Disney boosts Shanghai investment

US entertainment company Walt Disney Co, together with its Chinese partner Shanghai Shendi Group, announced that they would invest an extra $800 million to create additional attractions in its Shanghai resort, which industry watchers noted Tuesday would become a new tourist attraction for the metropolis.

Total investment in the resort reached $5.5 billion and its capacity will be enlarged by 30 percent after the expansion in investment - the theme park will receive around 10 million visitors each year, media reports said Tuesday.

The Shanghai Disney Resort, which is slated to open at the end of 2015, covers an area of around 3.9 square kilometers.

The total land area of the Shanghai Disney Resort will remain unchanged though, Walt Disney Co said.

Shanghai Shendi Group holds a 57 percent share of the Shanghai Resort while Disney owns the remaining 43 percent.

Financing of the additional investment will be proportional to the two companies' ownership, Walt Disney Co said in a statement on Monday.

The Shanghai resort is the second Disney theme park in China and the first one to be located on the Chinese mainland. The other one is in Hong Kong.

In 2013, a record 7.4 million people visited the Hong Kong Disney park, with 47 percent of the visitors coming from the mainland, and the net profit of the Hong Kong resort doubled to HK$242 million ($31.22 million) from a year ago, according to a financial report of the resort released in February.

"The Shanghai Disney park will surely attract some potential visitors to the Hong Kong park, since a large chunk of visitors to the Hong Kong park are from the mainland," Wang Danqing, a partner at Beijing-based ACME Management Consulting, told the Global Times Tuesday.

Wang noted that the Shanghai Disney theme park will become a new name card for Shanghai, given its strong brand recognition among consumers, and the local economy will also be boosted by the opening of the theme park.

"The Shanghai theme park will be even more popular than the one in Hong Kong, as it will cover a much larger market," he said.

The Shanghai Disney Resort is targeting 330 million people within a three-hour drive or train ride of Shanghai, according to information from the theme park's website.

"I will definitely go the Shanghai Disney theme park when it is open, because it is larger than the one in Hong Kong and it is nearer," Mu Qing, a 27-year-old postgraduate student in Beijing, told the Global Times on Tuesday.

But Hou Tao, vice president of entertainment industry consultancy Entgroup, believes that the Shanghai Disney Resort will not pose a direct threat to the Hong Kong one.

"The Shanghai resort will attract new visitors, instead of encroaching on the existing market."

The Hong Kong Disney Resort was open for visitors in 2005, and the park did not generate a profit until 2012.

However, experts are upbeat about the future performance of the Shanghai resort, due to Disney's widespread brand recognition among Chinese consumers.

"But it will take a long time before the park could generate enough profit to cover the cost," Hou said.

The Shanghai Disney Resort comes at a time when the Chinese economy is showing signs of slowing down.

However, many experts believe that a slowing economy will not dent most Chinese people's enthusiasm toward the Disney theme park, and with the growing middle class in China, entertainment and tourism spending will become a major driving force for economic growth.

China's tourist industry saw over 3.58 billion individual domestic trips in 2013, up 8.5 percent year-on-year and a total of 2.91 trillion yuan ($465 billion) of income was generated from domestic tourism, up 12 percent compared with that in 2012, according to data from the China Tourism Academy in January.