Disney (DIS) - Get Report has taken multiple steps to tailor its new foreign theme park to its Chinese audience, but some detractors remain ahead of the official opening of Shanghai Disneyland on June 16.
The Burbank, Calif., entertainment giant took measures to avoid the missteps that have plagued the openings of other foreign theme parks. Nevertheless, the park, in which Disney owns a 43% stake in a consortium with Chinese government-owned companies, still has faced early criticism on social media from consumers who argued that food and ticket prices are too expensive. Government safety rules also could crimp the sale of some high-margin merchandise.
The $4.4 billion 1,000-acre park had a so-called soft opening in early May.
"We have been asked a number of questions along the way in terms of what are we doing here that is perhaps different than how we have entered other markets, what are we doing here that will make this park successful in China," Disney Chairman and Chief Executive Bob Iger said at a MoffettNathanson investor conference on May 18. "We wanted to build something that is authentically Disney but distinctly Chinese."
The company did away with Frontierland, an ode to the American West and a staple of its other parks, because it plays less well with Chinese audiences and instead built an entire island focused on its movie Pirates of the Caribbean, a huge hit in that country. It also eliminated the Main Street entry and shopping area, based on Walt Disney's rural hometown and found at its other parks.
Only about 10% of the food served in the park is American fare. Instead, about 70% of the food is Chinese. Consumers can taste braised minced pork and puffballs at Fairy Godmother's Cupboard in Fantasyland or Wagyu beef noodle soup at the Wandering Moon Teahouse in the park's Gardens of imagination.
The company added a large lake and grass area outside its park to accommodate the extended families that often vacation together. And it employed masters of the Chinese Feng Shui philosophy of environmental harmony to help it built the park. Its 800-room Toy Story hotel, for instance, is built in the shape of an "8," which symbolizes luck.
A company spokesman has said that surveys show that as many as 90% of visitors during the soft opening had a positive reaction to the park.
Still, early visitors to the park have complained that ticket and food prices are too steep. The Los Angeles Times reported that in May, 9 million viewers to Weibo, China's answer to Twitter, clicked on an article titled "Shanghai Disney is too expensive." An article headlined "The first group of Shanghai Disneyland visitors have wept to the point of fainting inside the park, because it's too expensive" went viral on Chinese messaging platform WeChat, the newspaper also reported.
The article said xiaolongbao soup dumplings were priced at about $1 each in the park, while they could be purchased at restaurants outside the park for about 15 cents apiece. It also quoted consumers who said Disney's ticket prices, which start at $57 for adults in nonpeak periods and rise to $76 in more popular periods, were too expensive for the average consumer.
Disney representatives in the past have said the parks' restaurants feature prices at different levels to fit any budget and that ticket prices are among the lowest of any of Disney park.
The company could face other problems from local authorities. Visitors to the park during the soft opening were not allowed to take helium-filled souvenir balloons home with them, China Daily reported, because safety regulators feared they would explode on the train ride. Consumers paid $9 apiece for the balloons.
Disney has stumbled out of the gates in the past with other international parks, in some cases by mistaking cultural tastes and the size of its park. It angered unions in the construction of its 81% owned Disneyland Paris theme park and initially refused to sell wine to vin-loving consumers. The park was mired in losses and mounting debts for much of its 24-year existence, and in 2014 Disney bailed it out in a $1.25 billion refinancing.
The company later built its 47% owned Hong Kong Disneyland park too small and was criticized for wait times of up to two hours for some of its rides when it opened in 2005. Attendance was below capacity for its first year and dropped 20% in the second, leading to years to losses. The park posted a net loss of $19 million in fiscal 2015, ended in September, according to a report by the Hong Kong government, which cited a decreasing number of Mainland Chinese visitors and "overall market condition and sentiment."
Disney, however, earns royalties from licensing its Tokyo park to Oriental Land, which has successfully run it for the past 32 years.
Disney shares on Tuesday afternoon closed down 43 cents, or 0.44%, at $98.35.
This article is commentary by an independent contributor. At the time of publication, the author held a position in Disney.