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The happiest place on Earth and finally in mainland China: a white paper to explain what Dalian Wanda Group chairman forgot when he thought he could beat Disney in China

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The happiest place on Earth and finally in mainland China: a white paper to explain what Dalian Wanda Group chairman forgot when he thought he could beat Disney in China

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Content Copyright 2017 Yiyi Liu

The Happiest Place on Earth and Finally in Mainland China

A White Paper to Explain What Dalian Wanda Group Chairman Forgot When He Thought He
Could Beat Disney in China

Yiyi Liu

A Thesis Presented to the
FACULTY OF THE USC GRADUATE SCHOOL
UNIVERSITY OF SOUTHERN CALIFORNIA
In Partial Fulfillment of the
Requirements for the Degree
MASTER OF ARTS (STRATEGIC PUBLIC RELATIONS)
May 2017

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Table of Contents
Introduction .......................................................................................................................... 3
Situation and Background ...................................................................................................... 4
1. Overview of the Chinese Theme Park Market ................................................................. 4
2. Dalian Wanda Group and Its Challenge to Disney ............................................................ 9
3. The Author’s Position ................................................................................................... 12
Content Analysis .................................................................................................................. 14
1. Sampling ...................................................................................................................... 15
2. Coding ......................................................................................................................... 15
3. Data Results and Analysis ............................................................................................. 16
4. Conclusion ................................................................................................................... 22
A Detailed Look at Wang’s Comments .................................................................................. 23
1. Intellectual Property and Innovation ............................................................................ 23
2. Brand Equity and Admission Price ................................................................................ 33
3. Theme Park Operations ................................................................................................ 41
4. Local Market Adaptation .............................................................................................. 46
5. Scale of Influence ......................................................................................................... 51
6. Financial Outlooks ........................................................................................................ 57
Conclusion ........................................................................................................................... 63
Bibliography ........................................................................................................................ 66
APPENDIX 1: CONTENT ANALYSIS ......................................................................................... 70
APPENDIX 2: CONTENT ANALYSIS FULL DATA REPORT .......................................................... 72
APPENDIX 3: INNOVATIVE PARK ENTERTAINMENT ............................................................... 78
APPENDIX 4: GLOBAL BRAND SHARE % IN THE SMARTPHONE MARKET ................................ 79
APPENDIX 5: DISNEY STUDIOS AND COMPETITIVE POSITION ................................................ 80
APPENDIX 6: DISNEY FINANCIAL REPORTS ............................................................................ 81
APPENDIX 7: DISNEY SEGMENT-SPECIFIC FINANCIALS........................................................... 84

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Introduction

In 2004, the first Warner Brothers movie theater opened in Wuhan, China. The walls
were decorated with cartoon characters from the Bugs Bunny Show. The screen was the biggest
and brightest in the country. The seats were the most luxurious. In the same complex were aisles
and aisles of fashion shops, record stores, manicure salons and restaurants for consumers to kill
time before and after movies. The entertainment destination was the highlight of the city, and
bragging to classmates about going to the cinema was the high point of the school week. Then,
one day the huge “WB” sign in the middle of the theater lobby was replaced with “WD,” and all
the Bugs Bunny characters disappeared and were replaced by movie posters and advertisements.
Dalian Wanda Group, owner of the shopping center where the theater was located, had
bought out Warner Brothers. China’s largest real estate company had entered the entertainment
industry. Over the next decade, Wanda Group Chairman Wang Jianlin continued to expand, even
threatening to drive the Disney brand out of the country. Dalian Wanda was the largest movie
theater operator in China and already owned AMC theaters in the United States, when it decided
to run Disney’s Shanghai resort out of business by building its own theme parks throughout the
country.
Would history repeat itself? Would Disney be driven off Mainland China as Warner
Brothers had been? Or, would the beloved brand rise to the challenge and keep its market share
of the Chinese theme park industry?

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Situation and Background

1. Overview of the Chinese Theme Park Market

The Chinese government maintains tight and absolute control on everything ranging from
education to entertainment. However, a ban on theme park development was officially lifted in
2013, meaning parks under US$800 million could be green lighted by local government. Now,
according to the International Association of Amusement Parks & Attractions, 59 parks are
planned or under construction in China, due to be completed by 2020.
1
Over the past five years,
the revenue from the Chinese amusement park industry has increased by about 10.2% each year.
The revenue is expected to continue to grow at an average annual rate of 6.9%, higher than the
country’s GDP at 6.5%.
2
Over the next four years, the number of visitors to theme parks in China
is predicted to surpass 330 million, contributing to revenues as high as US$12 billion. Figure 1
shows that China is predicted to surpass the United States and Japan to become the top country
in theme park sales
3
in 2020.

1
Oster, Matthew. Channel In Focus: Theme Parks. Euromonitor International, 11 Feb 2016
2
IBISWorld Industry Report: Amusement Parks In China. IBISWorld Inc., March 2016.
3
Global Trends Report 2016. Euromonitor International, November 2016

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Figure 1: Leading Countries for Theme Park Sales 2015/2020

Source: Euromonitor International

Whether it is Walt Disney World or Universal Studios in America, or the 20
th
Century
Fox World and the Lotte World in Asia, theme parks are always at the top of the must-see lists of
Chinese travelers. Despite recent economic recessions, the Chinese passion for entertainment has
not waned. Now that high-speed rail links are rapidly developing across the country and the
number of national holidays increases, Chinese families can plan a fun weekend at a major theme
park located a couple of hours’ ride away. As the Chinese tourism market grows rapidly and
major events like the Beijing Olympics and Shanghai Expo spurred interest among international
tourists, parks are expected to host more visitors every day despite the admission prices climbing
up. Figure 2 shows the segmentation of park visitors in 2016 with international visitors
accounting for 10% of total park ticket sales.

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Figure 2: Segmentation of Park Visitors: Chinese vs. Foreign Visitors

Source: IBISWorld

China stretches across 3.7 million square miles, so naturally the country’s different
geographical regions offer different returns to park operators (Figure 3). Guangdong Province on
the Southeast Coast with highly developed metropolitan areas and temperate weather throughout
the year, will account for a quarter of the total theme park industry revenue alone. While Chinese
companies are catering to the largely unmet demands of inland cities,
4
international players are
focusing their attention on the wealthier coastal regions.

Figure 3: Park Revenue in Different Regions

Source: IBISWorld

4
Global Trends Report 2016. Euromonitor International, November 2016

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Competition

Both local and international companies are competing for the rising disposable income of
the Chinese working class. Chinese consumers have a wide range of interests when it comes to
leisure activities, and this means theme parks must constantly attempt to differentiate themselves
and compete for patrons, particularly consumers who are not committed to a brand. Development
of new equipment and rides is a draw for typical Chinese consumers, who are always looking to
try something new. It is also the best way to increase repeat visits and turn a one-time transaction
into an ongoing relationship. The nature of theme park operations requires enormous capital
investment that scares away any small players. A close second to new attractions are advertising
and marketing strategies that have grown the industry and fueled an intense competition among
industry leaders. In addition to Disney and Dalian Wanda Group, famous park chains Six Flags
and Lewa, also compete in this market, and round out the top four money makers in the Chinese
amusement park business. The four leaders accounted for 14.5% of the total industry revenue in
China by 2016, and their combined share is expected to increase as the number of patrons
grows.
5
Global businesses are diligently studying the consumption patterns to capitalize on this
booming market. Most foreign brands enter the Chinese market through a partnership with either
a local developer or the local state government. While such a partnership lowers the risk of
entering a foreign market, it also surrenders much control of operations and development. While
the Chinese market has great potential, it is still challenging for foreign brands to enter and
compete with local developers. Figure 4 shows that only 5% of the current enterprises are owned
by foreign companies.

5
IBISWorld Industry Report: Amusement Parks In China. IBISWorld Inc., March 2016.

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Figure 4: Enterprises by Ownership Type (2016)

Source: ACMR-IBISWorld Estimate
Note: *Joint-Equity Cooperative Enterprise

According to IBIS World report, the six keys to capturing Chinese amusement park
visitors are to provide security, new products, premium services, reasonable ticket prices,
proximity to transportation, and management of seasonal tourism.
6
Park operators must create a
clean and orderly environment, utilize aggressive promotional tactics, and charge competitive
prices with occasional discounts and attractive loyalty programs. Failure to execute these basics
has resulted in many parks losing money. According to a report from ACMR-IBISWorld, which
maintains a database on the quality of businesses in China, companies “with quality services,
unique features, abundant cultural attractions and sound brand reputations” will become market
leaders in the coming years.
In a country with thousands of years of rich history and culture, many leading attractions
are also marked as cultural destinations. For example, one of the top players, Songcheng
Performance Development Co. Ltd established in Hangzhou, owns parks and tourism shows in

6
IBISWorld Industry Report: Amusement Parks In China. IBISWorld Inc., March 2016.

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South China that celebrate cultural heritage and earn more than US$100 million a year with a
profit margin as high as 40%.
7

Established theme parks earn more money through property businesses such as hotels,
shops and apartments than they do on ticket sales. After trial and error over the past decade, a
mix of shops and attractions has become the preferred model among Chinese park owners and
developers, especially the segment leader, Dalian Wanda Group.
8

2. Dalian Wanda Group and Its Challenge to Disney

Dalian Wanda Group was founded in 1988 and quickly grew its assets to about US$100
billion with revenue of US$42 billion in 2015. Creating as many as 146,000 jobs per year, the
group’s business activities focus on three areas: commercial properties, culture and finance.
Wanda Commercial Properties is the world’s largest property company with 133 Wanda Plazas
and 84 hotels in its portfolio. The Wanda Cultural Industry Group is not only the largest cultural
enterprise in China, but also the biggest cinema operator in the world.
9
The business sector
encompasses films, sports, tourism and children’s entertainment. The acquisitions of the AMC
theaters and Legendary Entertainment in America among other aggressive moves in the global
sphere are a testament to Wang Jianlin’s global ambitions of ranking in the world’s five biggest
cultural companies.
In recent years, Wanda has invested in culture and tourism on an unprecedented scale and
has built successful entertainment hubs in metropolitan areas throughout mainland China. Wanda

7
Leisure Attractions In China: Leading Companies. Marketline, 2015.
8
Global Trends Report 2016. Euromonitor International, November 2016
9
Wanda Group Website. http://www.wanda-group.com/corporate/

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is developing more and more shopping centers and cultural tourism complexes. The Wuhan
Central Cultural District boasts the only entirely indoor movie theme park in the world, Wanda
Movie Park.
After a series of huge successes in domestic commercial projects, Wanda began boldly
pursuing international consumers. It launched a project called EuropaCity outside of Paris in
2016, taking its unique model of combining shopping and cultural experiences to another
continent and explicitly competing with Disneyland in Paris. However, it remains uncertain
whether Western consumers will be attracted to this entertainment destination and the Wanda
brand name. Short of any associable brand identity or original intellectual property, Wanda has a
geographical and cultural hurdle to overcome. Nevertheless, the group’s heavy investment in
theme parks is justified by the segment’s increasing importance in many brands’ successful
licensing strategies – an immersive and distinctive experience in a branded theme park will help
Wanda leverage its properties while creating meaningful connections with consumers.
Having embedded innovation in his corporate philosophy and being known for having the
courage to stand out and be controversial, Jianlin Wang has recently declared war on the
Shanghai Disney Resort. To sum up his comments, Disney shouldn’t even have come to
mainland China. In his opinion, the American iconic brand has apparently invested too much
money in one single establishment and will end up charging an unacceptably high admission
price that will drive away Chinese working-class families. He also despises the global brand for
not understanding the local weather condition and the Chinese market. He disregards American
household names, such as Mickey Mouse and Donald Duck, as out of fashion and an example of
Disney’s lack of innovation. He ignores new blockbusters and acquisitions of the hottest comic
and sci-fi franchises. In light of his countrymen’s criticism of American cultural imperialism and

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China’s demand for power in the global economy, Jianlin Wang believes that his plan to build
more parks focused on Chinese culture will prove to be the only right approach in China. He
plans for Wanda to surpass Disney and become the largest tourism enterprise in the world.
Currently, the global brand-strategy agency, Interbrand ranks Disney No. 13 on its Best Global
Brands list, and Forbes ranks the company No. 8 on the World’s Most Valuable Brands, while
Dalian Wanda Group isn’t listed in either ranking but Wang is regarded as the richest man in
China and No. 59 in Forbes’ World’s Most Powerful People.
The Walt Disney Company, established in 1923 by legendary animator Walt Disney, who
produced the world’s first feature length animation and won the first Oscar with a cartoon
character, is a $153 billion business operating in more than 40 countries and employing 180,000
employees. In addition to parks and resorts, the company is also active in media networks, studio
production, consumer products and digital interactives. Since the opening of Disneyland in
Anaheim, CA in 1955, Disney has developed theme parks and resorts in Florida, Hawaii, Paris,
Tokyo and Hong Kong. Disney partnered with the Shanghai government and invested US$5.5
billion and a decade of planning into its first park in mainland China, the Shanghai Disney
Resort – the largest Magic Kingdom in the world.
Wang has made many strategic decisions and led diligent efforts in hopes of dominating
China’s US$610 billion tourism industry.
10
The most sought-after restaurants and trendiest
fashion brands are almost all located on Wanda properties. The conglomerate is currently
developing theme parks in deliberately calculated locations scattered evenly across China
including underserved cities such as Xishuangbanna, Harbin, Nanchang and Wuxi. With the

10
“Wanda Billionaire Says Disney No Match for His ‘Wolf Pack’.” Bloomberg News, May 24, 2016.
http://www.bloomberg.com/news/articles/2016-05-24/billionaire-wang-says-disney-no-match-for-wanda-s-wolf-
pack

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company’s dedication to Chinese culture and production quality comparable to Cirque du Soleil
or Universal Studios, Wanda is expected to promote Chinese culture and raise the nation’s status
in the world.

3. The Author’s Position

Achievements at Wanda’s scale and speed could not be obtained without a thorough
understanding of Chinese consumers and absolute concord with the Chinese regulatory systems.
Along with consumers, the Chinese state government has been very supportive of Wanda’s
global advancement and its push of Chinese culture into the international spotlight. But is Wanda
living up to its end of the bargain?
Even with tremendous capital at its disposal and a largely captive local audience, Wanda
has failed to create original products and services to match the increasing demand of the Chinese
market for intellectual and artistic inspiration. The company does not seem to understand the
rising middle class’s quest for memorable experiences as well as cultural pride. To take China to
the top of the entertainment economy, it seems the least Wang could do was to learn why Disney
had stood so many years as one of the most respected and favored brands in the world, and why
it would not surrender to the threat of a local behemoth.
No one can predict the future or state whether the Shanghai Disney Resort will “make
money in the next two decades.” However, Disney is likely to remain the industry leader in
China. And, if the booming tourism and amusement parks industry in China is any indication,
prospects are good for all to do well, but competition will be fierce.

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The author’s argument against Jianlin Wang will begin with a primary research of
content analysis. Reporters and mass media’s opinions are an important influence on the public
and they are also a fair demonstration of an objective third party’s perspective. Following the
content analysis, the author will refute Wang’s critics with a deep analysis following his most
circulated quotes, covering aspects including innovation, brand equity, park operations, scale,
market knowledge and financials.

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Content Analysis

When Wanda opened its Nanchang park on May 28, 2016, Disney characters showed up
to celebrate. The new attraction in Nanchang boasts China’s longest and tallest rollercoasters.
While the park featured the uniquely Chinese culture and aesthetics of dragon dances and a mall
resembling a traditional Chinese tea set, it also provided guests with meet-and-greet with
American cultural icons: Mickey Mouse, Snow White, Captain America and Stormtrooper. The
highly-identifiable Disney characters were dressed in poorly designed costumes (see Figure 5)
and were apparently a surprise to their copyright owner. Disney executives turned from silent to
confounded at this turn of events. Chairman Wang responded that these characters were used by
independent stores in the mall and not within the theme park, and claimed that these poorly
imitated versions were authorized by Disney, but the company is reportedly taking legal action to
protect its copyrighted intellectual properties.
Figure 5: Disney characters spotted at Wanda City
11

Source: Bloomberg & Time

11
“Snow White Spotted At Wanda City Triggers Backlash From Disney.” Bloomberg News, May 30, 2016
https://www.bloomberg.com/news/articles/2016-05-30/disney-vows-to-defend-rights-as-snow-white-appears-at-
wanda-park
Iyengar, Rishi. “Chinese Tycoon Who Slammed Disney Denies Reports Of Disney Characters At His Theme Park.”
Time, May 31, 2016 http://time.com/4353306/china-wanda-disney-wang-jianlin-theme-park-characters/

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Wang’s public challenge to Disney and the opening of both companies’ parks in China all
happened within a month, and the media has covered the competition between Disney and
Wanda from the beginning. In addition to illuminating the differences and similarities between
the two companies, news coverage has stimulated interest among the public and influenced their
perceptions of the theme parks. To understand the competition between Disney and Wanda in the
mainland China theme park market, as well as to infer mass media and the general public’s
attitude towards these two conglomerate brands, the author conducted a content analysis in
addition to secondary research.

1. Sampling

There were 169 newspaper articles that mentioned Disney or Disneyland while also
covering Dalian Wanda Group between May 23 and June 30, 2016. These dates were chosen
because on May 23, Wang fired the opening volley against his competitor in an interview about
the Shanghai Disney Resort on CCTV, and June 30 marked the end of the theme park’s first two
weeks in business. Only articles written and published in English were selected from around the
world. A random sample of 30 articles from the pool were analyzed for content (what topics or
points were emphasized) and how the content was framed (manifest or latent attitude).

2. Coding

Time and origin of publication was noted for each article. The period was divided into
three by important dates: when Wang challenged Disney on TV, when Wanda City opened with
Disney characters’ appearances and when the Disney Resort opened. Origin of publication was

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also noted. Before the analysis, the author read about 15 news articles online to determine coding
rules for main topics and potential sentiments. Typical news topics include investment and
construction costs, intellectual property, admission price and innovation. An open category
created to capture new topics discovered during the coding stage. A code was developed to
account for emotions such as critical or sarcastic tones. After reading each article, a subtle
attitude could sometimes be inferred about the reporter, who might seem to endorse Wanda’s
aggressive point of view or dismiss its untenable comments. Therefore, the author created the
coding category for latent message—the hidden attitude (see Appendix 1).

3. Data Results and Analysis

Of the 30 news articles, 17 were published after the day Wanda opened its theme park
and before the Disney Shanghai Resort officially opened. The amount of coverage before and
after this period was relatively the same (see more data results in Appendix 2). Almost half of the
news articles originated from Chinese media outlets, and only 30% of the sampled articles were
from American publications. Chinese journalists tended to increase their coverage after the
Nanchang Wanda City opened. The author inferred two rationales behind this: they were more
passionate to report on a domestic brand, and they placed a higher news value on the Wanda City
launch after the Disney-like characters appeared at the opening. In contrast, countries other than
China and the United States began their coverage only after the grand opening of the Disney
theme park, and mentioned the Wanda Group in passing (Figure 6).

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Figure 6: Cross-Tabulation of News Coverage Between Time And Origin

A general look at the coverage showed that reporters were most interested in topics such
as the amount of money invested in these parks and a comparison between the two companies’
scales of influences—Wanda’s number of parks in China compared to Disney’s worldwide brand
reach (Figure 7). These two topics were covered in the news throughout the whole period
examined and across all publications. Differing investment costs between the two parks and their
scales of operations were almost always the first things mentioned in these articles, indicating
their importance and newsworthiness (Figure 8). However, these objective facts surely could be
looked at subjectively. No matter which brand the reporters focused their articles on, the high or
low investment and the different scales were reasonable and supported their points.

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Figure 7: The Most Frequently Mentioned Topics In News Coverage

Figure 8: Cross-Tabulation Between Media Attitude And Topic Presence

Intellectual property became the center of discussion after Disney characters were seen in
Nanchang’s Wanda City. A direct conflict between brands seemed newsworthy to media all over
the world. Of all countries, U.S. reporters discussed local market knowledge the most, whereas
other countries paid more attention to the actual theme park experiences (Figure 9). In this
competition, an objective outsider perspective suggests that the experience is what matters most
in a theme park. And those who paid attention to this important factor seemed to be absolutely in
favor of the Disney name.

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Figure 9: Topic Presence Over Different Periods & From Different News Origin

In terms of attitudes, about a third of the news articles showed no inclination towards
either company. Those that did seem to pick a side favored Disney. The research revealed that
mass media has more confidence in Disney’s profitability than Wang’s. It’s also worth noting
that a large number of news articles were written from the angle of Disney being challenged by a
local brand. Immediately after Wang challenged Disney on TV, media outlets were reserved in
their commentary, but as soon as the Shanghai Disney Resort opened, the content analysis
showed that the media leaned completely towards Disney (Figure 10). The divide among
publication origin in sentiment was also interesting. Chinese reporters seemed to have
confidence in Wanda, but the outside world was either undecided about the better of the two
theme parks or believed Disney would dominate.

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Figure 10: News Attitude Over Time & In Different Countries

Those who were not worried about the prospect of Disney in China also covered
intellectual property and theme park experience in their articles. The Disney brand was
essentially dependent on its large portfolio of beloved characters and blockbuster movies as well
as its focus on customer knowledge of those elements. These efforts had paid off and earned
Disney its status as the most-favored company in all kinds of official rankings. By contrast, the
Wanda Group had no original content and no association with consumer experience.
Regarding the tone detected in articles, only 1of the 30 sampled news articles had a
sarcastic tone. Half of the articles were neutral and objectively reported the facts (Figure 11). It
was also common to see an article that included its own critical analysis of the current situation
or optimistically commenting on the healthy competition given a burgeoning Chinese tourism
market. However, a deeper analysis shows that the mass media turned from neutral to critical
after Disney characters showed up in Wanda’s park.

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Figure 11: Distribution Of Different Tones In The Media

Even though Chinese reporters were largely supportive of Wanda’s challenge to Disney,
they wrote their opinions in a neutral tone, whereas the reporters in favor of Disney varied in
their tones and angles (Figure 12). Countries other than China or America published more news
articles framed as a critique of the competition or presented a positive outlook for the Chinese
entertainment market in general.

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Figure 12: Cross-Tabulation of Coverage Tone & Timing, Origin, Attitude

4. Conclusion

Many of the news articles touched on the great potential of the Chinese consumer and
tourism market. Nonetheless, it seemed an insurmountable challenge to beat Disney. Even
reporters who considered patriotic reasons that China needed to develop and support its own
global brand, showed more confidence in Disney’s ability to come out on top.

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A Detailed Look at Wang’s Comments

1. Intellectual Property and Innovation

The days of Mickey Mouse and Donald Duck being able to create a frenzy are over. They
are entirely cloning previous intellectual property, cloning previous products with no
innovation.
—Wang Jianlin, Chairman of Dalian Wanda Group

It is fair to say that the Mickey Mouse Club no longer draws children to their televisions
on Saturday mornings the way it used to, nor does it deliver America’s next biggest pop
sensations like Britney Spears or Justin Timberlake, with the possible exceptions of newly
emerged Selena Gomez or Zendaya. Donald Duck is unlikely to be courted by the IRS as he once
was when he encouraged American taxpayers to pay their income taxes during World War II.
12

But as the founding representatives of The Walt Disney Company, Mickey Mouse and Donald
Duck are still the best reminders of what Disney intellectual properties can accomplish. In
November 2016, when Mickey Mouse celebrated his 88
th
birthday, the character’s newly
registered Facebook page quickly gained 13 million likes and his Instagram account, 229,000
thousand followers. Disney channel alumnae, Selena Gomez, was named the world’s most-
followed person with more than 4 million likes on a single post. While Wang believes that
Disney no longer creates “frenzy” it used to, the company’s popularity remains stratospheric.
Are classic—or old-fashioned, to quote Wang’s exact words—characters ever forgotten?
A sellers’ analytic tool on eBay testing Disney princesses’ revenue-generating power found that
immediately following the popularity of Elsa merchandise from the movie Frozen, Cinderella

12
"Disney Studio at War." Theater Arts. Jan 1943. p. 31–39

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and Snow White, who are among the oldest of Disney characters, actually made the second and
third most revenue for Disney on eBay – the world’s No.1 auction site.
13

In recent years, Disney Studios has looked to its old storybook collections for new
opportunities. By 2014, the stage version of the Disney classic movie, Lion King, had grossed
US$6.2 billion and surpassed Phantom of the Opera to be the highest-grossing show of all
time.
14
The live-action remake of Cinderella grossed US$201 million in the United States and
US$543 million worldwide. Maleficent, based on Sleeping Beauty, made US$241 million at the
domestic box office and US$758 million worldwide. And the new production of The Jungle
Book released recently had a box office performance of US$364 million in the United States and
almost US$1 billion in the world. Although these numbers are no comparison to fresh tales
turned global blockbusters such as Zootopia (US$1.02 billion worldwide) and Frozen (US$1.17
billion worldwide), mining old intellectual property for new gold works well for Disney Studios.
The new versions of old Disney classics are updated not only in their use of today’s technology,
but also in language and cultural insights. For example, The Jungle Book astounded audiences
and won awards with its state-of-the-art visual and sound effects. As a result, many more
updated repeats are in store for passionate fans: live-action remakes of Beauty and the Beast,
Mulan, Aladdin, Peter Pan, Pinocchio, Dumbo, not to mention live television versions of some
of the same titles. And if it’s not clear enough yet, these characters and these stories are all
Disney IPs in addition to the mouse and the duck mentioned by Wang.

13
Morrissey, Tracie Egan. “Who Is The Most Popular Disney Princess On Ebay?” Jezebel, 4/28/14
http://jezebel.com/who-is-the-most-popular-disney-princess-on-ebay-1568896937
14
Gerard, Jeremy. “Hakuna Matata, Baby: Disney Claims Record $6.2 Billion Gross For ‘Lion King’.” Deadline,
September 22, 2014 http://deadline.com/2014/09/disney-lion-king-highest-grossing-show-at-6-2-billion-838482/

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Portfolio Progression

Walt Disney reminded his employees that as the business grew, they should “never lose
sight of one thing—that it was all started by a mouse.” Today, Mickey Mouse is seen everywhere
from children’s lunchboxes and infant’s diapers to women’s purses and adults’ tattoos, and, of
course, the iconic mouse ears hats that are donned at every Disney theme park. Branding
continues to be a tremendous company asset, and lends itself to a seemingly endless variety of
consumer products. But the company hasn’t stop there. The Walt Disney Company expanded by
buying out its competition. It purchased Pixar Animation Studios in 2006, Marvel Entertainment
in 2009, and Lucasfilm, Ltd. in 2012. Looking at the 20 highest grossing films released under the
label of Disney Studios (Figure 13), only three (The Jungle Book, Alice in Wonderland, The Lion
King) can be traced to IPs from the era when Mickey Mouse and Donald Duck were able to
create a frenzy, according to Wang. Disney is making money with new characters and stories as
well. Today, individuals go to Disney stores not only to buy Winnie the Pooh mugs, but also
Captain America’s shield and Darth Vader’s Light Saber. And if you invest in a ticket to a
Disney theme park, you get to visit Mickey and Minnie as well as Nemo and Dory.

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Figure 13: Top 20 Domestic-Grossing Films From The Disney Studios
15

Source: Box Office Mojo

Diversity in the Parks

The expansion of Disney’s portfolio of blockbusters and charismatic heroes and heroines
naturally led to the expansion in theme park entertainment. In addition to Mickey Mouse and
Winnie the Pooh, the theme parks must make room for Mike and Sully from Monsters Inc. and
superheroes in the Avengers league. The new Star Wars land was built to accommodate fans of
the Lucasfilm franchise when its seventh sequel was released in 2015. The parades are also
constantly changing to incorporate new characters. While the parks maintain stage performances

15
Box Office Mojo
http://www.boxofficemojo.com/studio/chart/?yr=&view=parent&view2=allmovies&studio=buenavista.htm&sort=
gross&order=DESC&p=.htm

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of classic stories such as The Lion King and Sorcerer’s Apprentice, they also offer new programs
such as The Star Wars Experience and the Frozen Musical. Regular parades and fireworks also
get upgrades to celebrate special occasions such as Disney anniversaries and winter holidays.
Besides characters from animation and live-action films, Disney, owning ESPN and major sports
teams, also has the recourses to realize the dreams of those who look up to sports stars as their
heroes instead of Iron Man or Captain America. Being a global leader in popular culture with its
arms in music, film, TV, sports and more, Disney has unstoppable momentum in expanding its
park entertainment options and exceeding the expectations from fans of everything.
More specifically in the Shanghai Disney Resort, customers can not only experience the
classic attractions such as Snow White and the Seven Dwarfs in Fantasyland, they are also
offered a much more diverse range of animation and live-action shows. The Marvel Universe
brings comic heroes to life whereas the rides in Tomorrowland take passengers into the
adventures of Buzz Lightyear and Luke Skywalker. If all consumers experienced at the Shanghai
park was a photo with Mickey Mouse and a screening of the “Steamboat Willie” short film,
Wang might be right that Disney should not have spent so much time and money investing in its
mainland China park. But that is far from the case. As the Chinese audiences have spent millions
on Disney movies such as Zootopia (US$235 million) and Avengers: Age of Ultron (US$240
million), they will also be excited to finally immerse themselves in these recent blockbuster
movies.
16

By comparison, Wanda has purchased studios and produced films, but they are pale
imitations of Hollywood creativity. It is easy to learn computer graphics and present a surreal
story of Monkey King in Hero is Back. Wanda also acquired the best construction team and built

16
Box office mojo: http://www.boxofficemojo.com/intl/china/yearly/?yr=2016&p=.htm

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the tallest and fastest roller coaster. The company bought the rights to use existing movie themes
and Chinese mystery classics. But the true spirit of innovation and creativity requires vision,
aesthetics and dedication to an engaging narrative. Sadly, the nation’s legendary hero, Monkey
King, had almost no foreign audience and only accumulated US$153 Million box office in total
whereas in comparison, Disney’s Zootopia obtained more than US$240 Million of box office in
China only. Before Wanda demonstrates its capability to build unique content and experiences,
no amount of capital or power can justify its criticism of Disney’s solid achievements in
innovation.

Technological Innovations

Disney is not only growing its content, but also constantly researching and implementing
avant-garde technology to enhance consumer experiences. Hollywood had its first fully
synchronized animation with sound when Walt Disney created “Steamboat Willie” featuring
Mickey Mouse. After that, he also made the industry’s first full-length animated feature, Snow
White and the Seven Dwarves. The ‘80s’ re-recording of the Disney musical classic, Fantasia,
shook the industry again as the first film to incorporate digital sound production.
17
In 2016,
Disney successfully employed state-of-the-art projection and motion-capture technology to
transform Frozen from the silver screen to the theater stage in the Anaheim park.
18
The World of
Color in the Disney California Adventure Land features fountains and mist as a veil on which to

17
Lev-Ram, Michal. “14 Iconic Milestones Of Disney Innovation.” Fortune, Dec 28, 2014
http://fortune.com/2014/12/29/disney-innovation-timeline/
18
Slater, Shawn. “Get A Sneak Peek At Some Of The Innovative Technology Coming To ‘Frozen – Live At The
Hyperion’ At Disney California Adventure Park.” Disneyparks Website, May 13, 2016.
https://disneyparks.disney.go.com/blog/2016/05/get-a-sneak-peek-at-some-of-the-innovative-technology-
coming-to-frozen-live-at-the-hyperion-at-disney-california-adventure-park/

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project vivid animation with synchronized effects including fire, lights, lasers and the typically
magnificent Disney music productions. As a holiday special, Disney also partnered with Intel to
prepare a new attraction using 300 drones to fly in the night sky to create magic with music and
lights.
19
(See Appendix 3.)
The importance of innovation is ingrained in Disney’s organizational structure to help the
company break frontiers and remain competitive. More than one department exists to facilitate
technology advancement in storytelling. Disney Research specializes in scientific and
technological R&D for the whole corporation with a mission to differentiate Disney’s content
and services. The company has also established Disney Accelerator, an incubator that supports
researchers and innovators in the media and entertainment fields. Dedicated to the parks and
resorts business, Disney Imagineering “dreams up, designs and builds all Disney theme parks,
resorts, attractions, cruise ships, real estate developments, and regional entertainment venues
worldwide.”
20
With the Imagineering team’s creative and technological expertise, Disney theme
parks have been reinventing the magical experience and pioneering new forms of entertainment
for many years, with many more to come.
Walt Disney Imagineering recently won a Technology in Architectural Practice award
from The American Institute of Architects for its design of the Enchanted Storybook Castle for
Shanghai Disney Resort. The Building Information Modeling was praised for its effectiveness in
facilitating real-time testing and feedback. Not only did the delivery of the project involve team
members around the globe through cloud computing and web-based collaboration, the

19
Barret, Brian. Barrett. “Disney’s Latest Attraction? 300 Drones Flying In Formation.” Wired, 11.16.16.
https://www.wired.com/2016/11/disneys-latest-attraction-300-drones-flying-formation/
20
Walt Disney Imagineering Website. https://disneyimaginations.com/about-imaginations/about-imagineering/

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technology also made the largest and most complicated Disney castle a combination of
“traditional architectural detailing” and “modern building technology.”
21

In addition to robotics and the behind-the-scene engineering processes, perhaps the most
widely applauded innovations in the Disney parks are the incorporation of mobile devices. Today
at Disney Parks, most visitors use an interactive map on their phones rather than the traditional
paper maps. But as early as 2013, Disney rolled out a wristband (Figure 14) to keep guests
connected with everything in the Magic Kingdom experience. While Silicon Valley was still
dreaming about a future of wearable technologies, Disney had already created one with the
MyMagic+ program.

Figure 14: MagicBand at the Park and the RFID Inside
22

Sources: Disney & Wired.com

21
Disney Parks Website. https://aboutdisneyparks.com/about/awards/innovative-technology-building-shanghai-
disney-resort’s-castle-attracts-prestigious
22
Carr, Austin. “The Messy Business Of Reinventing Happiness: Inside Disney’s Radical Plan To Modernize Its
Cherished Theme Parks.” Fast Company, 04.15.15 https://www.fastcompany.com/3044283/the-messy-business-
of-reinventing-happiness , Kuang, Cliff. “Disney’s $1 Billion Bet On A Magical Wristband.” Wired, 03.10.15
https://www.wired.com/2015/03/disney-magicband/

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The program was not just about selling one extra piece of merchandise to put on every
wrist. Its implementation required the park to make a US$1 billion investment in its digital
infrastructure. This innovation allowed individuals to use a wristband to unlock their hotel
rooms, enter Disney World, make purchases, and get fast passes for their favorite rides. The little
decorative accessory even had radio chip in it so that parents can find missing children. By 2015,
more than 11 million bands had been used at Florida’s Disney World before the program made
its way to California.
23
The band was a success, increasing guest satisfaction at Walt Disney
World
24
and demonstrating a commitment to customer service and innovation.
While the design of the MagicBand might look like nothing more than a child’s toy
watch, and its functionality taken from hotel room keycards, it’s what the band connects to and
makes possible that makes it innovative. The band ensures safety with its tracking capability.
Payment for meals and merchandise is quick and easy. Allowing guests to assess ride queues and
make reservations optimizes the entire theme park experience. The complicated system is hidden
in a simple wristband, invisible to a competitor like Wanda. But if Wang had not been so
ignorant of his competitor’s history and innovations, he would have figured out the technology
behind MagicBand and created his own version in 2017.
In Shanghai, Disney made a strategic choice to link its digital systems to guests’ smart
phones instead of introducing MagicBand. The system offers the same, if not a higher, level of
convenience and reliability to facilitate purchases and check-ins at the Shanghai Disney Resort.
According to CEO Bob Iger, the Shanghai park “from a technological perspective is more

23
Richwine, Lisa. “Disney Is Expanding Its Billion-Dollar Mobile Technology To More Parks.” Business Insider, May
21, 2015 http://www.businessinsider.com/r-disney-to-bring-mobile-technology-to-more-parks-2015-5
24
Palmeri, Christopher. “Why Disney Won't Be Taking Magic Wristbands To Its Chinese Park.” Bloomberg News,
January 10, 2016 https://www.bloomberg.com/news/articles/2016-01-10/why-disney-won-t-be-taking-magic-
wristbands-to-its-chinese-park

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advanced than anything we’ve ever built.” The park features many new rides with fresh
technology such as the Roaring Rapids with Disney’s first ropes course and the TRON
Lightcycle Power Run that takes riders racing and twisting as if in the original movie.
25
There
are too many new and fascinating inventions that – to the dismay of the Chinese fans like Wang
who had only heard about Mickey Mouse and Donald Duck – the park leaves very little room for
clones of previous IPs and technology.

25
Berman, Nat. 10 Incredible Innovations At The New Shanghai Disneyland. Money Inc., 2016.
http://moneyinc.com/shanghai-disneyland/

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2. Brand Equity and Admission Price

So with the costs as high as they are, I’m certain they have to charge high prices to
maintain a financial balance. But high prices will lose customers. So this is a high price
problem in and of itself.
—Wang Jianlin, Chairman of Dalian Wanda Group

The mainland China market has a rising middle class with disposable income at hand and
a desire to consume the best in quality products and premium services. Admittedly, Disney
charges a relatively high ticket price for its theme parks, even though admission to the Shanghai
Disney Resort is roughly 60% of the price to enter American Disney parks and 80% of the cost
of the Hong Kong park. In comparison to Disney’s US$56 to US$76 charge for an adult
depending on the tourism seasonality, the popular Songcheng cultural complex in Hangzhou
charges less than US$50 for admission, and the Wanda Cultural Tourism Cities throughout
China charges less than US$30 on average. In the most basic sense, a lower price for an
experience perceived to offer the same utility might signal a better economic value to consumers,
and could lead to a competitive advantage for the merchant. But besides the possibly different
perceptions of different parks in China, the market is not as simple as a comparison of admission
prices, and, fortunately, Disney is very well-positioned to offer more value than its competitors
in China and to justify its pricing strategy.

Chinese Consumer Behavior Trends

By 2020, about a third of urban households in China will make more than $24,000 a year
and join the100 million-member middle class. Consumption among the under-35 age group is

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rising at an annual rate of 14%. With spending at 100% ahead of their elders who are more frugal
and less frivolous in their spending choices,
26
the middle class and the young are both major
markets for the entertainment industry.
In a report published by Bain & Company in 2015, Chinese consumers account for the
largest portion of global luxury goods purchased, about one-third more than Americans.
27
Sales
of passenger vehicles are growing 10% a year, with sports-utility-vehicles and luxury styles up
46% from last year.
28
Figure 15 from a McKinsey report shows the drastically shrinking number
of “value” households that have relatively low disposable income and are more price sensitive.
With considerable portions of income unreported in a lot of households, the numbers represent
only lower bounds of the estimated rising income of Chinese families.
29
By 2020, more families
will join the affluent, offering a market for other international companies and justifying company
strategies to position themselves as premium brands instead of competing on price points.
Especially in developed metropolitan areas such as Shanghai, the majority of consumers are
already willing to pay a premium.

26
“Still Kicking: Despite China’s Economic Slowdown, Consumption Is Resilient.” The Economist, Apr 30th 2016
http://www.economist.com/news/business-and-finance/21697597-free-spending-consumers-provide-comfort-
troubled-economy-consumption-china-resilient
27
D’arpizio, Claudia., Levato, Federica., Zito, Daniele. And Joë Lle De Montgolfier. “Luxury Goods Worldwide Market
Study, Fall−Winter 2015, A Time To Act: How Luxury Brands Can Rebuild To Win.” Bain & Company, 2015.
http://www.bain.com/Images/BAIN_REPORT_Global_Luxury_2015.pdf
28
The Economist, Apr 30th 2016
29
Towson, Jeffrey And Woetzel, Jonathan. “Why China’s Consumers Will Continue To Surprise The World.”
Mckinsey & Company, May 2015 http://www.mckinsey.com/business-functions/strategy-and-corporate-
finance/our-insights/why-chinas-consumers-will-continue-to-surprise-the-world

Liu 35
Figure 15: Share of Urban Household Income in China and the Dramatic Changes
30

Source: McKinsey

For a nation that plays a primary role in the worldwide growth of luxury spending, it is
too presumptuous to say China will shy away from the magical experience because of the ticket
price. The country is seeing a trend in consumers trading up to buy pricier versions of what they
had, driven by the aspirations to “improve themselves, the way they live, and their perceived
social standing
31
.” Replacing a Toyota with a Lexus is trading up, just as going to Disneyland
instead of the municipal amusement park is a perceived step up.
As Figure 16 shows, per-household spending on both semi-necessity items (things they
only sort of need such as household utilities and basic apparel) and discretionary categories are
growing much faster than on necessities, with discretionary spending growing the fastest at an
estimated annual rate of more than 7%, which is 2% higher than the country’s expected GDP

30
Atsmon, Yuval., Magni, Max. “Meet The Chinese Consumer Of 2020.” Mckinsey & Company, March 2012.
http://www.mckinsey.com/global-themes/asia-pacific/meet-the-chinese-consumer-of-2020
31
Mckinsey & Company, March 2012.

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growth.
32
As income levels continue to rise, it’s an exciting time for the Chinese to buy
everything they need and want—a ski trip, an exotic cup of espresso, a VIP concert ticket and all
other kinds of entertainment. While Millennials and Generation Z take over the economy and the
government tightens its control on corruption, the spending on luxuries will likely shift even
more to entertainment and experiences.
Discretionary spending, by definition, is never perfectly price-elastic or value-centric. It
is buying something, for the intangible benefit and implicit social currency. If Chinese
consumers were all perfectly rational and only went to amusement parks that charge a
commodity price, they would also buy what’s necessary and reject pricey brands such as
Starbucks and Louis Vuitton. However, Starbucks’ 74% market share on mainland China,
despite its late entrance in 1999,
33
is proof that disposable income is spent on brands that offer
more than economic value and practicality.
Figure 16: Growth Patterns of Consumption in Different Categories in China

Source: McKinsey Analysis

32
Towson, Jeffrey And Woetzel, Jonathan. “Why China’s Consumers Will Continue To Surprise The World.”
McKinsey & Company, May 2015. http://www.mckinsey.com/business-functions/strategy-and-corporate-
finance/our-insights/why-chinas-consumers-will-continue-to-surprise-the-world
33
“Starbucks Plans To Double Stores In China In 5 Years.” Fox News, October 20, 2016.
http://www.foxnews.com/food-drink/2016/10/20/starbucks-plans-to-double-stores-in-china-in-5-years.html

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Brand Equity and Price Premium

Brand, in the words of Johnson & Johnson CEO, James E. Burke, is the capitalized value
of the trust between the company and the consumer. The equity of a brand contains not only the
functional benefits of the product or the service, but also the emotional and social benefits from
consuming the brand. In the case of a trip to a theme park, a consumer’s cost of making a
mistake is high: at risk are tickets for the whole group and everybody’s entire day or weekend’s
time. It is also hard to gauge from the brochure or the park entrance whether this will be a
satisfying transaction, even with the help of Internet reviews. The decision largely involves a
consumer’s knowledge of, and relationship with, a brand, the brand’s credibility and
characteristics. This is something Neil H. Borden called “hidden value.”
34

Brand value is usually delivered on five levels: the tangible values including the product
attributes and benefits, and the intangible values in the brand’s essence, personality and
emotional benefits.
35
Figure 17, a basic supply-and-demand curve, shows the effect of brand
equity—preference and loyalty—on the demand of a product; it raises the supplier’s ability to
sell the same amount of product at a higher price. Research has shown that a probability of
choice (the likelihood of being chosen by a consumer) can be found at each price point for
branded products. But brands are not created equal. At the same price point, some brands are
more appealing than others and have a higher probability of choice. And vice versa, probability
of choice being equal, some brands begin at a much higher price point.
36

34
Neil H. Borden, The Economic Effects of Advertising (Chicago, IL: Richard D. Irwin, Inc., 1942)
35
Brand Equity: An Overview. Darden Business Publishing, UVA. Feb 24, 2015.
36
Brand Equity. Darden UVA. Feb 24, 2015.
Bryan K. Orme, Getting Started with Conjoint Analysis: Strategies for Product Design and Pricing Research.

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Figure 17: Price Premium from Brand Preference

Source: Darden Business Publishing, UVA

To illustrate this theory, take the Apple brand. In the global smartphone and portable
consumer electronics market, Samsung, Apple, Huawei and Xiaomi are the top four choices
among global consumers. The brands each have its own positioning and pricing strategy. Apple
is now the second most popular brand with a 10% market share, more than the combined share of
the third and fourth brands (see Appendix 4). However, its smartphones are also more expensive
than almost all other comparable models. Apple is known for a history of breakthroughs in the
personal computer and portable music player industries, and famous for its consumer-centric
minimalist designs and iconic shopping experience. The company has accumulated enough
equity in its brand to command a strong market share for its smartphones despite high price
points.
In China’s theme park market, Disney is also able to charge a higher admission price
while maintaining at least the same market share as its competitors. The Shanghai Disney Resort
has differentiated itself with leading technologies and premium services to provide better
products and benefits than other parks in the market. Its intangible brand value gives Disney
even more power to keep its higher price point without danger of losing that market share. As

Liu 39
purchase intention and demand can be directly transferred into market share, Wanda will soon
realize there is only so much it can concede on the price of admission to drive traffic into its
parks, while also creating a customer perception of offering fewer benefits.

Disney’s Brand Power

When The Three Little Pigs received critical acclaim, Walt Disney said that “these things
could be more than just a mouse hopping around.” He was referring to a vision for animated
characters that would create emotional connections with audiences and bring art to life. Since the
founding as the Disney Bros. Studios, Disney has valued relationships with its target market
beyond the transactional and surface level. Consumer loyalty, which is the strength of attachment
consumers have towards a brand, also affects the equity of a brand and thus its price points.
Besides the better services and better rides that guests can touch and feel at the Shanghai Disney
Resort, the favorable brand image as well as its promise to deliver emotional and social values
are all justifications to charge more than other parks in China.
Disney has been praised by many prestigious publications and ranking agencies as one of
the best brands in the world. The global brand-strategy agency, Interbrand publishes a report of
the best brands every year based on a model that separates a brand’s intangible value from its
tangible value. This study that evaluates brands on their “hidden value” and consumer loyalty
has continuously listed Disney in the top 15 best brands in the world. This year, the Disney brand
is calculated to be worth US$39 million by Interbrand. The number represents the capital
brought to The Walt Disney Company purely by the branding efforts and the brand image itself.
It is the premium consumers are willing to pay collectively for what the Disney brand stands for:

Liu 40
the extra dollar parents are paying for their kids’ school supplies with Mickey Mouse on it and,
of course, the extra 200 Yuan Chinese consumers will pay for admission to the Shanghai theme
park.

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3. Theme Park Operations

Every park of ours has its own business model, with constant innovation and combines
indoor and outdoor activities.
—Wang Jianlin, Chairman of Dalian Wanda Group

Although Wang has not released much information on the various business models
governing each of his parks, a brief look at the distribution and plans of Wanda Cities seems to
indicate a lack of identity. Wanda chooses locations with distinct cultural importance or
historical meaning, while also making sure it offers market opportunity in a location currently
underserved by the entertainment industry. Besides special designs featuring local symbols, such
as tropical rainforests in Xishuangbanna, each park also has its own selling points, either the
fastest rollercoaster or an interactive battleship ride. Thus, Wanda Cities became a group of silo
attractions without a coherent identity other than having the same name. The parks also fail to
attach themselves to the culture or history of their locations in their marketing efforts. So, they
appear to be nothing more than typical amusement parks that offer convenience of location and a
lower ticket price.
Not long after the Shanghai Disney Resort opened, Wanda closed its signature cultural
attraction in Wuhan after only 19 months of operation, saying it needed a complete renovation to
better serve customers. After such a short time in existence, that explanation is rather doubtful.
More likely is that an unsatisfactory attendance rate or the threat of a much stronger competitor
forced Wanda to withdraw. The park has only six rides, but many shops, making it more
appropriate to call it a mall. Although Wanda hired award-winning Hollywood visual effects
teams to build its attractions, consumers still reported the experience to be dull and not worth a

Liu 42
return trip. “It took us 2½ hours to wait in line and we only had 3 minutes on the ride. I felt like I
could go to any 4-D theater and have a better time than this,” is how one customer described the
most anticipated ride, “Flying Over Wuhan.”
37

Upon the grand opening of Wanda City at a historical site in the Anhui province, a local
resident commented that, “Of course I’d love to take my entire family to go visit sometime, but
it’s quite expensive compared to our usual leisure destinations. The existing aquarium costs just
80 yuan.”
38
In addition to value, consumers are not buying what Wanda has to offer because the
brand doesn’t offer the same identity or differentiation that Disney does. Apparently, no matter
how much cultural importance and national pride Wanda labelled on its parks, consumers
couldn’t help comparing it with their existing neighborhood entertainment choices.
Innovation or a combination of various indoor and outdoor activities only provides the
framework for a park. To make the experience attractive, a park must also possess differentiated
and clear positioning. A guest walks into Disneyland or Universal Studios Hollywood and
immediately recognize the brand’s familiar cartoon characters and super heroes. Besides not
having its own creative content and original intellectual properties, Wanda theme parks have no
coherent identity, either. Further, each Wanda park runs on its own business model in contrast to
Disney and Universal, both of which use a single business model for all of their parks regardless
of location. By ignoring the expertise of these theme park superstars, and adapting each of its
parks based on their geographic and local market characteristics, Wanda has achieved neither
consistency or differentiation.

37
Makinen, Julie. “Wanda Shuts China Theme Park For ‘Upgrades’— Just 19 Months After Opening.” The Los
Angeles Times, August 2, 2016 http://www.latimes.com/world/asia/la-fi-wanda-wuhan-park-20160802-snap-
story.html
38
“Wanda Seeks To Overrun Disney In Theme Park Battle In China.” Bloomberg News, September 26, 2016.
https://www.bloomberg.com/news/articles/2016-09-25/wanda-s-wang-wants-to-overrun-disney-in-china-theme-
park-battle

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Disney’s Operation Philosophy

Disneyland was first built by Walt Disney who was frustrated by the lack of clean and
safe rides for children and parents to enjoy together. The idea of building rides on a theme and
telling stories throughout the park won Disneyland an immediate and dedicated following from
the beginning. Although the facilities and logistics in the park weren’t ready to accommodate the
crowds at first, the business philosophy was promising. The park soon featured its own hotels,
restaurants and stores so that every touch point with consumers was completely controlled by
Disney to ensure a coherent experience and a delivery on brand promise. After the concept
proved successful, Disney copied that same model and built parks in Tokyo, Paris and Hong
Kong. A series of parks with an identical core but slight adaptations for local tastes helped the
company create a strong identity and scale it globally at the same time.
The Happiest Place on Earth is not just built on business efficiency and sophisticated
operations models. Great customer service has earned Disney parks a 70% return of first time
visitors.
39
The magic experience is delivered through attention to detail and dedication to
satisfaction. When a child waiting in line gets to the front only to find that he or she does not
meet the height requirement, a Disney cast member will provide a special pass so that the child
can enter his or her next ride without waiting. After understanding the concerns and needs of
guests with disabilities, Disney also created Special Assistance Passes. Cast members were
trained to smoothly assist individuals with these passes by moving them to the front of lines,
helping them find elevators when they can’t use stairs, and showing them and their families to
special seating so they could remain together for a ride or show.

39
Ciotti, Gregory. “How Disney Creates Magical Experiences (And A 70% Return Rate).” Huffington Post, June 18,
2015. http://www.huffingtonpost.com/gregory-ciotti/how-disney-creates-magica_b_7093682.html

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Walt Disney’s philosophy is to have employees (called “cast members”) treat customers
as if they are guests in their own homes. This has successfully made Walt Disney World the most
visited park in the world as well as the Holy Grail of companies in the service industry. Disney
even established an institute to help organizations reimagine their customer service. The Disney
Institute not only illustrates how the words or messages from employees contribute to a pleasant
experience, its consultancy also covers details such as the tone of communication and how to
anticipate unasked questions. Disney’s exceptional service stems from its corporate culture.
40
Its
park operation is optimized in a simple but not an easy way: Disney leaders physically go into
the parks to feel the experience and understand their guests, and then turn their own observations
into improvement as large as a technological overhaul with MagicBands or as small as setting
fixed locations for character meet and greets. In the service industry, nothing works better than a
keen dedication to treating guests the way they want to be treated and taking care of their needs
before they even have to ask.

Business Advice to Wanda

Although it is unlikely that Wanda will create its own blockbuster films or household
stories to enhance its parks, the company surely has access to other differentiation strategies. As
Wang once said, “Chinese culture led the world for 2,000 years, but for the last 300 years,
because of our lagging development and the invasion of foreign cultures, we have lacked
confidence in our own culture.”
41
Wang wanted the parks he designed to strengthen China’s

40
Disney Insititute Website. https://disneyinstitute.com/about/
41
Cendrowski, Scott. “Disney Characters Spark Controversy At China’s New Anti-Disneyland.” Fortune, May 30,
2016. http://fortune.com/2016/05/31/disney-characters-china-disneyland/

Liu 45
cultural recognition and international status. To achieve that goal, he built the US$3.5 billion
Wanda City in Nanchang, featuring outdoor roller coasters and indoor movie attractions, fancy
hotels, and shops that sell clothing and luxury products, cafes and confectioners. However, there
is nothing originally Chinese and remarkably cultural to see or feel in such a place, except for a
tea set-shaped exterior, which even seems to be mocking Wang’s strategy to preach his own
culture only on the surface and fill his business practice with anything but Chinese. Without
original branding, Wanda cannot achieve an identity to compete with Disney in the theme park
business. Changing business models for each individual project is not the same as localizing or
innovating. In fact, letting each park look different and operate on its own only confuses
customers and increases management costs. However desperately and passionately Wang wants
to bring the glory back to China, he won’t make it happen any faster by diffusing resources on
whatever random shops he could fit into an attraction.

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4. Local Market Adaptation

Opening an entirely outdoor theme park in Shanghai, I personally feel that the climate
isn’t advantageous, with heavy summer rainfall, the rainy season lasting tens of days,
and the winters also quite cold.

Disneyland is fully built on American culture. We place importance on local culture.

—Wang Jianlin, Chairman of Dalian Wanda Group

Wang miscalculated how well Disney would handle the less-than-ideal weather in its
Shanghai Disney Resort. There is no roof over the 963 acres of land, but then every ride is not
outdoors and every dinner table is not on a patio. The dense population in Shanghai and the
convenience of driving from surrounding cities partially compensates for weather that doesn’t
cooperate as well as that of Southern California. But Disney has done much more than make
trade-offs between location and climate to make sure its model runs smoothly in mainland China.

History of “Glocalization”

Back in 1983 when Disney innovators travelled across the globe and landed in Tokyo, it
was not rejected as typical American cultural imperialism. Instead, the venture became a success
when the park was reimagined as “a significant piece of American business, ideology, and
fantasy… remade in Japan.” Rides that required a narrative and special atmosphere were
recreated to incorporate the special nuisances of the Japanese language and tastes. The Main
Street was remade into a World Bazaar, and the Mystery Tour of the Cinderella Castle became a
real haunted house by Japanese horror standards when children mistook Disney’s own ghost

Liu 47
character as a Buddhist demon. Understanding its target market of young women who collect
toys and dress up as teenage girls, Tokyo Disneyland made itself the best choice for first dates
and offered an abundance of souvenirs. It became the most successful retail space in Japan,
despite being a foreign brand.
42

In Paris, the brand had to be reimagined again to reflect French pleasures. Disneyland
Paris is the only Disney park in the world where alcohol is permitted and enjoyed outside of
featured restaurants. Smoking is also permitted as part of Disney’s dedication to local culture.
The park also replaced the little-known story of Tom Sawyer with the Orbitron featuring
Leonardo Da Vinci and an experience based on the European classic, Twenty Thousand Leagues
Under the Sea. French characters in Disney animations and movies are also featured in the Paris
park.
43

Thus, the Disneyland design and operations are not blindly copied into each market. They
are carefully adapted to retain the Disney identity and protect cultural pride at the same time. Not
only is Disney considerate of geographic differences in its parks around the world, the brand is
fully aware of diversity in its films, and in leveraging this diversity in its marketing efforts in
every business line. Disney Studios tailors its advertisements to the market. For example,
American audiences previewed Moana, animation feature of the Polynesian culture and legends,
through its exciting adventurous scenes, but Japanese audiences saw the trailer of a cute little girl
playing with a humanized tide. The viral clip from Zootopia in which the DMV is the brunt of a
joke was used across the board, but the jokes were all different, tailored to the kind of humor
popular in each corner of the market. In the consumer products business line, the Tsum Tsum

42
Hodder, Harbour Fraser. “Right Now | Pop-Culture Imperialism? Tokyo Disney.” Harvard Magazine, 7.1.1997
http://www.harvardmagazine.com/1997/07/tokyo-disney
43
Tang, Phillip. “Different Disneylands Around The World.” BBC, 18 December 2012.
http://www.bbc.com/travel/story/20121213-different-disneylands-around-the-world

Liu 48
design of tiny stackable dolls (Figure 18) first caught on in Japan, the country most obsessed
with cuteness and little collectibles. The designs were gradually introduced in Disney parks and
stores in other parts of the world. Although the Disney Channel is not permitted in the Chinese
media market, the brand’s English language school, Disney English’s take-home learning videos
are especially successful in the country, and children are exposed to the Disney characters in this
way. Korea is even more open to the Disney brand. When Disney Channel Korea rebranded
itself after an organizational change, it not only translated Disney’s most popular old shows, it
also partnered with the country’s dominant entertainment agency to co-produce a new Mickey
Mouse Club. The hottest pop stars are used to promote the new Lucasfilm franchise to South
Korea’s next generation of Star Wars fans.
Figure 18: Tsum Tsum Dolls

Source: Disney Store Japan

Special Adaptation for China

When Wang boasted about his decision to invest in indoor facilities out of his familiarity
with the weather in China and his concentration in Chinese cultural icons, his rhetoric was not

Liu 49
falling on deaf ears. His special combination of luxury shops and entertainment attractions were
a proven model in the Chinese market. His passion for Chinese culture was also an echo of the
demand for patronage of local businesses and the protest of cultural imperialism. Chinese
citizens who resent the dominance of American culture in the global economy claim the moral
high ground when they go to a park built by a Chinese corporation instead of an iconic American
establishment. However, as much as the Chinese want their culture to be more prominent in the
world, Wanda fails to tell that story with its parks. Selling fashions from Europe and ice cream
made in America inside a porcelain tea set-shaped building is insulting to the Chinese culture. It
is as if Chinese culture exists in a form without a soul. Further, the need for Disney characters to
celebrate Wanda City’s opening in Nanchang only revealed a solid enthusiasm for Western
culture. Not that any proof was needed. The first few weeks’ tickets to the Shanghai Disney
Resort were sold out months before the park opened. As Chinese citizens wait for their own
domestic entertainment brand to dominate, some question whether Wanda will ever develop a
legacy even close to Disney’s.
44

Disney does it all right, and right from the get go. The Shanghai Disney Resort is a
commitment to cross-cultural cooperation starting with its shared investment by The Walt
Disney Company and the Shanghai government. Disney hired Chinese architects when designing
the park and diligently downplayed American cultural symbols such as removing the Main Street
USA in favor of blending its animated figures into a Garden of 12 Chinese zodiac animals.
Subtle adaptations were also made to cater to local preferences in restaurants, adding seating to
accommodate long talks over meals. Shows and spectacles received more resources because

44
Allen-Ebrahimian, Bethany. “Nationalist Chinese Netizens Are Already Turning On Disney Shanghai.” Foreign
Policy, June 16, 2016. http://foreignpolicy.com/2016/06/16/china-nationalists-disney-shanghai-wang-jianlin-
wanda-mickey/

Liu 50
Chinese patrons prefer live entertainment over thrill rides. Picnic grounds were expanded to
make more room for guests bringing their own meals into the park.
45
More than 80% of rides are
unique to the Shanghai Park,
46
due to both requirements from the Chinese government and
Disney’s own will to meet market demand. While creating new content and experiences for
locals and staying true to its brand identity, Disney achieved a harmonious theme park that lives
up to its positioning as “authentically Disney, distinctively Chinese.”

45
Makinen, Julie And Kaiman, Jonathan. “Rain Doesn't Dampen The Mood Of Opening Day At Shanghai Disney.”
Los Angeles Times, June 16, 2016. http://www.latimes.com/business/la-fi-shanghai-disney-opens-20160615-snap-
story.html
46
Global Trends Report 2016. Euromonitor International, November 2016

Liu 51
5. Scale of Influence

One tiger is no match for a pack of wolves. Shanghai has one Disney, while Wanda,
across the nation, will open 15 to 20.
—Wang Jianlin, Chairman of Dalian Wanda Group

Dalian Wanda Group has unquestionable scale in China. It owns the world’s largest
property company with 133 Wanda Plazas and 84 hotels across the country. Its commercial real
estate operation is completely independent and takes projects from planning to construction to
management. Backed up with huge assets and capital, Wanda is also dominant in the Chinese
entertainment business. Its portfolio spreads into film, tourism, sports and children’s
entertainment not only in mainland China but also in America and Europe. The group’s Cultural
Industry branch is on its way to becoming one of the top five cultural companies in the world and
aims to take over Disney’s status as world’s largest tourism enterprise in the coming decade.
Wanda’s business also encompasses financial services such as insurance and investments for
consumers and business owners. Wanda reaches both vertically along the value chain and
horizontally across segments tightly associated with every aspect of living. It is indispensable to
China’s economy.
The Walt Disney Company has a different representation of scale. Together with its
subsidiaries, the company operates in five business segments: Media Networks, Parks and
Resorts, Studio Entertainment, Consumer Products and Interactive. It has businesses in more
than 40 countries and employs 180,000 individuals around the world. The brand is distinctly
positioned as the home of family entertainment and constantly adapts to changing tastes and
technology. In addition to being an innovator in the animation realm, Disney Studios has been

Liu 52
the No.2 top-grossing film distributor every year since 1995, taking a 15% share of the total
global box office (Appendix 5). With several studios each having its unique image and core
audience, Disney balances a portfolio of live productions and animated features with a wide
range of themes. Using its strong asset mix, Disney also expanded its legacy in film
entertainment into other business areas. In fiscal year 2015, the company had US$52 billion in
revenues, compared to Wanda Group’s approximately US$44 billion revenue in 2015. Not long
ago, Disney had just announced that fiscal year 2016 showed 6% increase in total revenues and
7% increase in net income. The Disney brand began in the entertainment industry and is thriving
in the same business 90 years later. The company achieved this by focusing on its core
capabilities and expanding only when it could bring the same value to different industries and
more individuals.

Wolf and Tiger

As Wang sees it, Disney’s Shanghai Resort is a tiger and Wanda Cities are wolves. There
are essential differences between the two. Disney parks have been around and successful for
more than 60 years, whereas Wanda has just broken into the theme park industry with lots of
money and no operational expertise. While Wang could use his considerable resources to drive
out smaller players in the real estate and tourism markets, Disney is a wise and scrappy
competitor. For example, Figure 19 lists the top 10 distributors in the U.S. film industry by
parent company in 2016. Disney distributed only 16 of the movies that year, but took in more
than 25% of box office revenues, more than other studios that distributed twice as many movies.
Quality matters much more than quantity in the marketplace of experience and content.

Liu 53
Figure 19: 2016 Studio Market Share in Domestic Box Office
47

Source: Box Office Mojo

Building 20 theme parks in China and locating them conveniently for consumers may
lead to a large market share, but it could also result in a depreciation of brand value and a loss of
novelty. If the parks don’t spark the joy and excitement expected by visitors, the bigger the
quantity, the harder Wanda will fall. Wang must be familiar with the Chinese idiom that the rare
is valued more, but he failed to give the one and only Shanghai Disney Resort its due. When
there are parks with a logo that has been attached to every Chinese shopping center for the past
decade, it is easy to see that consumers might be more eager to save up for a precious visit to the
unique venue considered as the “tiger” that had just set its foot on the mainland after years of
denial from the country’s gatekeeper.

47
Box Office Mojo: http://www.boxofficemojo.com/studio/?debug=0&view=parent&p=.htm

Liu 54
Disney’s Invisible Scale in China

While Wanda faces no obstacles in its plans to build commercial properties and parks
across mainland China, Disney is restricted from bringing its media networks into the
marketplace. Nonetheless, Disney has great brand recognition in China as the leader in animation
and children’s products. Disney theme parks are a must-go destination when Chinese tourists
visit America or Japan. Disadvantaged by the Chinese government’s restrictions, Disney had
explored more creative strategies to build its brand and scale of influence in China.
As early as 1985, Mickey Mouse toured China and went to 30 cities to celebrate 30 years
of Disneyland. Disney cartoons have been shown on Chinese Central Television since 1986
48

despite the absence of the Disney Channel. Today movies such as Frozen and Zootopia are
blockbusters in Chinese theaters. Back in 2004 before Disneyland opened in Hong Kong, Disney
partnered with the Communist Youth League in China for a grass-roots campaign, in which the
American brand toured youth centers in China to offer sessions of storytelling, interactive games
and animation lessons. It also brought Mickey Mouse into malls and public libraries to meet
children and play games. Although the Disney Channel could not be aired in China, its special
programs with Hong Kong Television made their way into South China homes.
49

Such campaigns were not necessary in Paris or Tokyo where people already had access to
Disney media content and understood the brand better. Disney targeted the booming Asian
economy, and patiently introduced its brand image in China. While the government limits film

48
“Disney Plays By China Rules With Shanghai Park, Media Strategy.” Bloomberg News, June 13, 2016.
https://www.bloomberg.com/news/articles/2016-06-13/disney-plays-by-china-rules-with-shanghai-park-media-
strategy
49
“Disney Markets Mickey Mouse In China.” Los Angeles Time, September 24, 2004.
http://articles.latimes.com/2004/sep/24/business/fi-disney24

Liu 55
imports, Disney secured four films of same-day release (i.e. Chinese movie-goers can see them
on the same day as their counterparts in U.S. and other countries) in China out of all 34 foreign
films allowed,
50
and took advantage of the increasing number of screens in the country to ensure
the visibility of its animated features. While TV programs and advertising opportunities were
limited, Disney kept multiple active social media handles to engage with children and families in
China. Recently, a 53,000-square-foot Disney store opened in Shanghai. Finally, the Disney
licensed children’s clothes and school supplies that had been desirable for decades but
impossible to come by could be purchased. While the Mickey Mouse Club was never founded or
registered in China, Disney’s own English language school, Disney English, was established in
2008. Its English-language videos have been shown to millions of children in China attending
private schools or taking English classes at educational agencies.
51

Although scale can be achieved much easier with more capital and approval from the
Chinese government, years of effort and a shift in the Chinese economy paid off. Even strict
policies in broadcasting and online streaming services didn’t stop Disney from gaining
awareness and preference. As more affluent families demand a global perspective for their
children, immersion in Disney content and products will only come earlier in their children’s
lives. Whenever granted an opportunity, Disney took a step forward. More than ever, the park in
Shanghai will have “a halo effect on the brand and appreciation of Disney stories and
characters.”
52
However, the park is never meant to compete with many other amusement parks in

50
“Disney Plays By China Rules With Shanghai Park, Media Strategy.” Bloomberg News, June 13, 2016.
https://www.bloomberg.com/news/articles/2016-06-13/disney-plays-by-china-rules-with-shanghai-park-media-
strategy
51
Conley, Margaret. “Some Chinese Kids' First English Word: Mickey.” Bloomberg Business Week, June 9, 2011.
https://www.bloomberg.com/news/articles/2011-06-09/some-chinese-kids-first-english-word-mickey
52
Graser, Marc. “Disney To Focus On Building Family Brand In China Before Shanghai Park Opens In 2015.” Variety,
November 7, 2013 http://variety.com/2013/biz/news/disney-to-focus-on-building-family-brand-in-china-before-
shanghai-disneyland-opens-in-2015-1200805697/

Liu 56
China. It is a milestone in Disney’s overall branding strategy in China. With a transmedia
operating model that encompasses content on phones, TV screens, movie theaters and consumer
products, Disney has more than enough ammunition to take care of Wang’s packs of wolves.

Liu 57
6. Financial Outlooks

At Wanda I always say we want to ensure Disney is not profitable for 10-20 years in this
business segment in China.
—Wang Jianlin, Chairman of Dalian Wanda Group

In the past few years, profit has been growing steadily in Disney parks around the world
(Figure 20). From fiscal year 2015 to 2016, revenues in parks rose again for 5% and net
operating income rose for 9%. Total revenues in the Walt Disney Company have grown 6%, and
net operating income has grown 7%. Given Disney Studios’ record-breaking box office
performance of US$7.5 billion in 2016, thanks to the tremendously successful revitalization of
the Star Wars franchise, it is expected that more individuals will be motivated to visit Disney
theme parks and buy Disney merchandise (see Appendix 6 for complete financial reports).

Figure 20: Growing profit from Disney Parks

Parks and resorts is the second biggest financial contributor to the Disney brand,
accounting for some 30% of the company’s revenues, only next to its Media Networks

Liu 58
operations. As the media industry goes through dramatic changes with Millennials cutting cords
and increasing adoption of online streaming, Disney investors are more concerned about what
will happen to the Media Networks revenue stream, which includes popular paid channels such
as ESPN, than they are Disney’s park business. In fact, the healthy financial performances of
Disney’s theme parks have thus far offset the loss in the media segment and given investors
some reassurance. The year-end comparison in Figure 21 shows that theme park revenues have
grown in 2016 despite reported low attendance in Paris and Hong Kong. Losses in these park and
hotel operations were offset by the first full quarter of Shanghai Disney Resort operations.
Admittedly, the initial investment of more than US$5 billion and the higher capital costs and
interest rate in Shanghai took their toll, but the park is up and running, and more than holding its
own (see Appendix 7 for more segment financial data). Who said Disney shouldn’t have come to
China?

Figure 21: Financial Performance of Q4 and Year End of Fiscal 2016

Liu 59
Disney Park’s Popularity in China

In the first half of 2016, Baidu (Chinese Google) searches for Disney’s theme park in
Shanghai had risen 495% in the five months leading to its opening, demonstrating Chinese
consumers’ huge interest. The Shanghai establishment is expected to help Disney grow the scale
of its international theme park business at an annual rate of 13% and expand revenues in the
segment by 43% by fiscal year 2018. The huge investment enabled Disney to locate itself next to
China’s wealthiest and most populous city, and realize an exclusive and immersive experience
on a 5000-acre kingdom. Because of the rising number of middle class and affluent households,
Disney has access to a population of 330 million with enough disposable income to visit the
park. The company projected 10 to 12 million visitors in the first year and US$300 million in
revenues. Meanwhile, Disney is not wasting any of this land big enough to fit one and half more
theme parks. Knowing hospitality segment’s high financial efficiency in the park business, the
company is already developing a line of hotels on a lake in the park.
While 70% of theme parks in China are losing money, Disney opened on a rainy
Thursday in June 2016 with huge enthusiasm from local fans. Shortly after opening, the most
popular rides were showing wait times of two hours. Booking of tours, FIT products and
admission tickets upon opening have contributed an estimate of 7.3 million visitors in the second
half of 2016. At this rate, total annual admission will reach 15 million, and based on Chinese
visitors’ average spending of US$350 a day in the Shanghai Disney Resort, the park will bring in
roughly US$5 billion in annual revenues. Despite the high costs of capital in Shanghai, with a
20% average net operating margin for the parks and resorts business segment reflected on

Liu 60
Disney’s 2016 financial report, it is highly unlikely that Disney will lose money, as Wang
predicted.

Comparable Experience in International Markets

From the 2000s to the 2010s, attendance at Tokyo Disneyland increased 10%. Revenues
per guest have also increased 12%, driving the operating margin up 9 percentage points (Figure
22). Competition in Japan not only includes Universal Studios and other theme parks based on
popular Anime franchises, but also other forms of entertainment in one of the world’s most
developed countries. Entering a completely different market with strong protections for its own
culture was a challenge at first, but Disney created a Magic Kingdom that is unexpected
combination of the West and the East. With a much smaller park in a recently stagnated Japanese
economy, Disney has kept its growth slowly but firmly. As mainland China draws international
attention for its booming tourism and leisure market, there is no reason why Disney would fail
with its biggest park that’s “distinctively Disney, authentically Chinese.”

Figure 22: Trends in Tokyo Disneyland

Liu 61
Financial Indications Outside Parks

Although the Shanghai Disney Resort is expected to break even in 2017, the real reward
will not likely be its contribution to parks and resorts profits within the Disney corporation, but
rather the door it is opening for Disney’s content and media business in the market. As the
Chinese government zealously controls what’s shown on the silver screen and what programs to
play on TV, Disney had been disadvantaged for decades to get its media networks into the
country as part of its branding strategy. Disney stores were nonexistent, and the only way to get
an official copyrighted Mickey Mouse doll was to visit the Hong Kong Disneyland. Depending
on the English language schools distributing its media was no longer enough for the company,
which aims to put more blockbuster films out and fill theater seats with a more diverse audience.
Being the world’s second largest film market, China only contributed US$124 million to
Disney’s 2015 Star Wars blockbuster, The Force Awakens, which made US$2 billion at the box
office worldwide and US$937 million in U.S. There is untapped potential in the mainland China
film market if Disney has the resources and channels to promote its intellectual properties and
inform consumers of the large variety of choices it offers in the theater. The success of Shanghai
Disney Resort is not only a milestone for Disney’s reach into the international park and tourism
industry, it also means promotional effects for the entire Disney brand.
The strict control of airwaves and the prevalence of piracy have made content strategy
almost impossible for Disney. After negotiations with the Chinese government, Disney’s
Shanghai resort was made possible with further restrictions on Disney Media Networks’ entry
into hundreds of millions of households with TV. However, exposures to Disney’s film
characters and TV programs in the park can be transferred into strengthened brand resonance and

Liu 62
boost in theater attendance. Experiences at an authentic Disney park cannot be easily substituted
or copied. As the theme park opens in Shanghai and incorporates intellectual properties from
Disney’s newest films, Chinese consumers will become familiar with upcoming releases and
quickly catch up in box office and franchise fandoms. The Walt Disney Company does not
necessarily expect the new park to make profit in the first one or two years, given that domestic
parks are still much larger revenue contributors than international parks in Disney’s financial
portfolio. But as CEO Bob Iger said, it “plants a stake deeper into the largest market in the
world” and will hopefully bring unprecedented possibilities to the company. The financial
outlook of the park by itself is much less important than its potential to generate much more
income in other segments such as studio entertainment and consumer products in China.

Liu 63
Conclusion

Chinese journalists have been insisting that the government stay out of the foreign vs.
domestic competition in the entertainment industry, and let the invisible hand drive it. The
Chinese media’s reasons vary, but all include the same expectation that Chinese service
providers and businesses will grow stronger through healthy competition. A dynamic equilibrium
between the big and small businesses and between the domestic and international players will
only improve the Chinese economy. A booming tourism and leisure segment in mainland China
is likely to ensure every participant a share of the market over the next five to ten years. Wang’s
untenable comments and projections only seem to serve his own best interests and come off like
a jealous child. Although he is granted rights to have his own opinions, he is also facing the
consequences of appearing boastful and ignorant in front of the Chinese public and numerous
people with access to the Internet.
Disney has delighted generations with 90 years of innovation and achievement in films
and 60 years of expertise in theme park operations. Its characters and stories have progressed
from Mickey Mouse and Donald Duck to Nemo and Elsa. The company owns the highest
grossing animation titles and the most visited theme parks. It is also one of the most respected
and favored brands in the world. While Wanda has done well in 30 years with its capital and
convenient access to the world’s largest consumer market, it cannot unseat Disney, especially
with Wang’s current attitude, and that should not be the company’s goal.
Disney has strong brand resonance throughout the world, even in China, despite the
government’s strict control over international content and media. With a dedication to
innovation, excellence and relationship-building, Disney Parks & Resorts is well positioned to go
into any foreign country and compete with local incumbents. While Wanda has been growing

Liu 64
exponentially in China and made itself ubiquitous in the local market in various segments,
Disney is much more focused on building meanings behind its brand and cultivating strong ties
with its fans. The efforts on building an appealing and admirable brand will pay off in the long
run because strong customer loyalty can serve as a shield in a price war. The equity in Disney’s
reputation and legacy gives it advantages over Wanda’s strategy of lower prices and high
quantity. Wanda could find it difficult to mimic Disney’s strategy and convey a coherent
personality to consumers after so many years of rapid growth and scattered developments.
As Disney responded to the appearance of Stormtroopers and Snow White at the Wanda
opening, “these illegal and substandard imitations unfortunately disappoint all who expect
more.” There are rising middle and affluent classes in China looking for the best quality products
and premium services on which to spend their increasing disposable income. There is also a
generation of patriots who are demanding that Chinese businesses protect and promote the
Chinese culture. Unfortunately, as one of the biggest corporations in China, Wanda has failed to
deliver on both accounts. While competition gives Chinese consumers more choices and drives
Chinese businesses to innovate, Wanda is only disguising its complexes full of imported brands
with a Chinese exterior. Hiring the best technicians and designers will not compensate for a lack
of real vision and creativity. Although the company has the resources and assets to innovate on
content and narratives behind its park themes, it has instead chased after the “highest and tallest”
in hardware and to dismiss its competitors. In the entertainment industry, Wanda needs to move
from the mindset it employs in its property and financial holdings. Instead of competing with
capital and scale, the company needs to take a more curious attitude toward creativity.
In the Chinese amusement and theme park industry, where leading attractions exhibit the
unique history and aesthetics of a country, it is crucial for Wanda to incorporate substantial

Liu 65
cultural content into its offerings. Knowing that bricks and mortar do very little to help on the
balance sheet, Disney is focused on intellectual properties and making money with its animation
patents,
53
two things Chinese operators don’t have. While Wanda is not winning on either the
intellectual properties or the representation of local authenticity, Wang still dared to say it will
take Disney down in both mainland China and the world tourism industry.
When Wanda took over the best movie theater in town from Warner Brothers ten years
ago, a depreciation of the facilities and service quality was obvious to consumers. At this
moment, the author is very confident in the future of the Shanghai Disney Resort and its
contribution to Disney’s branding strategy in China. More children and families will know and
enjoy Disney characters and stories, and be inspired by the innovation and creativity Disney
showcases with its new park and flagship store. This new generation will have unprecedented
access to world-class entertainment and become the real force that changes China’s status in the
global economy and entertainment business. Regarding the disoriented competitor who is
blinded by its own achievements, Wang faces a disastrous defeat as he challenges Disney in
China. Perhaps the experience will teach him some humility before he charges outside of China
and humiliates himself as well as other Chinese entrepreneurs.

53
“Wanda Billionaire Says Disney No Match For His ‘Wolf Pack’.” Bloomberg News, May 24, 2016.
https://www.bloomberg.com/news/articles/2016-05-24/billionaire-wang-says-disney-no-match-for-wanda-s-wolf-
pack

Liu 66
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http://jezebel.com/who-is-the-most-popular-disney-princess-on-ebay-1568896937

Neil H. Borden, The Economic Effects of Advertising (Chicago, IL: Richard D. Irwin, Inc., 1942)

Oster, Matthew. Channel In Focus: Theme Parks. Euromonitor International, 11 Feb 2016

Palmeri, Christopher. “Why Disney Won't Be Taking Magic Wristbands To Its Chinese Park.”
Bloomberg News, January 10, 2016 https://www.bloomberg.com/news/articles/2016-01-10/why-
disney-won-t-be-taking-magic-wristbands-to-its-chinese-park

Richwine, Lisa. “Disney Is Expanding Its Billion-Dollar Mobile Technology To More Parks.”
Business Insider, May 21, 2015 http://www.businessinsider.com/r-disney-to-bring-mobile-
technology-to-more-parks-2015-5

Slater, Shawn. “Get A Sneak Peek At Some Of The Innovative Technology Coming To ‘Frozen
– Live At The Hyperion’ At Disney California Adventure Park.” Disneyparks Website, May 13,
2016. https://disneyparks.disney.go.com/blog/2016/05/get-a-sneak-peek-at-some-of-the-
innovative-technology-coming-to-frozen-live-at-the-hyperion-at-disney-california-adventure-
park/

“Snow White Spotted At Wanda City Triggers Backlash From Disney.” Bloomberg News, May
30, 2016 https://www.bloomberg.com/news/articles/2016-05-30/disney-vows-to-defend-rights-
as-snow-white-appears-at-wanda-park

“Starbucks Plans To Double Stores In China In 5 Years.” Fox News, October 20, 2016.
http://www.foxnews.com/food-drink/2016/10/20/starbucks-plans-to-double-stores-in-china-in-5-
years.html

“Still Kicking: Despite China’s Economic Slowdown, Consumption Is Resilient.” The
Economist, Apr 30th 2016 http://www.economist.com/news/business-and-finance/21697597-
free-spending-consumers-provide-comfort-troubled-economy-consumption-china-resilient

Tang, Phillip. “Different Disneylands Around The World.” BBC, 18 December 2012.
http://www.bbc.com/travel/story/20121213-different-disneylands-around-the-world

Towson, Jeffrey And Woetzel, Jonathan. “Why China’s Consumers Will Continue To Surprise
The World.” Mckinsey & Company, May 2015 http://www.mckinsey.com/business-
functions/strategy-and-corporate-finance/our-insights/why-chinas-consumers-will-continue-to-
surprise-the-world

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Walt Disney Imagineering Website. https://disneyimaginations.com/about-imaginations/about-
imagineering/

“Wanda Billionaire Says Disney No Match for His ‘Wolf Pack’.” Bloomberg News, May 24,
2016. http://www.bloomberg.com/news/articles/2016-05-24/billionaire-wang-says-disney-no-
match-for-wanda-s-wolf-pack

Wanda Group Website. http://www.wanda-group.com/corporate/

“Wanda Seeks To Overrun Disney In Theme Park Battle In China.” Bloomberg News,
September 26, 2016. https://www.bloomberg.com/news/articles/2016-09-25/wanda-s-wang-
wants-to-overrun-disney-in-china-theme-park-battle

Liu 70
APPENDIX 1: CONTENT ANALYSIS

Article Search Criteria:

Coding Rule:

1. Timing
Wanda comment ~ Wanda park open
Wanda park open ~ Disneyland open
After Disneyland open

2. Geographical origin of the media outlet
Chinese
American
Other countries (Neither Chinese nor American)

3. Topic presence
Investment & construction cost
Intellectual property
Admission price
Innovation
Creativity
Patriotism
Scale of operations
Local market knowledge
Brand legacy
Theme park experience
Other

4. Latent messages
Pro-Wanda
Pro-Disney
Neutral attitude

5. Framing and tone
Sarcastic
Criticizing – objective analytical tone
Neural tone – reporting facts

Liu 71
Worried
Optimistic
Other

Liu 72
APPENDIX 2: CONTENT ANALYSIS FULL DATA REPORT

Q1 - Timing

# Answer % Count
1 Wanda comment ~ Wanda park opening (5/23 ~ 5/28) 23.33% 7
2 Wanda park opening ~ Disneyland opening (5/29 ~ 6/15) 56.67% 17
3 After Disneyland opened (6/16 ~ 6/30) 20.00% 6
Total 100% 30

Liu 73
Q2 - Origin of the media outlet

# Answer % Count
1 Chinese media outlet 43.33% 13
2 American media outlet 30.00% 9
3 Other countries' media 26.67% 8
Total 100% 30

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Q3 - Topic presence

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# Answer % Count
1 Investment & construction cost 76.67% 23
2 Intellectual property 53.33% 16
3 Admission price 30.00% 9
4 Innovation 26.67% 8
5 Creativity 10.00% 3
6 Patriotism 33.33% 10
7 Scale of operations 70.00% 21
8 Local market knowledge 33.33% 10
9 Brand legacy 20.00% 6
11 Theme park experience 30.00% 9
13 Number of visitors 33.33% 10
10 Other 10.00% 3
Total 100% 30

Other
Other
Business model
Experience
Chinese market condition

Liu 76
Q4 - Latent Messages

# Answer % Count
1 Pro-Wanda 23.33% 7
2 Pro-Disney 40.00% 12
3 Neutral attitude 36.67% 11
Total 100% 30

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Q5 - Framing and tone

# Answer % Count
1 Sarcastic 3.33% 1
2 Criticizing 30.00% 9
3 Neutral tone 46.67% 14
4 Worried 6.67% 2
5 Optimistic 36.67% 11
6 Other 0.00% 0
Total 100% 30

Liu 78
APPENDIX 3: INNOVATIVE PARK ENTERTAINMENT

http://www.disneyeveryday.com/10-things-you-never-knew-about-world-of-color-at-disney-
california-adventure/

http://www.popsugar.com/smart-living/Disney-World-Drone-Show-Pictures-42723447#photo-
42723447

Liu 79
APPENDIX 4: GLOBAL BRAND SHARE % IN THE SMARTPHONE
MARKET

Liu 80
APPENDIX 5: DISNEY STUDIOS AND COMPETITIVE POSITION

Top-Grossing Distributors 1995 to 2016

Movies Total Gross Average Gross Market Share
1 Warner Bros. 666 $29,588,484,852 $44,427,154 15.09%
2 Walt Disney 524 $29,396,042,572 $56,099,318 14.99%
3 Sony Pictures 634 $24,506,313,155 $38,653,491 12.50%
4 20th Century Fox 458 $22,766,198,705 $49,707,857 11.61%
5 Universal 428 $22,197,888,163 $51,864,225 11.32%
6 Paramount Pictures 429 $21,948,072,870 $51,161,009 11.19%
7 Lionsgate 335 $7,171,618,583 $21,407,817 3.66%
8 New Line 205 $6,193,114,702 $30,210,316 3.16%
9 Dreamworks SKG 77 $4,278,649,271 $55,566,874 2.18%
10 Miramax 382 $3,841,082,392 $10,055,190 1.96%

Source:
The Numbers, Domestic Movie Theatrical Market Summary 1995 to 2016. Retrieved 2016, from http://www.the-numbers.com/market/

Liu 81
APPENDIX 6: DISNEY FINANCIAL REPORTS

Liu 82

Liu 83

Liu 84
APPENDIX 7: DISNEY SEGMENT-SPECIFIC FINANCIALS

Company Performance Summary:

Segment Specific Data:

Liu 85

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Creator Liu, Yiyi (author)

Core Title The happiest place on Earth and finally in mainland China: a white paper to explain what Dalian Wanda Group chairman forgot when he thought he could beat Disney in China

School Annenberg School for Communication

Degree Master of Arts

Degree Program Strategic Public Relations

Publication Date 04/17/2017

Defense Date 04/17/2017

Publisher University of Southern California (original), University of Southern California. Libraries (digital)

Tag brand equity,China,Chinese consumers,Disney,Disneyland,entertainment business model,global competition,Globalization,innovation,intellectual property,OAI-PMH Harvest,theme park,Wanda

Language English

Contributor Electronically uploaded by the author (provenance)

Advisor Floto, Jennifer D. (committee chair), Kozinets, Robert V. (committee member), Lynch, Brenda (committee member)

Creator Email yiyil@usc.edu,yiyiliu611@gmail.com

Permanent Link (DOI) https://doi.org/10.25549/usctheses-c40-356253

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