Shanghai begins building long-sought Disney park

[April 08, 2011]  SHANGHAI (AP) -- Dipping golden shovels into a trench of sand, Walt Disney Co. executives and their Shanghai partners broke ground Friday for a long-sought theme park that will feature the world's biggest "Magic Kingdom" castle, and ambitions to match.

The 24.5 billion yuan ($3.7 billion) park in Shanghai's southeastern suburbs is meant to serve as a brand-building cornerstone, luring legions of newly affluent Chinese with world-class facilities that will be "authentically Disney, but distinctly Chinese," said Disney CEO Bob Iger.

"Today is the culmination of many years of hard work, dedication and partnership," Iger said. "This is a defining moment in our company's history."

After over a decade of haggling, Shanghai's communist leaders seemed equally enthusiastic about the project, which will serve as an anchor for an "international tourism resort zone" with hotels and other large-scale entertainment venues. It will be Disney's fourth theme park outside the U.S., after Paris, Tokyo and Hong Kong.

"Disney is a classic urban entertainment brand," said the city's mayor, Han Zheng. "This project will help improve Shanghai's profile as a world famous tourism destination."

The project is a new showcase for this city of 22 million, whose aspirations as a tourism destination were fortified by the 2010 World Expo, which drew a record 72 million visitors during its six-month run, almost all of them Chinese tourists.

Both sides are presumably hoping the park will prove more successful than Hong Kong Disneyland, which has struggled to remain profitable though it reports increasing popularity with visitors from the mainland, who account for more than 40 percent of total attendance.

Initial plans call for the Shanghai park, at 225 acres (91 hectares) to be even smaller than the 310 acre (125 hectare) one in Hong Kong, which is now undergoing expansion by about a quarter.

But the surrounding resort area in Shanghai, at 963 acres (390 hectares) will be more than twice the size of the Disney resort in Hong Kong, making comparisons of size between the two venues difficult, said Tom Staggs, chairman of Walt Disney Parks and Resorts, calling it "apples and oranges."

"Any park that we build is designed to grow over time," Staggs said, citing Walt Disney's line that his parks were "never finished."

"It's clear there is plenty of room for growth here," Iger said.

The Shanghai park will have several advantages going for it, including the general lack of historic attractions in the region, which is home to over 300 million people all looking for ways to spend their growing incomes and leisure time.

Details of the park's design are still being worked out, but plans call for it to feature Disney's biggest castle, an "attraction unto itself," a spacious green area, a lake and plenty of space for anticipated huge crowds, Iger said.

"When people walk into Disneyland here we want them to say 'Wow!' Look at that big castle," he said.

Disney is taking a 43 percent equity stake in two joint ventures set up to build and operate the project, with a company owned by a consortium of government-backed local companies taking the majority 57 percent.

But Disney will hold a 70 percent stake in a joint venture management company that will run the park.

"We come in as the creative partner," said Staggs.

Discussions on the project have been simmering for a decade, as local officials visited and studied other Disney theme parks.

But there was no sign of reluctance to move ahead at Friday's groundbreaking event, held inside a huge tent ringed by ribbon-festooned backhoes and crisply uniformed security guards who snapped to attention as buses of dignitaries passed by.

Residents were long ago moved off farmland in the once rural area of Chuansha, near the city's Pudong International Airport, to make way for the park.

While Disney executives generally speak of a five-year time span before the park opens, Shanghai authorities, who marshaled massive amounts of money and labor to expand subways, roads and other infrastructure ahead of the Expo, were speaking of a four-year wait.

"We expect to work well together to meet construction deadlines," Han said. "Let us pray for the successful completion of the Disney resort in four year's time," he said.

Asked about the apparent difference, Iger and Staggs acknowledged the Shanghai side was eager to get rolling.

"There was a certain desire for instant gratification," Iger said, explaining that the Disney side took care to emphasize the need to "build it right first."

Like other foreign entertainment companies, Disney has struggled to break into the tightly controlled China market while also fending off rampant piracy of both software and product lines.

But China's experiences with theme parks offer little encouragement, with most running at losses and many eventually closing down. Meanwhile, competition in the region has been heating up, with a planned Legoland Park in Malaysia, a massive amusement park on the Singaporean resort island of Sentosa and a slew of less well-known parks in the Shanghai region itself.

[Associated Press; By ELAINE KURTENBACH]

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