Disney's China fairytale begins with $5.5 bln park opening, eyes expansion

Disney's largest overseas investment at $5.5 billion, the park is a bet on China's middle class and booming domestic tourism. The U.S. firm hopes it will offset an otherwise lackluster international theme park business, better known for cash-burning sites such as Euro Disney.

"China obviously represents incredible potential for the Walt Disney Company," chief executive Bob Iger told reporters at the park. Flanked by officials from local government partners on Thursday, Iger cut a ribbon to officially open the resort - nearly two decades after he first scoped out the site in 1999.

Not everything has gone quite to plan though.

The opening gala - meant to be a bonanza of fireworks, live music and dance - was rained off on Wednesday night, while at Disney's park in Orlando, Florida, a young boy was grabbed by an alligator and killed.

Disney, however, sees China as its greatest business opportunity since Walt Disney bought land in central Florida in the 1960s for what is now Walt Disney World - the world's most-visited theme park. The firm estimates 330 million people within a three-hour radius of Shanghai, the country's financial centre, will be able to afford to come to the park.

Main Street has been replaced by Mickey Avenue to reduce the feel of Americana while attractions include a Chinese-style Wandering Moon tea house, a Chinese Zodiac-themed garden and a Tarzan musical featuring Chinese acrobats.

Already expanding

The iconic U.S. firm is already expanding the Shanghai site to keep the home crowd keen, in a country where competition from a plethora of local theme parks and domestic cartoon characters promises to be fierce.

The park's seven square kilometer plot of land means there is plenty of space to expand, Iger told reporters.

"There is actually construction going on this week. When we open we will continue the construction to expand what's on the opening day menu," he said.

"We have plenty of space to do that and we believe we've got willing partners...We think we will probably do that sooner rather than later."

Shanghai Disney could also help lure more consumers to its films. "Zootopia", "Captain America: Civil War", "The Jungle Book" and "Star Wars: the Force Awakens" are among the 10 most-watched movies in China of 2016, reaping more than $690 million in ticket sales, according to Box Office Mojo. Characters from those films will feature at the Shanghai resort.

Disney, though, is facing intense competition from billionaire developers building homegrown parks and from domestic cartoon characters. Consumers also have an ambivalent attitude to its products, with some being skeptical about American values overriding Chinese traditions and culture.

Iger received a presidential welcome from Xi Jinping in May, and Disney has been granted "special" trademark protection. But China's main military newspaper has also warned that "Zootopia", a story about a rabbit police officer in an animal city, was a tool for spreading U.S. propaganda and ideals.

Furthermore, Disney will have to share the spoils. The resort is a joint venture with state-owned Shendi Group, which has a 57 percent stake - a concession agreed during lengthy negotiations.

Shendi is a consortium controlled by four large government-owned companies: Shanghai Media Group; hotelier Jin Jiang International, controlled by the city of Shanghai; supermarket-to-department store operator Bailian Group, and property developer Lujiazui Development Group.