The billion-yuan question: are China and Disney coming together to build a theme park in Shanghai?

Some of the local villagers simply can't wait for the government to evict them from their homes. "Next June," one predicted optimistically.

Such is the pragmatism that exists sometimes in the Chinese psyche. Never mind the ancestral home, think of the compensation that will come from the state. Others are looking to the day when the arrival of a Disneyland in the Pudong area will skyrocket the value of their properties by quite a few-fold.

Are they counting the chickens in their backyard before they are even hatched? Shanghai has been watching the possible deal since its then-mayor Zhu Rongji visited the Magic Kingdom in 1990 with the intention of setting up a match. Eighteen years have passed, Zhu has added "Governor, Central Bank",  "Vice Premier, China" and "Prime Minister of China" to his resume, and still, no deal.

After months and years of following a high-profile celebrity wedding being planned in their city, Shanghainese are, well, tired of it. But just as interest was waning, like a properly managed public relations mechanism, the China-Disney union once again grabbed attention, as the public announcement came that the Chinese economic planning agency has approved the Shanghai Disney resort. This means the project could benefit from the US$600 billion China is pumping into the economy to address the current global downturn.

Never one to miss a chance to strike it rich, those who can afford it are buying up shares in companies with interests in the Pudong neighbourhood. After the Shanghai Securities News splashed across its front page that "there is no doubt over the deal, it was only a matter of time", the price-earning ratio of shares in the Jielong Group, a printing firm reported to own 50 acres of land in the vicinity, reached 85.

According to the paper's report, the final site will be just 10 minutes from Shanghai's Pudong International Airport and those in transit may receive a 48-hour visa waiver to visit the Park.

Disney officials are expected to land in Shanghai this month for further negotiations. Back in the US, Bernstein Research analyst Michael Nathanson noted that the most recent fiscal fourth quarter was the first time Disney missed consensus earnings-per-share estimates during Bob Iger's tenure as CEO. In China, it secured a 5% share in NBA China this January along with other investors, including Hong Kong tycoon Li Ka-Shing. A successful deal over in Shanghai will help to expand Disney's interests not only with the addition of a theme park, but also more importantly – according to sources close to the discussions – exempt the US company from the 20-foreign-films-a-year quota set by Beijing. What's more, it may also be able to circumvent Chinese restrictions on foreign media with the setting-up of a Disney Channel in China.

This will be an important source of revenue for Disney since the theme park is likely to merely break even, and profits generally come from related businesses such merchandising.

Is China ready for "High School Musical" and "Hannah Montana"? Well, whether or not Chinese kids will be rocking to these pre-teen dramas, one thing seems sure. As Disney's most famous mouse celebrates its 80th birthday this year, Mickey's virility has not lessened.

 

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