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Disney signs agreement for Shanghai theme park

(Agencies)
Updated: 2010-11-08 09:11
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Walt Disney has signed an agreement with a Shanghai company for the establishment of a Disneyland theme park in the city, bringing its long-planned park in mainland China closer to fruition.

The deal was reached with Shanghai Shendi Group, which was specifically created for the development of the Disneyland project, the official Xinhua news agency said on Friday.

Disney confirmed the Xinhua report and said it was awaiting final approval from China's central government regarding the incorporation of the related joint venture companies and the completion of regulatory procedures.

"For quite some time, we have been involved in discussions with the Shanghai government about building a Disney theme park. We can confirm the statement from the Shanghai government that we have taken another step forward in the approval process," a Disney spokeswoman said in an emailed statement to Reuters.

Disney's foray into the China market has been mixed so far. Its Hong Kong Disneyland park, which opened to great fanfare, reported a loss last year and has at times struggled to attract as many visitors as hoped. Disney runs two other parks outside of the United States, in Paris and Tokyo.

Disney has long sought to build in Shanghai, a wealthy city of about 20 million people that is ringed by the prosperous Yangtze River Delta, home to tens of millions more potential visitors.

Shanghai's Disneyland is expected to cover about 4 square kilometers and cost about 25 billion yuan ($3.75 billion), Xinhua said.

China's 1.4 billion residents, and its growing middle class and powerful economy, have made it a compelling investment spot

Disney's Parks and Resorts division, which has roots stretching back to the early 1950s, accounts for roughly one-quarter of the company's sales. But the division has faced headwinds in recent quarters as the economic downturn has hurt attendance and hotel occupancy, particularly at its U.S. resorts.

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