Posted on: Monday, August 26, 2002
Two Disneys may be one too many for China
By Kate Linebaugh
Bloomberg News Service
HONG KONG — Builders haven't laid the first brick of Sleeping Beauty Castle at Disneyland Hong Kong, and archrival Shanghai is already stealing the park's magic.
Hong Kong Chief Executive Tung Chee-hwa hailed the park as an economic savior when Walt Disney Co. chose the city for its third theme park outside the United States in 1999. Flanked by Mickey and Minnie Mouse, he said Disneyland would attract millions of visitors, revive sagging growth and give Hong Kong an edge over Shanghai.
Those hopes were deflated last month when a Hong Kong newspaper reported that Disney plans to open a Shanghai park by 2008, two years after the Hong Kong park opens. Some lawmakers question Tung's decision to pour $2.8 billion of taxpayers' money into the project, especially after the Los Angeles-based company confirmed it's in talks with China's government.
"For Shanghai to have a Disneyland in 2008 would be catastrophic for Hong Kong," said Albert Chan, a lawmaker in the opposition Democratic Party. "Lots of tourists would be attracted to Shanghai rather than Hong Kong, and it would seriously damage Hong Kong's economic development."
The threat of a rival Disneyland in Shanghai underscores Hong Kong's vulnerability to the growing economic clout of neighboring China. As Hong Kong faces stalled economic growth and a jobless rate that has more than tripled in the past five years, China expects its economy to grow at least 7.5 percent this year.
Hong Kong, home to about 6.8 million people on China's southeastern tip, hoped Disneyland would draw tourists from neighboring China's 1.3 billion-strong market. Chinese tourists such as Li Jihong say they'll be less inclined to travel to Hong Kong if Shanghai boasts its own Fantasyland and Main Street U.S.A.
"Hong Kong is unfamiliar," said Li, a 44-year-old worker from Sichuan province who was visiting Shanghai for the first time with his family. "You need foreign currency and special passes to travel there, and that would make it more expensive."
Border-crossing delays, visa requirements and language barriers — Hong Kong's Cantonese dialect isn't spoken by most mainlanders — may deter visitors from making the trip to Hong Kong, even though the Hong Kong government says it will help them avoid those pitfalls.
While a five-day package tour by train to Hong Kong from Sichuan in southwestern China costs about $275, the same as a similar trip to Shanghai, Shanghai's location 765 miles north of Hong Kong makes it easier for most Chinese travelers to reach.
Disney may also take advantage of Shanghai's lower labor costs to offer cheaper ticket prices there than in Hong Kong. The average income in Shanghai is about a tenth the level in Hong Kong.
Other companies are already choosing China over Hong Kong as they seek to cut costs and tap into the world's biggest consumer market. Bank of East Asia Ltd. plans to move more than 600 jobs from Hong Kong to the mainland to cut costs, and Germany's Siemens AG is moving its Asia mobile-phone headquarters to Shanghai from Hong Kong.
Hong Kong's government is betting that Disneyland — under construction on reclaimed land in Penny's Bay, a remote cove on Lantau island — will help jump-start an economy plagued by a record-high 7.7 percent jobless rate and stalled consumer spending.
The park will add 18,400 jobs when it opens and earn the city $19 billion over 40 years, the government estimates. The park will attract an estimated 3.4 million overseas tourists during its first year.
