SHANGHAI – Disney had pushed China too hard, putting the company’s plans for a new theme park here in limbo. Now, Robert Iger wanted to kick the yearslong negotiations into high gear.
Iger, Disney’s chief executive, flew to Shanghai in February 2008 to meet with the city’s new Communist Party boss, Yu Zhengsheng. Over dinner, Iger offered a more conciliatory approach, setting the tone for the next phase of talks.
After that, Disney substantially dialed back its demands. In addition to handing over a large piece of the profit, the control-obsessed company would give the government a role in running the park. Disney was also prepared to drop its long-standing insistence on a television channel.
For Disney, such moves were once unthinkable. Giving up on the Disney Channel meant abandoning the company’s proven brand-building strategy. “We’re kidding ourselves if we think we’re going to get everything we want,” Iger recalled saying at the time.
Iger’s trip and the new attitude in the talks that followed appeased Chinese officials. Before long, they had struck a deal to build the $5.5 billion Shanghai Disney Resort, opening China to a singularly American brand and setting the pace for multinational companies to do business in the country.
The Shanghai park, which opens Thursday, has become mission critical for Disney as it faces business pressures in other areas like cable. It is designed to be a machine in China for the Disney brand, with a manicured Magic Kingdom-style park, “Toy Story”-themed hotel and Mickey Avenue shopping arcade. More than 330 million people live within a three-hour car or train ride, and Disney is bent on turning them into lifelong consumers.
But Disney is sharing the keys to the Magic Kingdom with the Communist Party. While that partnership has made it easier to get things done, it has also given the government influence over everything from the price of admission to the types of rides at the park.
From the outset, Disney has catered to Chinese officials, who had to approve the roster of rides and were especially keen to have a large-scale park that would appeal to more than children. The Shanghai resort, which will ultimately be four times as big as Disneyland, has a supersize castle, a longer parade than any of the other five Disney resorts around the world, and a vast central garden aimed at older visitors.
Worried that importing classic rides would reek of cultural imperialism, Disney left out stalwarts such as Space Mountain, the Jungle Cruise and It’s a Small World. Instead, 80 percent of the Shanghai rides are unique, a move that pleased executives at the company’s Chinese partner, the state-owned Shanghai Shendi Group, who made multiple trips to Disney headquarters to hash out blueprint details.
Disney then ran with the idea, infusing the park with Chinese elements. The resort’s signature restaurant, the Wandering Moon Teahouse, has rooms designed to represent different areas of the country. The restaurant is billed as honoring the “restless, creative spirit” of Chinese poets.
Such accommodation of the Chinese is becoming increasingly common. A growing number of multinationals have agreed to cooperate with the state through alliances, joint ventures or partnerships, all in the hopes of garnering more favorable treatment and gaining access to the world’s second-largest economy.
For Disney, if all goes as planned, the Shanghai park will create an ecosystem of demand in China for movies, toys, clothes, video games, books and TV programs. Iger has called Shanghai the “greatest opportunity the company has had since Walt Disney himself bought land in Central Florida” in the 1960s.
That site, of course, became Walt Disney World, a group of four theme parks that attracts roughly 40 million visitors annually. About 11 million visitors are expected next year at the Shanghai park, with annual attendance estimated to reach 20 million within a few years, according to Jessica Reif Cohen, an analyst at Bank of America Merrill Lynch.
If all doesn’t go as planned, Disney will suffer the wrath of Wall Street, which expects the resort to offset slower growth at ESPN, the company’s longtime profit engine, and some of its other theme parks. The last thing Disney wants is another Disneyland Paris, a money pit that suffered cultural miscues and, after 24 years, is still struggling to turn a profit. The relatively small Hong Kong Disneyland has had mixed financial results since opening in 2005.
Iger has staked his personal legacy on Disney’s partnership with the Chinese government. The resort includes the world’s largest Disney castle. which quite literally bears his signature. He autographed the castle’s golden spire before it was attached last year. Thousands of workers built a “Pirates of the Caribbean”-themed underwater voyage.
While Iger delegated certain duties to lieutenants, he has been the guiding force. He pre-tasted the food, which will include items like pork knuckles and Donald Duck-shaped waffles, and decided which characters would appear in the parade. He has held face-to-face talks with Chinese presidents, prime ministers and propaganda officials.
Iger, 65, has sought a personal relationship with China’s paramount leader, President Xi Jinping. After Iger learned that Xi’s father, Xi Zhongxun, a revolutionary leader, had visited Disneyland in 1980, he pressed his staff to find a photograph. A color photo shows the president’s father, who died in 2002, wearing a Mao suit, shaking hands with Mickey Mouse. Iger presented it to Xi as a gift and symbol of their partnership.