Hongkong-Disney Land Case Study

* What are the risks and consequences of Disney bringing a competing theme park to China?

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* 1)The recovery speed of Southeast Asian economies from the Asian financial turmoil;

* 2)The ability of Walt Disney to exit from the deal if the park was not profitable;

* 3)The political stability of Mainland China, Hong Kong and other regions;

* 4)Illegal sales of counterfeit Disney products that might have a negative impact on the sales of merchandise in the theme park;

* 5)Uncertainty as to whether US and Disneyland culture would be welcome on Hong Kong’s and Chinese soil;

* 6)Beijing Government might exercise censorship on Disney films.

Stimulate Hong Kong economy

After the financial storm in 1997, the economy of Hong Kong stayed in the period of recession. As mentioned before, Hong Kong was over reliant on the property sector, so when the property market took a nosedive during the financial year of 1998-1999, a budget deficit of HK$32 billion was resulted. In order to turn over the plight, Hong Kong Government believed that cooperation with the foreign company to open a new tourist spot should be a useful method.

According to the statistics provided by Hong Kong Tourism Board, the 2006 spending figures showcase the increasing contribution of tourism to Hong Kong’s economy, with all market regions recording increase in total and per capita spending. The average per capita spending of overnight visitors, those staying one night or more, grew by 2.9% to HK$4799, while that of the same-day in-town visitors increased significantly by 25.3% from HK$810 in 2005 to HK $1015 in 2006. A key factor leading to the growth of same-day, in-town visitor spending is higher than average spending by consumption visitors from Mainland China.

Continued with this development trend, the Government estimated that the GDP of Hong Kong will keep increasing because there will be more and more tourists attracted by the opening of Hong Kong Disneyland...