Marking the largest foreign investment to date in China, Disney will be pouring an additional $800 million into Shanghai Disneyland, thereby expanding the park’s overall cost by over 10% before it’s even opened.
At the Milken Global Conference in Beverly Hills on Monday, Disney CEO Bob Iger said 8,000 workers are living and working on the property — a $5.5 billion investment.
“It’s clear that we are serving a number of interests in China,” Iger said, citing a more service orientated economy as well as greater western cultural experiences.
The additional $800 million will be used primarily for new attractions, entertainment and other offerings to increase capacity at the theme park, which is scheduled to open in December 2015.
He noted that 3.2 billion Chinese traveled within their home country in 2013, which resulted in $480 billion in tourism spending. Additionally, the relaxation of the one-child policy should mean 4 million more births per year over the next 20 years. “Thumbs up to that from Disney,” he added.
“Like all of our parks, Shanghai Disney Resort was designed to expand over time and this investment allows us to bring some of those additions online earlier,” said Thomas O. Staggs, chairman of Walt Disney Parks and Resorts.
Shanghai Shendi Group, Disney’s joint venture partner on the park, owns 57% of the owner companies while Disney holds the rest.
The majority of the additional $800 million attractions at the park are expected to be completed by opening day.
During the panel, Iger also spoke about the challenges of doing business in China. The negotiations to construct Disney Shanghai took a decade. Disney runs roughly 40 English-language schools in different markets throughout China, but admitted that the program may not be as large as the Mouse House anticipated.
“I don’t know how far ultimately we will go with this,” he said. “I don’t know necessarily if it is the business we thought it would be.”
Despite any potential hurdles, Iger was candid about China.
“We need China to create growth for our company. We need China to be stable and continue to create growth in order to create growth in our company,” he added, calling the U.S. relationship to China “vitally important.”