December 04,2009

Love/Hate Disneyland in Shanghai and China

By CSC staff, Shanghai


is fixing to erect a new theme park near the Shanghai Yangtze River estuary, which looks to be a feast for the government and developers. But nationalists, residents who can not afford housing, and the local entertainment industry in China, Hong Kong, and East Asia are vociferously protesting the entry of Mickey Mouse and Donald Duck into mainland China.


The Disneyland project has triggered a new round of soaring property prices in the Shanghai area, up 10% in November. Many real estate projects have taken to hoarding housing in expectations of rising prices. The "Disney Concept" real estate project, Dingxin Celebrity Court, located in Chuansha in Shanghai's Pudong New Area, announced in early November it would suspend sales, but recently the high-profile real estate project has quietly started selling again. Compared with prices in early November, the average new apartment price is up 50%, to 21,000 yuan/square meter.


The negotiation and approval process for the Disney project has been time-consuming, with the Shanghai municipality, Pudong district government, and the local developers eager to get it moving. The area of land expropriated for the project is four times the size approved by the State Development and Reform Commission.


But the Disney effort is facing growing grassroots opposition. An organization called "College Students Group Overseeing Disney" has labeled as "sweatshops" its Chinese factories for OEM products. In a recently released report titled "Mickey Mouse No Longer Cute--Labor Survey on Disney OEM Factories," they cite frequent accidents and work-related injuries and deaths, no guarantee of staff security, and deduction of wages in five plants in the Pearl River Delta producing Disney toys and stationery.


The Group consists of seven college students from Jiangxi Agricultural University, and Nanchang University, who surveyed five Disney plants in July this year while working there. The factories deny the allegations in the report and state that they are in compliance with local labor laws.

In recent years, Disney has repeatedly faced similar charges. Hong Kong's Students and Scholars against Corporate Misbehavior released two investigative reports on Disney's treatment of workers in 2005 and 2006, questioning the latter's corporate social responsibility.

Disney's Shanghai branch says Disney only has direct contact with licensees, who themselves choose OEM plants, so Disney has no direct relationship with these factories. They believe it is unreasonable to accuse Disney, but the company says it will carry out a thorough investigation into the matter.


Local competition

Before the approval of the Shanghai Disneyland project, property developers in Shenzhen Overseas Chinese Town (OCT) had expanded their theme park Shenzhen Happy Valley to Shanghai. Cities neighboring Shanghai in Jiangsu and Zhejiang are building their own theme parks.


Other theme park companies in Asia are also making moves. Hong Kong Ocean Park is joining hands with 11 other theme parks, such as OCT Happy Valley, Shanghai Ocean Aquarium, Beijing Aquarium, Taiwan LeoFoo Village Theme Park, and Night Safari in Singapore, to launch a collective "ticket reciprocity" discount promotion, in order to compete with Disney. This promotion involves mainland China, Hong Kong, Taiwan and Singapore and other regions.


A Happy Valley insider says, "At the early opening stage of the Hong Kong Disneyland, Ocean Park talked with Happy Valley, looking for cooperation to enhance competitive capabilities." These theme park companies are competitors, but when "public enemy" Disneyland appeared, they saw the need for cooperation.


In the last fiscal year, the annual number of tourists at Ocean Park reached more than 5 million, surpassing HK Disneyland's total. According to the fiscal year 2008-2009 Annual Report (as of June 30, 2009), annual capacity at Ocean Park was 4.8 million visitors, down 5% compared with the previous fiscal year. With HK Disneyland preparing for expansion and Shanghai Disneyland getting approval, Ocean Park and other theme parks in East Asia are feeling the pressure.


Visitors to Ocean Park consist 45% of mainland tourists and 45% locals, with the remainder international tourists. It is hoped that the large-scale promotion among Asian theme parks will soon effectively increase their customer base and market competitiveness.


The alliance is expanding beyond the original 11 theme parks. Ocean Park will soon sign with the Shanghai Happy Valley and include the latter in the alliance. As a local rival of Shanghai Disney, Shanghai Happy Valley is willing to join hands with the Ocean Park and hopes to attract more tourists in the Yangtze River Delta through such cooperation.

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