China says yes to Disney park in Shanghai

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The Independent Online

Disney plans to sprinkle its magic over mainland China for the first time, with officials announcing Wednesday the long-awaited approval of a theme park in the booming metropolis of Shanghai.

The green light for the park, which would be one of the biggest ever foreign investments in China, comes less than two weeks before US President Barack Obama makes his first official visit here, starting November 15 in Shanghai.

Neither side disclosed any figures or gave a time frame for the project, but previous reports have said the US entertainment giant will invest 3.6 billion dollars in the 10-square-kilometre (four-square mile) park.

"China is one of the most dynamic, exciting and important countries in the world, and this approval marks a very significant milestone for The Walt Disney Company in mainland China," Walt Disney Co. president and CEO Robert Iger said.

Approval of the project would "enable Disney and its Shanghai partners to move forward toward a final agreement to build and operate the park and begin preliminary development work," the California-based firm said in a statement.

The new Chinese venture would be a "Magic Kingdom-style theme park with characteristics tailored to the Shanghai region," it added.

Authorities in Beijing approved the Disney project application report (PAR) late last month, and both sides "started in-depth talks" about detailed plans for the park in the city's Pudong New district, the Shanghai government said.

A Shanghai-based Disney executive told AFP on Wednesday: "It's just a PAR and not the final deal yet."

When asked how long negotiations -- already in progress for a decade -- could last, the executive said: "It may take several more months."

China's official Xinhua news agency, quoting Shanghai municipal officials, said "several big state-owned firms" would form a joint venture with Walt Disney to invest in the project.

Analysts say the Shanghai park would be part of a major push by Disney into China, to build the iconic brand in the world's most populous nation of 1.3 billion people.

"The Disney park will become a huge advertisement and a landmark project," Wang Liang, deputy head of the Shanghai Circulation Economics Research Institute, a think-tank linked to the city government, told AFP.

"Disney is not just eyeing the output from the park itself. Rather, it aims to cultivate little consumers, cultivate children's loyalty to the Disney and Mickey Mouse brands. Profits would then come from the relevant stationery, garments and toys."

Disney is one of the most active foreign entertainment companies in China, with more than 600 employees in Shanghai, Beijing and Guangzhou, according to corporate data.

Its products are sold in 5,000 branded, free-standing locations and retail corners in more than 25 Chinese cities. Last year, the company launched its first English learning centre in Shanghai for children aged two to 10.

The park would be the fourth for Disney outside the United States and the third in Asia, after Tokyo, Paris and Hong Kong, where an amusement park opened in 2005.

Earlier reports said Disney had hoped to open the Shanghai park to coincide with next year's World Expo in the city, but that time frame has now been pushed back until at least 2012 or 2013.

Wang said the amusement park would give China's financial centre a boost in terms of jobs creation and revenue, but not solely from the millions of tourists visiting the rides and attractions.

"The revenue and new jobs from industries deriving from the Disney park, such as animation, will be much higher than tourists to the park itself. It will become an engine to drive relevant industries," Wang said.

Hong Kong Disneyland has had a bumpy ride since opening its gates, with local lawmakers saying reportedly low attendance has not justified the huge public investment.

But He Jianmin, a member of a task force organised by China's top economic planning agency to evaluate the Shanghai project, told AFP there were no such concerns about Disney's potential profitability on the mainland.

"The Disney company has had to repeatedly look into that. Now, with the development of China's economy, it is no longer a big problem," He said.