Walt Disney Co, facing slower earnings at theme parks in the US, starts work tomorrow on its US$2.9 billion Hong Kong Disney-land, the first step in the No. 2 US media company's push into China.
Disney is banking on record tourist arrivals in Hong Kong, which returned to Chinese rule five years ago. Disney is competing with Vivendi Universal SA, which is planning parks in Shanghai, for a slice of the Chinese market.
PHOTO: AFP
Tourism from China surged last year, when 6.1 million Chinese visited the former British colony in the first 11 months, a gain of about 50 percent from a year earlier. That made China, the world's most populous country, the city's biggest source of visitors, accounting for two-fifths of the total.
"This area of the world is possibly the most important growth area for Disney in the next few decades," said Jordan Rohan, an analyst at SoundView Technology Group in Old Greenwich, Connecticut.
The entertainment company isn't limiting its China ambition to Hong Kong. It also plans a park in Shanghai, to be built after 2010, giving Chinese visitors a choice of Disney destinations close to home.
Disney said last month it has had talks with the Chinese government about the Shanghai park. The company didn't strike a final agreement, said Irene Chan, a Hong Kong-based Disney spokeswoman.
Disney invested HK$2.45 billion (US$314 million) for a 43 percent stake in Hong Kong International Theme Parks Ltd. The company convinced the Hong Kong government, which holds a 57 percent stake, to pay for most of the rest.
The company says the Hong Kong park, a 126 hectare development in Penny's Bay on Lantau Island, will be a 10-minute railway ride from the airport and half an hour from downtown. It targets 5.6 million visitors a year when it opens in 2006 and will employ 18,000 people, according to Disney.
"In the first year, we expect HK$8.3 billion additional income" from foreign visitors to Disneyland, Hong Kong Tourism Board Chairman Selina Chow said in an interview.
At Sunday's ground-breaking ceremony, Disney chairman Michael Eisner and Hong Kong Chief Executive Tung Chee Hwa meet in a city that is counting on the project more than it did when it was announced in November 1999, at the tail end of Asia's financial crisis.
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