From a visit to Disneyland by Shanghai’s mayor in 1990 to Tuesday’s opening of the $5.5 billion joint venture, Shanghai Disney Resort has been more than 25 years in the making. 

That quarter of a century stretches from an era when China was more rural and agricultural than not, through a period of massive urbanization and industrialization, to a post-boom slowdown, with a new middle class that is increasingly switched on to a service-led economy.

Walt Disney Company chairman/CEO Bob Iger has called the park the entertainment giant’s “greatest opportunity since buying land in Florida.” Forecasts are for 15 million visitors in the first full year of operation; this compares to the 19 million who visited Disney World in Orlando, Fla., in 2014, according to the Themed Entertainment Association.

Disney is taking pains to stress that the park will be “distinctly Chinese,” a phrase Iger used repeatedly in a presentation May 18 at the MoffettNathanson Media and Communications Summit. As part of an effort toward “making sure that the people who visit this park feel that it is theirs,” the Shanghai park eliminated the Main Street USA feature, which appears at all five other Disney parks: Orlando and Anaheim in the U.S., as well as Hong Kong, Paris, and Tokyo. Frontierland, another traditional element derived from the American West, was also eliminated. Iger said that Disney shows have been reconceived and designed by Chinese artists, and he touted a massive teahouse in front of the Disney castle featuring local art and architectural elements, and food from across the country.

Disney’s desire to plant a solid stake in the world’s largest market comes amid growing competition from Chinese firms in the theme-park sector, including Dalian Wanda (which is building upward of 15 theme parks), Huayi Brothers, and Carnival Group (in Qingdao now, with plans for another 10 parks), as well as Six Flags (Tianjin, 2018), Universal Studios (Beijing, 2019), and DreamWorks Animation, which will open its own joint venture park in Shanghai next year. Locating the park in Shanghai gives Disney access to a local population of 330 million (within three hours of the park), as well as two international airports.

Shanghai Stats
Disney has upped its investment in the park since it was first announced.
$3.6b Expected cost as announced in 2009
$5.5b Final cost
$56 Lowest ticket price
$15m Visitors
expected in first year

Disney says internal decisions were taken in 2014 to build a bigger park than was initially envisaged in 2009. The company says the expansion — not public safety concerns following a stampede on Dec. 31, 2014, that killed 36 in Shanghai — was the reason the park’s opening, originally expected in 2015, was pushed back.

In addition to causing delay, the extra building work bumped up costs, which went from the $3.6 billion announced in 2009, to $4.7 billion, and finally to $5.5 billion. Costs are shared proportionally by the park’s owners — the Walt Disney Company holds 43% of the ownership company, and Shanghai Shendi Group (itself formed from two state-owned enterprises) holds a majority 57% stake. Financing comprised 67% equity and 33% debt. Disney owns a controlling 70% stake in Shanghai International Theme Park and Resort Management Company, which operates the resort.

Those equity splits appear to reflect Chinese concerns about foreign ownership of major infrastructure, as well as Disney’s determination to fully control its intellectual property in a country where piracy has been rife and Western brands have been cautious about handing over their crown jewels. (Disney was granted a year of special copyright enforcement running until October 2016.)

The risks of operating in China were made clear to Disney in March, when the company quietly shuttered DisneyLife, a family-friendly, subscription TV channel launched in December 2015 in partnership with China’s Alibaba. The channel was hindered by new regulations limiting foreign content and Sino-foreign media partnerships.

Disney China executives would not comment for this story ahead of a planned press junket June 14-16.

Shanghai Disney will have two ticket pricing tiers, peak ($76) and off-peak ($56), plus concessions for children and the elderly. That makes it one of the most expensive theme parks in China, and a significant outlay given the average $7,000 GDP. It is also the lowest cost of the six Disney parks worldwide.

Those prices were described last month as too high by Wang Jianlin, chairman of Dalian Wanda group. Wanda, which has expanded from property into leisure and entertainment, and has made Wang the richest man in Asia, has set theme parks as a central plank of its diversification strategy. Wang used a televised interview on CCTV to suggest that Disney should never have come to China, and to criticize the park’s pricing structure. The war of words continued when Disney accused Wanda’s new Nanchang theme park of misusing Disney-owned Captain America and Snow White characters.

But Wang’s remarks that “one tiger is no match for a pack of wolves” serve up a reminder that foreign companies operating in China will always be playing a game that is partially rigged in favor of the local team.