Tokya Disneyland , Disney in Asia

Beyond Tokyo: Disney’s Expansion in Asia DISNEY IN ASIA Early in 1999, Michael Eisner, CEO of The Walt Disney Company, voiced his opinions concerning potential markets for his firm’s entertainment products and services. A major thrust for the new millenium would be development in Asia. †¢ We could be getting close to the time for a major Disney attraction in the world’s most populous nation. † The Walt Disney Company, Annual Report, 1998. †¢ â€Å"I am completely confident that Chinese people love Mickey no less than they love a Big Mac. Statement by Michael Eisner, CEO of The Walt Disney Company, during a trip to China in January 1999, Knight-Ridder/Tribune Business News, 16 June 1999. INTERNATIONAL THEME PARKS AND RESORTS: DISNEY EXPERIENCE Tokyo Disneyland [pic] Euro Disney (now Disneyland Paris) [pic] DISNEY AND CHINA IN THE 1990s Relations between the Disney Company and the government of China had not been particularly tranquil in recent yea rs. Disney held firm on its position on the movie. â€Å"Disney’s potential business in China is infinite.But Disney has to decide whether it wants to facilitate business or stand for free speech. † Not all of Disney’s relationships with China were negative however. The liberalization of China’s markets had generated benefits for the firm. ‘The Lion King’ had brought in almost $4 million in 1996 and the soundtrack had sold 1. 4 million copies. POTENTIAL OF THE ASIAN MARKET Building and investing in a multi-billion dollar theme park would represent another major, long-term commitment for The Walt Disney Company. Therefore, much research and planning were involved in this decision.In addition to the attractiveness of each of the remaining cities, Shanghai and Hong Kong, the market characteristics of the demand for theme park experiences by the Chinese people would have to be carefully evaluated. Although the success of the Tokyo Disney theme pa rk would strengthen the case for another facility in Asia, other data and experience brought up additional questions. Between 1993 and 1998, more than 2000 theme parks had been opened in China, developed and financed by both domestic and foreign investors.Disney management was convinced that a huge, child-loving populace would support a lively theme park business. Instead, many projects were swamped by excessive competition, poor market projections, high costs, and relentless interference from local officials. Cultural Factor The Chinese had a cultural disposition toward pampering children, which had been accentuated by the nation’s one-child per couple policy. Although many theme parks in China had not been successful, it was still generally believed that an exciting experience of high quality would attract visitors to a park.A mundane experience would be unlikely to spark interest in a second visit. Based on the repeat visitors at every other Disney theme park, management w as quite confident that they would be successful in attracting Chinese visitors not only the first time, but also the second, third, and fourth times. CASE Questions for Review 1. What cultural challenges are posed by Disney’s expansion into Asia? How are these different from those in Europe? There are some cultural challenges posed by Disney’s expansion into Asia.For example, Disney in Hong Kong soon realized that its attempts at cultural sensitivity had not gone far enough. For instance, the decision to serve shark fin soup, a local favorite greatly angered environmentalists. The park ultimately had to remove the dish from its menus. Furthermore, there is negative media coverage of the relatively new theme park for Hong Kong Disneyland in terms of cultural challenge. On the other hand, in order to make the park â€Å"culturally sensitive†, Hong Kong Disneyland would be trilingual with English, Cantonese and Mandarin.The park would also include a fantasy garden for taking picture with the Disney’s characters, popular among Asian tourists, as well as more covered and rainproof spaces to accommodate the â€Å"drizzly† climate. Attendance and operating income in France were less than anticipated and a major restructuring of the Euro Disney operating company was affected in 1994. Cultural challenges, as well as a European recession in the early 1990s, resulted in less than expected success of the park and its related hotels and facilities.Renamed Disneyland Paris early in 1994, and with enhanced performance, the Disney European experience finally began to pay off for this facility, which, by the late 1990s, was the largest theme park in Western Europe! With these two, quite different, experiences in operating a large theme park and resort facility outside of the continental United States, the Eisner management team was ready to move into China. Two locations were â€Å"in the running† early in 1999, representing quite dif ferent operating and financial strategies and structures.Either Hong Kong or Shanghai would likely be the site of the next Disney theme park. This was the challenge faced by the Disney management team, with a target decision date of June 1999. 2. How do cultural variables influence the location choice of theme parks around the world? Cultural obstacles influence the location of new theme parks in Asia. One is finding the right location. Often, more important than content is whether a venue is located in a metropolis, whether it is easily accessible by public transportation.However, in cultural perspective, there is an additional threat of competition, both from local attractions and those of other international corporations because of the fact that it seems that Asian travelers are loyal to their local attractions. Therefore, the stiff competition of the theme park industry in Asia will center on not only which park can create a surge of interest in its first year but also which can build a loyal base of repeat customers. In deciding on a site for a China theme park, a number of factors had to be identified, considered, and evaluated.In consultation with the Disney Board of Directors, they were looking for an â€Å"international character† for this park. A diversified visitor base would reduce the risks of problems in one country having an adverse effect on international visitor flow. Infrastructure in the area of the park and the region supporting it were also important. Visitors should be able to reach the park easily, by a variety of forms of transportation — airports, railroads, roadways, tunnels, bridges, bus lines, etc. hould be well established or enhanced while the park was being constructed. A prime area would be easily accessible and would also support a park most efficiently. The park and the region should contribute to visitors extending their time spent at the Disney facility. Management knew that convincing visitors to stay at the s ite, in a Disney hotel, was likely to generate greater cash flows from the park and its ancillary facilities. A stock of hotel rooms to upport park visitors was also important. Rooms at a variety of price points, from economy to luxury should be available when the park opened. 3. What location would you recommend for Disney’s next theme park in Asia? Why? We recommend Malaysia for Disney’s next theme park in Asia. Therefore, one of such strategic locations is the state of Johor in Malaysia due to the fact that Malaysian officials wanted to develop Johor in order to rival its neighbor Singapore, as a tourist attraction.In fact, there can be a Disneyland in Singapore; however, we don’t want to create a competitive environment between Hong Kong and Singapore. For us, there shouldn’t be two large Disney lands per region. Therefore, the best location in Asia to build a new theme park is Malaysia. We think that Malaysia Disneyland can rather bring in a new set of customers. EPILOGUE Despite its already large size, the Asian theme park industry is still developing.