Monday, September 12, 2005
Disney plans expansion in China
Alexandra Harney / Hong Kong September 12, 2005
Walt Disney plans to almost triple the number of retail outlets in mainland China over the next five years as part of an expansion that includes Monday's opening of Hong Kong Disneyland.
The US entertainment group aims to open more than 5,000 outlets on the mainland over the next half-decade, up from about 1,700 now, according to Andrew Mooney, chairman of Disney's consumer products division.
Most of these will be devoted areas within department stores and other retailers, which Disney calls “corners”, but some will be stand-alone stores.
“I would anticipate us having more free-standing stores perhaps in China by the end of five years than we have in maybe any other country in the world,” he told the FT in an interview. Currently, the US with 300 has the most stand-alone stores.
Disney's aggressive retail strategy partly reflects restrictions the Chinese government has imposed on other parts of its business.
Beijing tightly controls foreign media groups' activities and limits the number of foreign films released in cinemas each year.
Rampant intellectual piracy has all but eliminated profits from DVD sales for international film studios.
Walt Disney has secured a beachhead in China with Hong Kong Disneyland. But how much will the $3.5 billion park, which opens on Monday, fuel growth in the US entertainment group’s other businesses in mainland China?
Stanley Cheung, managing director of Disney's Chinese operations, said the group's strategy was “to push the things that ... first can be monetarised and first have less regulation”.
Cheung said because most of Disney's stores were concentrated in China's largest cities – Beijing, Shanghai and Guangzhou – the plan was to now roll out in second-tier cities such as Hangzhou, Nanjing and Qingdao.
* Walt Disney plans to almost triple the number of retail outlets in mainland China over the next five years
* Most of these will be devoted areas within department stores and other retailers, but some will be stand-alone stores
* Most of Disney’s stores are concentrated in China’s largest cities like Beijing, Shanghai and Guangzhou. It now wants to expand in second-tier cities
* The US entertainment group has already secured a beachhead in China with Hong Kong Disneyland, which opens on Monday