartoon compared with Japanese and Hong Kong people not only for the language reason but also for a low level development of cartoon industrydomestically. Faced with this situation, the Shanghai Disney makes great efforts in such as launching the world's first Chinese version of the"Lion King" and all the translation of the park introduction is very local.
5. Disney Flavor &Chinese Characteristics
5.1. Architecture Style
As the largest, highest and most interactive Disney castle, the iconic attractions of Shanghai Disney Park, "Fantasy Fairy Tale Castle" is rich in unique Chinese elements. At the highest point of the castle stands a decorative spire, the top is a golden China flower: peony. Below the peony flower, a Disney magic star bloom to the sky. The other larger decorative spire contains the traditional auspicious clouds, peony, lotus and other Chinese unique patterns and features, and present magnolia what is behalf of the Shanghai. Furthermore, the castle is also full of Chinese elements, such as the welcome pavilion’s green jade carving, carved on the porch, and the murals showing the changing seasons.
5.2. Content Design
The Shanghai Disney Resort is divided into 6 districts, one of them is called as Garden Fantasy which consists of seven independent small gardens, including a unique "Twelve friends’ garden". The garden displays 12 huge pieces of exquisite color mosaic murals are showed by the popular Disney and Disney Pixar Animation Movie Stars transformed into Chinese traditional twelve zodiacs, illustrating the story of Disney by the unique Chinese elements.
5.3. Eating Habit
Learning from the Tokyo Disneyland, the Shanghai Disney Resort do a lot work to combine the Disney style with Chinese eating habit. Shanghai Disney Resort respects the Chinese traditional diet. In addition to Shanghai cuisine, he menu provided by the resort will also include other different regional cuisine from across the nation, for example, Sichuan, Shandong, Cantonese and Hunan cuisine. Food supplied in Shanghai Disney Resort cover China’s eight major regional cuisines. These flavors are placed in plates printed with Disney cartoon images or be made into the shape of famous Disney cartoon characters such as Mickey and Minnie.Mickey Pork Cake, Donald Duck Waffle, Braised Pork Knuckle in Dark Soy Sauce and Mickey Chocolate Tar…yum?
6. Conclusion
Based on the illustration above, it is clear to see that the Shanghai Disney Resort is facing the severe challenges from the Tokyo and Hong Kong Disneyland, but also full of opportunities. To some extent, how to combine the authentic Disney flavor with Chinese characteristics is a decisive factor for the Shanghai Disney Resort to obtain the competitive advantage over the other two Asian Disneyland.
