Posted by: Frederik Balfour on November 05, 2009
It’s been a crummy 24 hours for the Hong Kong tourism industry. The first piece of bad news: China has given the green light to Disney to build a theme park in Shanghai. The $3.5 billion Chinese facility will sprawl across about 1,000 acres which will dwarf Hong Kong Disneyland’s 296 acre lot. Mainland Chinese account for more than one third of the visitors to Hong Kong Disneyland, and once the Magic Kingdom sets up in the Middle Kingdom much of that business will get cannibalized. Hong Kong legislator Emily Lau, a long-time critic of Hong Kong Disneyland in which the government has invested billions, called the news a “devastating blow.”
The second piece of bad news is really just more of the same: another day of extremely high roadside pollution reported by RTHK radio this morning. A Hong Kong tourism official interviewed on the radio tried to put a brave face on things saying the problem—which he presumably thinks is only temporary-will go away soon. That’s little consolation for anyone visiting Hong Kong at the moment, where the average stay is just a few days. “The blight of air pollution is a tax on the whole tourism industry as it affects tourists during their visit and leaves a negative impression of the city that will affect their desire to return,” says Joanne Ooi, CEO of Clean Air Network, an environmental advocacy group focusing exclusively on air pollution in Hong Kong. “Reduced visibility leads to strong association with less developed cities like Mumbai that leaves a black mark on Hong Kong’s image.”
Equally important perhaps is that Hong Kong’s air quality leads to unfavorable comparisons with its regional rival Singapore which has has long benefited from its reputation as the cleanest and safest metropolis in Southeast Asia. More recently the Singapore government has made a big push to improve the city’s tourism attractions by hosting the Formula One race and allowing casinos to open their doors next year. Another selling point for Singapore: a Universal Studios theme park is also set to open in early 2010. Though smaller than Hong Kong Disneyland, its proximity to Indonesia, Malaysia and Thailand will give it an advantage over Hong Kong.
But Shanghai is clearly the bigger threat to Hong Kong. Here’s what Parita Chitakasem, research manager at Euromonitor International in Singapore, who specializes in theme parks, had to say to me in an email. “Disneyland Shanghai will have two big features which will make it more attractive than its Hong Kong counterpart: although it is still early days, Disneyland in Shanghai will probably offer a much better experience for your money than Disneyland in Hong Kong – initial plans show that Shanghai’s Disneyland will be six times bigger compared to the current size of Hong Kong Disneyland, which is very small (only 16 attractions). Also, for visitors from mainland China, it will be much easier to travel to Disneyland in Shanghai, as there are no visa/cross border concerns to take care of.”
Still, the Shanghai project is still some years off. Indeed, the press release from Disney was short on details, saying it was in negotiations with the Shanghai government. The Burbank, California-based company will have a 40% stake in the Shanghai resort while the Chinese partners are as yet unnamed. But ff the experience of other U.S. corporations with joint ventures in China is anything to go by, Disney CEO Robert A. Iger is going to need a lot of pixy dust around to make things go smoothly.
Zhongnan University professor Sun Xiliang says on his blog on China.org says Disney needs Shanghai a lot more than Shanghai needs Disney.
BusinessWeek’s team of Asia reporters brings you the latest insights on business, politics, technology and culture from some of the world’s biggest and fastest-growing economies. Eye on Asia’s bloggers include Asia regional editor Bruce Einhorn, Tokyo reporter Ian Rowley, Korea bureau chief Moon Ihlwan, Asia News Editor and China Bureau Chief. Dexter Roberts, and Hong Kong-based Asia correspondent Frederik Balfour.