Disney: Losing Magic in the Middle Kingdom

With a revenue of $10.6 billion, Disney was one the global players in the theme park entertainment industry. The first Disneyland theme park was opened successfully in California in 1955, following Disneyland theme parks in Florida, Tokyo and a less successful one in France. In order to raise awareness of the brand “Disney” in China, another Disneyland was to be set up in Hong Kong in cooperation with its government. Hong Kong was thought to be well suited as a location for a new park, the population was receptive to foreign and new things and, due to Disney’s presence in television and cinema, children were familiar with the Disney characters. On the other hand, there were many characteristics of the Hong Kong population, which contradicted Disney’s factors of success. First of all, the number of children in Hong Kong, Disney’s target audience, was quite low and expected to drop in the future. Second, parents focused on their children’s education and not their entertainment. Inhabitants were known to be very busy and impatient, making them unsuited for rides with long waiting time.

As experienced in Tokyo, the biggest group of adult visitors was married women having the time to take their children to the park. Because women in Hong Kong usually kept on working after marrying, another target group was unreachable in Hong Kong. For Hong Kong’s inhabitants their entertainment had to be convenient, comfortable, fast and inexpensive, characteristics that Disneyland didn’t fulfil. Last but not least, tourists visiting Hong Kong were either mainlanders, who weren’t familiar with Disney, or overseas, who travelled there to experience the authentic Hong Kong feel. Nevertheless Disneyland Hong Kong was being built. During preparations for the park, it already angered environmental groups as well as bad press. The construction had destroyed the nature at the site and harmed the environment. In the attempt to adapt Chinese culture, Disney wanted to serve shark soup, arousing complaints about animal cruelty and the associated decline in shark population. Last but not least, Disney produced souvenirs in Chinese factories, where the working condition were inhuman. In conclusion, Disney had already aroused a lot of negative press even before it’s opening.

The admission free trial-month before the official opening already detected one of the major errors of Disneyland Hong Kong. The park was too small for the determined maximum of 30.000 visitors; first doubts were voiced and ignored. The opening and the time that followed didn’t turn the sails around. Although Disney was attempting to implement Chinese Culture in the opening and the park in various ways, high prices for food and tickets, complaints from employees about bad working conditions and unsatisfied tourist agents shed a negative light on Disney from the beginning and visitors stayed away. In the Golden Week around Chinese New Year, Disneyland then underestimated the number of visitors, forcing them to close the gates and leave many angry visitors with valid tickets outside. The following Golden Week around Labour Day was approached with day-specific tickets, but only a fraction of the expected visitors showed.

After completing it’s first year with 7% below its targeted number of visitors, the Management started the second year with multiple alterations and new marketing strategies such as discounts and different ticket tariffs, crash courses to the World of Disney for people to whom it was unknown, broader distribution and more fairness to the agents, special events, integration of Chinese cultural elements, as well as the promotion of higher attractiveness for adults and teens. Despite all their efforts, by the end of the third year the number of visitors had dropped to 4.8 Million, which was 21% below their target number. In addition, the Ocean Park, being their biggest local competitor, enjoyed a far better reputation than Disney.

They were education-oriented, cheaper, better located and had more varied attraction. But the biggest difference and at the same time biggest advantage was, that because it was a state-owned non-profit statutory, their goal was the happiness of their employees and costumers, not their financial success, which was often criticised to be Disneyland’s obvious sole target. Disneyland was also facing additional challenges in the future. The shift of children’s and teen’s interest towards technology, decreased the attraction that Disneyland had on their target group. The rise of the Chinese version of Las Vegas in Macao, representing a very attractive vacation destination, was another future competitor. And finally, the Setup of Disneyland in Shanghai, which was destined to be much bigger and offer plenty more attractions, generated the threat of cannibalisation.