Disney plots China expansion

18 January 2012

BEIJING: The Walt Disney Company, the entertainment group, is set to establish a formal retail presence in China, part of a wider effort to enhance its position in the fast-growing economy.

The US multinational intends to create a store network spanning between 25 and 40 outlets in the next three years, opening the first branch, in Shanghai, during the autumn of 2012.

Jim Fielding, president of Disney Stores Worldwide, told Reuters the approval granted by the Chinese government to construct an amusement park in Shanghai, finalised in April 2011, had proved to be a vital step.

"China is very important to overall Disney company plans, obviously with the launch of the Shanghai Disneyland Park. So, it is probably the newest country that is getting the most focus," he said.

In building out its Chinese retail operations, Disney will initially target first tier cities like Shanghai and Beijing, housing large numbers of increasingly affluent consumers.

"We are focusing on tier-one cities in very high population and tourist locations, very similar to what we look at around the world," said Fielding.

Although this aspect of the organisation's strategy replicates that employed elsewhere, Disney is to adopt a more bespoke approach in other ways.

"The product assortment is definitely localised to Chinese consumers and Chinese knowledge because they don't know all the Disney characters that people know in America and in Europe," Fielding said.

As a result, it will prioritise brand characters such as Mickey Mouse and Winnie the Pooh and reduce its emphasis on the Princess dolls that have been particularly popular in areas like the US.

While Disney is now ramping up its activity in China, it has a decent base from which to grow given existing licensing arrangements have provided a strong starting point.

"Because the licensing division has had a presence in China already, there is affinity for the brand and affinity for characters," said Fielding. "The market is ready."

However, success in China is not guaranteed. Mattel, the toy group, closed a six-floor Barbie store in Shanghai last year, and Best Buy, the electronics chain, shut its branded stores having failed, according to some observers, to reflect local tastes.

Data sourced from Reuters; additional content by Warc staff