Disneyland in Hong Kong

Disney in Hong Kong: Negotiations

Negotiations between the Walt Disney Corporation and the HKSAR (Hong Kong Special Administrative Region) government began in 1997 when Disney showed interest in building a theme park in Hong Kong. The two entities created a subsidiary company headquartered in Hong Kong, called Hong Kong International Theme Parks, Ltd. Due to the fact that it was a joint venture; both parties owned a significant amount of shares in the company. The Hong Kong government required that Disney constantly maintain at least a 33% share in Hong Kong International Theme Parks, Ltd. (a total of 1.9 billion shares), and that it may never own more than 57% of the company. After negotiations, the two came to the conclusion that Disney would own 43% and HKSAR would own the remaining 53%. Negotiations regarding equities were concluded when an agreement was made that allowed the HKSAR to sell as many of its shares at any time as well as Disney being required to keep at least a 33% stake in the venture. This act served to hedge the potential risk that faced the Hong Kong government.

The next step taken was answering the important questions of where the park should be located and who would be paying the bill. Both parties firmly believe in solutions that were environmentally friendly, but Disney also had a different and unique set of criteria for the location of the park: they wanted a secluded area with as little outside noise or interference as possible. Disney explained that in order to give guests the true Disneyland experience, skyscrapers and a constant sound of airplane engines would taint the atmosphere of the park. This unexpected requirement ruled out two locations HKSAR had in mind, leaving an area on the southeastern region of Lantau Island. The island’s location was ideal for both Disney and Hong Kong because not only was it somewhat isolated but it had previously been earmarked by the HKSAR for tourism development. Disney would be allowed to...