Disney in Hong Kong

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1. Disneyland Market Positioning and Expansion into the international Market Disneyland has pride itself to be a fantasy world, a place where people (regardless of age) can escape from reality (Appendix 1 shows that fantasy world is heavily weighted in the proportion of Disney movies). With this positioning statement that applies to everyone regardless of geographic location (Chinese have dreams and can fantasize as much as Americans or Europeans), expansion into the international market may not seem to be a challenge for Walt Disney Company. However, in evaluating the past 4 years of attendance and operating figures of their newest park – Hong Kong Disneyland, it goes to show that the park performance is far from ideal. Why does the Disney magic not work in the hub of Asia – Hong Kong? This paper will answer that question, and after consolidating the lessons learnt from Tokyo, Paris and Hong Kong Disneyland, we will recommend the items Disney should consider before investing in a theme park in mainland China. Following that, this paper will also address the communication strategy Disney should deploy in mainland China. 2. Operating Performance in Hong Kong Disneyland

Attendance and thus ticket sales is an important measures to a theme park operating performance. Hong Kong Disneyland set a target of 5.6 million visitors in the first year of operation and expects 6.49 million visitors in year 2009. As Disneyland has not been very open about releasing the targets, we will assume a linear increase in projected annual attendance. As seen in Appendix 2.1, the actual number of visitors has fallen well under the first year target, needless to say the annual target which is supposed to be on a linear growth. Ocean Park, the 23 years old theme park in Hong Kong, is the closest competitor to Hong Kong Disneyland. Through the 4 full years of operation, Hong Kong Disneyland attendance has been lower than that of Ocean Park, with the exception of fiscal year 2006 which is Hong Kong Disneyland’s first year of operations (Refer to Appendix 2.2). The initial target for Hong Kong Disneyland was to breakeven between 2009 and 2011 (Yoshida.R, 2010). However, from Appendix 2.3, Hong Kong Disneyland is still incurring a loss of HKD1.315 billion even in fiscal year 2009. This is a sharp contrast to Ocean Park which has been consistently earning a profit throughout the 4 years of comparison (Appendix 2.4). In conclusion, the attendance and profit (loss) figures from 2006-2009 have shown that Hong Kong Disneyland has failed its initial targets and failed to match up to its closest competitor, Ocean Park. 3. Reasons for the underperformance in Hong Kong Disneyland

The underperformance of Hong Kong Disneyland can be summarized in 3 reasons: (1) Failure to manage Guanxi with the important stakeholders; (2) Lost of balance in hybrid of Western and Chinese cultures; (3) Small Park Size. 3.1. Hong Kong Disneyland could have better manage stakeholders relationships Embedded in Chinese culture is the need to build good relationships whereby both parties provide mutual support and help. Chinese would rather work with people they trust and by establishing good “guan xi”, this trust is earned. Hong Kong Disneyland suffered several mishaps in their initial launch. For example, they had a strained relationship with Chinese travel agencies who play a pivotal role in bringing in visitors. Due to poor understanding of the average Chinese tourist, Disneyland offered poor commission to the agents. Also, there was a major hoo-ha over Chinese New Year whereby valid ticket holders were turned away due to a miscalculation of the crowd volume. Furthermore, Disneyland strained its relationship with the Hong Kong citizens in general, who felt that the Hong Kong government was dealt an unfair trade (they invested too much for too low a cut on profits). 3.2. Hong Kong Disneyland could have strike a better balance between Western and Chinese cultures “Ironically,...
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