The big idea: Given the success of Walt Disney’s first two U.S. theme parks, the company sought to replicate its formula globally. Although there had been plenty of mistakes in its launches in Paris, Hong Kong and Tokyo, Disney ultimately adapted to local tastes. Would Disney’s secrets to its service operations work in Shanghai?
The scenario: Even for a company that was built on the creative risk-taking culture of Walt Disney, the plan to open Shanghai Disneyland this year, the first in mainland China, is an audacious bet. The sixth global Disney resort, its biggest, will occupy nearly 1,000 acres and will feature several themed lands, including Tomorrowland, Treasure Cove, Disney Town and the Enchanted Storybook Castle, which will also be the biggest and tallest Disney castle.
Disney and its investors are excited about Shanghai for good reason: demographics. The resort will be located in the Pudong district of Shanghai, the wealthiest of all of China’s districts. And 330 million people live within a three-hour drive of the resort site, compared with 19.6 million near Disney’s most profitable park, Walt Disney World in Orlando. Construction complications have delayed the opening. Cost overruns and alterations have increased the final price of the project. The Chinese economy has hit a rough patch since a stock market slump in summer 2015. Can the classic Disney theme park experience be delivered with the right cultural balance to appeal to its largely Chinese customers?
The resolution: Disney’s key challenges are to maintain its service levels while customizing the experience for Chinese visitors. Disney retains operational control of the park through 75 percent voting power within the management company that oversees it. Its imagineers — architects, engineers and others designing the park — are conducting their work in the Putonghua language, and all business at the park will be conducted in Mandarin and translated into English. Given the former one-child policy, accommodations will be made for the extended family members likely to travel together to the park.
Near the center of the park will be the Garden of the Twelve Friends, where Disney characters will be featured as the 12 animals of an enormous Chinese zodiac. At the center of a fountain will be a huge glass sculpture of a peony blossom, a symbol of good fortune and majesty. Some spires on the Enchanted Storybook Castle will be painted with lucky cloud patterns. And food will include such local fare as dim sum.
When Disney opened its world’s biggest store in Shanghai’s Lujiazui area in May 2015, a line snaked down the street for a mile, demonstrating the power of the brand.
The lesson: Disney’s purpose is to create a magical experience for customers. Disney Shanghai’s park operations will be based on quality service, be clean, be in good repair and the experience will be a Disney immersion. What remains to be seen is whether Disney understands Chinese cultural differences so that profitability will occur faster than in its other non-U.S. locations.
and Steve Maiden
Yemen is a senior researcher, Weiss is a professor and Maiden is a case writer at the University of Virginia Darden School of Business.