Shanghai Disneyland launches with Disney characters, distinctly Chinese flavor

Leslie Shaffer and Haze Fan | Special to CNBC
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More than five years and $5.5 billion after first breaking ground, Walt Disney opened its first Chinese Disneyland on Thursday to crowds eager for a theme park that was "authentically Disney and distinctly Chinese."

Spread over 963 acres - a space that includes two hotels, a 100-acre lake and the "most interactive" Storybook Castle ever built by Disney - the Shanghai park celebrated its official launch on June 9, a week before it fully opens to the public.

Disney CEO Bob Iger told CNBC that the park amounted to the "biggest step" the company had taken in any overseas market.

"China represents a great market for the Walt Disney Company because our stories are not only known here but they are universal in appeal, they touch people's hearts all over the world, no matter what country, no matter what culture."

"So this is, I think, a great market for Disney and a growth market as well. Obviously, the size of the market, the number of people is another reason. But this is... the biggest step actually that we've ever taken anywhere to grow in a market."

Fireworks light up the Enchanted Storybook Castle at Shanghai Disneyland on May 25, 2016.
Visual China Group | Getty Images

Unlike Hong Kong Disneyland and Tokyo Disneyland, which visitors say are near-carbon copies of the U.S. theme parks, the Magic Kingdom in the Middle Kingdom gave plenty of nods to its host nation, by mixing classic Disney features with Chinese customs and architecture.

For example, rather than an American-style Main Street, the main promenade is called Mickey Street, and the 12 animals of the Chinese zodiac have been given a Pixar-style makeover.

Iger told CNBC that he saw the Shanghai park as part of a bigger push into the Chinese market and a "booster rocket" for people's appreciation of Disney.

"An immersive park experience the Disney way is something that people will remember for the rest of their lives and that goes a long way in terms of not just creating word of mouth, but in terms of creating people's interest in, passion for our brand and everything that it stands for and everything that bears its name," he said. "So it becomes very, very important, not just in terms of awareness but appreciation."

Disney has a lot riding on the Shanghai park, which was a joint venture between the U.S. company and Chinese state-backed consortium Shanghai Shendi Group.

The attraction of the Chinese market is obvious.

China's middle class is estimated to be about 500 million people-strong and is expected to continue growing in size and purchasing power, while remaining highly brand-conscious. About 330 million people - more than the entire population of the U.S. - live within a three-hour drive or train-ride from Shanghai.

McKinsey has projected that Chinese urban, private consumption would reach 26.804 trillion yuan ($4.08 trillion) by 2022, more than double that of 2012.

Visitors tour Disneyland's Tomorrowland on June 5, 2016 in Shanghai, China.
Visual China Group | Getty Images

The park has already had thousands of visitors through its gates since it soft-launched on May 17, with many reporting that they enjoyed their first taste of Disney. But the bippity boppety boo didn't appear to be running at full power just yet.

The soft launch was marred by a worse-than-usual version of the universal complaint of all fun-park visitors: long queues, with some visitors reporting wait-times of up to five hours for some rides.

"We got here at 7 o'clock this morning. It's almost 4:00 p.m. now and we only tried out one attraction," one father, who gave his name as Xu, told CNBC on Thursday. "The waiting line is way too long."

Xu was visiting with his wife, Qi, their son, who was wearing a Captain America costume, and Qi's parents. Qi had another complaint: "Stuff is expensive here," she said, noting that the family had spent more than 2,000 ($300).

"We haven't bought souvenirs and eaten dinner [yet]," she said, adding that food in the park, while expensive, was "tasty."

A three-course set meal inside the castle sets visitors back about 368 yuan ($56), per person, without the additional service charge. By comparison, buying a regular Chinese rice dish outside the park costs about 85 yuan ($12.90). Shanghai workers make on average about 4,070 yuan a month ($620).

Despite higher food prices than some locals were accustomed to, visitors queued for as much as two hours to try a traditional American turkey leg for the first time.

One experienced mouseketeer agreed that the wait times far exceeded the norm on the day she visited.

"I have been to Paris Disney and Tokyo Disney. It only took around one hour to get onto a ride, but here in Shanghai, the queues are terribly long," a young girl named Li told CNBC. "I had to wait at least two hours to check out an attraction, at least. This is ridiculous."

However, the grumbles don't appear to have rained on the parade of visitors so far.

Ticket scalpers have been quick to capitalize on the park's popularity, with thousands of soft-launch tickets for sale this week on Alibaba's e-commerce platform Taobao for more than three times the 300 yuan ($45.70) turnstile price.

The tickets had been distributed to the families of Disney staff, Shanghai government departments, Disney's business partners and foreign consulates in China.

One scalper, Jin, told CNBC that he had a family member who worked for one of Disney's local business partners.

"The company bought loads of soft opening tickets at low prices and gave them to its employees and clients," he explained. "I then got the tickets from my relative and her colleagues, some free, some with a few hundred yuan. Then I can easily make big money selling them at a high price again."

Jin said he offered a "booking service," raising the ticket price if the buyer wanted to secure entry on a specific date.

Disney didn't immediately return an emailed request for comment.

But the soft-launch hiccups weren't the only headaches for the Shanghai park.

China's homegrown rival Wanda launched a theme park of its own in Nanchang in May, just ahead of Disney's opening.

Costumed Disney characters, including Marvel's Captain America, were spotted at Wanda's park, spurring Disney to issue a warning to its rival over intellectual property, the China Daily reported.

The report said Wanda claimed the Disney characters were operated by individual stores within Wanda Mall and did not represent Wanda.It's far from first time that intellectual property - long a bugbear for China - has been a problem for Disney on the mainland. Counterfeit versions of Winnie the Pooh and other characters are easily found in Chinese markets, and film piracy is common.

Before the soft opening, analysts were optimistic about the likely popularity of the park.

In May, Jefferies analyst John Janedis forecast 10 million visitors in the first year, and nearly 18 million annually five years after the park opened. With that attendance, he expected ticket revenue to increase from $386 million in the first year to $884 million in the fifth year.

The model projected profitability in Shanghai within three years.

Evelyn Cheng contributed to this report.

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