Economy

Markets

Industries

Insights

Reports

Events

Disney gets China's nod for Shanghai theme park

(Agencies)
Updated: 2009-11-04 14:32

The Walt Disney Co has received Chinese government's nod to build a theme park in Shanghai, in a major advance ahead of President Obama's first China visit.

China is one of the most dynamic, exciting and important countries in the world, and this approval marks a very significant milestone for The Walt Disney Company in Chinese mainland. Disney CEO Robert Iger said in a statement.

Disney already has operations in Hong Kong, where its fifth resort was built in 2005, but that location has not been as successful as initially envisioned.

Following the central government's approval of Disney's project application report (PAR), Shanghai and Disney must still work out more details on the park, said a Disney spokeswoman in Hong Kong.

"Essentially the PAR approval represents one milestone in the process," she said. The next stage enables us to proceed with detailed discussions with the Shanghai government to produce a final deal."

Earlier rumors Disney had secured approval for the park also boosted shares of property developers that have holdings in Pudong. The city had decided on a site in Shanghai's Pudong New Area for the planned project but was still in discussions to determine who the local business partners might be, a government source told Reuters earlier this week.

Relatreadings:  Initial plans for Disney park set  Shanghai awaits Beijing nod on Disney park: source  Disney shares on boil again  Shanghai may greet Obama with Disney park deal

Media reports have placed the cost of the park at around $3.6 billion.

The new Shanghai park, which would be Disney's sixth, will inevitably affect the Hong Kong park, though the impact will be limited as the two parks will draw from different areas.

"Visitors from Guangdong and southern China will still find Hong Kong more convenient while Shanghai will attract visitors from northern and eastern China," said Paul Tang, chief economist of Bank of East Asia.

Shanghai is close to a number of other major cities within easy driving distance, including Nanjing, Suzhou and Hangzhou.

Disney also doesn't view the two parks as competitors.

"From our point of view the Hong Kong and Shanghai parks are not competitors, they're complementary." the spokeswoman said. She really believes the China market is big enough to support multiple parks.