Hong Kong Disney Land Case study

The Walt Disney Company is an American institution closely identified with Mickey Mouse and world-famous theme parks. Hong Kong Disneyland was the Walt Disney Company's third international theme park outside America, after Tokyo and Paris. Interesting enough, both the Hong Kong and Paris theme parks had its chief replaced in less than a few months after the park's opening, if these corporate moves were anything but indicative. In September 2006, the Hong Kong theme park announced it had missed its first year attendance target of 5.6 million. Often criticized as the smallest Disneyland in the world, the Hong Kong theme park had been tipped as a "stepping stone" for the American company's entry into mainland China. If it was indeed to serve as a prototype for another Disneyland in China, it would be critical for the management of Hong Kong Disneyland to come up with a recovery plan and realign its strategy to improve its image, boost attendance and deliver its revenue target. This case can be used to explore what could be done to enhance the smooth delivery of the American fantasy in the alien culture of the Middle Kingdom. (Bennett Yim Josephine Lau). Moreover, Hong Kong Disneyland is one of the world largest entrainment businesses of the world. During the 1920s and 1930s Disney just had studio and theme park but at the end of the 20^th century it had several TV networks, several theme park a cruise lines, malls, airports, hotel resorts and so many other entrainment units which in total are able to prove itself as a world happiest place and greatest entertainment organization.

 

1.      Hong Kong Disneyland (HKD) had mechanisms in place to adapt to local Hong Kong culture, yet these means appeared to be ineffective.  Why?  What areas, in terms of cultural adaptation, still need further improvement?

With China expected to become one of the world’s largest tourism destinations, and mainland tourists becoming a formidable force with spending power, Hong Kong Disneyland looks set for imminent success, at least on paper. Hong Kong Disneyland is the Walt Disney Company's eleventh theme park in the world, and the first of the parks the company wants to build in China, including one in Shanghai. Disneyland Paris’ teething problems have famously demonstrated the tough challenges that even a globally known and loved brand like Disney faces in extending its brand experience to another culture. From cultural insensitivities such as a blanket English-only policy for staff and the prohibition on wine consumption on park grounds, to exorbitant pricing on tickets and merchandise, mistakes could provide valuable lessons in what to avoid in future international ventures. (Doris Ho)

Disney has gone to great lengths to make the Hong Kong Park culturally sensitive to the Hong Kong population and attractive to Chinese visitors. Consulting local (cultural) feng shui masters, especially to appease the prosperity-conscious Hong Kong population which has invested HKD 316 million in tax dollars in the park, the main entrance gate of Hong Kong Disneyland was shifted by 12 degrees and cash counters are placed close to corners or along walls to maximize prosperity. Auspicious dates were picked for the commencement and completion of each building on the property, lucky numbers like 8 abound (the main ballroom at one of the hotels is 888 square feet large), and unlucky ones like 4 (which sounds like the word death in Cantonese and Mandarin) do not appear at all on lift buttons.(Doris Ho)

 Finally, Disney must change the way it manages its overseas ventures. It is unacceptable for a company that is considered to be worldwide, to earn 80% of total revenues in the United States. Managers in Burbank California do not know the interests and needs of consumers in Europe or Asia as well as do the people who live in those areas. Disney must stop micromanaging these foreign operations and allow their managers in overseas locations to take a more active role in the decision making process. This concept should be essential to the creation of the new theme park in Hong China if the company wants to avoid the problems and pitfalls that it faced with the introduction of Euro and Hong Kong Disney. (Joris Quenee  and Joel Ngo)

 The Walt Disney Company, having been criticized for ignoring French culture when it built Disneyland Paris in the early 1990s, this time paid close attention to Chinese culture, customs, and traditions when building Hong Kong Disneyland. Hong Kong Disneyland was built with great respect for the Chinese culture, and features many interesting features to maximize feng shui and chi. Hong Kong Disney Land has carefully address the cultural values of Hong Kong in business modeling and operations is so many ways, such as the actual Hong Kong Disneyland Park entrance was modified to maximize energy and guest flow. Individual attraction entrances inside the Disney Park have been positioned for good luck as well. Large rocks are placed throughout Hong Kong Disneyland Park because they represent stability in Chinese culture. The boulders also prevent good fortune from flowing away from the theme park or hotels. Lakes, ponds, and streams are placed throughout Hong Kong Disneyland to encourage good luck, fortune, and wealth for the resort and a large fountain featuring classic Disney characters welcomes guests at the entrance to the park and to provide good luck. The Hong Kong Disneyland Resort hotels have views of the waterfront onto the ocean and South China Sea. Red is an extremely lucky color in Chinese culture, so it is seen frequently throughout the park, especially on the buildings on Main Street, USA. No clocks are sold at the stores in Hong Kong Disneyland because in Chinese the phrase "giving clock" sounds like "going to a funeral." No green hats are sold in Hong Kong Disneyland stores because it is said in Chinese culture that a man wearing a green hat is cheating on his wife. (from article: Hong Kong Disneyland Feng Shui Secrets and Facts)

Prior to the grand opening, Hong Kong Confederation of Trade Unions received 20 complaints from Disney’s staff regarding the ignorance of staff health needs along with other problems (The Standard, 2005). Furthermore, a survey conducted by the Disney Cast members Union among 470 of the 5,000 staff found that 63 percent were unhappy with management, complaining largely of unequal treatment and what they see as unfair work distribution (Parry, 2007). Staffs are the most important element in any organization. In the service industry, employees are involved in the service delivery that directly affects guests’ experience. Unfortunately, HKDL has de-motivated its staff and hence have lessened employee morale, which in turn leads to decreased employee performance and poor organizational performance. Besides destroying the magic it has resulted in a bad press reputation. Apart from the size and structure of the population, values, belief, religion and custom have also affected HKDL in their management decision-making (Chan Bo Yee, Bowie). Therefore, HKDL also need further improvement in these areas in terms of cultural adaptation process.

Fairly speaking, HKDL understands the importance of cultural differences and has attempted to avoid the problem of cultural backlash such as experienced by Disneyland Resort Paris. Instead of planting American culture in Hong Kong, Disney land had put a lot of effort embody both American and Chinese cultures. Still the bad reputation of HKDL arose amongst others, through a case of food poisoning broke out in a park restaurant (Eimer, 2005). Green groups asked the park to change their resort’s wedding menu to take off shark’s fin soup (lbid). District councilors accused Disney officials of discrimination of refusing to switch to the more environmentally friendly fireworks technology they used in California (lbid). Local unionists attacked the poor working conditions, long hours and unfair treatment at the park like staff that wear Mickey Mouse costumes earning higher pay than those wearing Donald Duck costumes (Shenzhen Daily, 2008; The Standard, 2005). All these relate to the poor corporate social responsibility planning. (Chan Bo Yee, Bowie). But the problem is that Hong Kong Disney Land (HKDL) has no clear operational plan and functional agenda that clearly addresses the cultural issues. Employees of the HKDL don’t welcome the guest properly. There is no customer help department that can quickly address the guest problems. During the first year of its operation HKDL introduced the new discounted ticket which could be used anytime during a given six month period other than “special days” when the park anticipated an influx of visitors. But due to the weak understanding from the part of the HKDL about the Chinese main land holidays, they are unable to manage the visitors crowd and thousand of guest from main land China were went back dissatisfied. Therefore, HKDL should consider the culture of the mainland China along with the Hong Kong culture. Therefore, HKDL needs further cultural adaptation in operation level. One third of the of the visitors who visit the HKDL are Chinese, therefore, HKDL should understand and incorporate the main land Chinese culture which is slightly different than that of Hong Kong culture. Key areas where HKDL needs special attention is its restaurant menu, human resources management and environmental areas, all of these areas seems to be critical to the Chinese people.

2.      Using Professor’s Brannen’s concept of re-conceptualizing strategic assets (Exhibit 2), do you think Disney’s strategic assets are in an advantageous position or a disadvantageous position in the Chinese cultural context?  Explain.

It is universally true that Disney is really successful in Japan and unexpectedly failure in France. According to Professor Mary Yoko Brannon in some extent this is due to the way Disney’s strategic assets-such as products, practices and ideologies-were translated to and interpreted in the Japanese and French context. Brannen further explains that “Americana” represented by Disney was an assets in Japan, whereas it is a liability in France. While talking about the Chinese cultural context Disney strategic assets are more in advantageous position for number of reason. As mentioned in the case Chinese consumers wanted to connect with the global popular culture and distance themselves from their previous collective poverty and communist dictate. Kevin Wong, a tourism economist at the Hong Kong Polytechnic University, remarked that Chinese “want to come to Disney because it is American. The foreignness is a part of the appeal.” It means that large number of population from the mainland China and from the Hong Kong love to visit the Disney Land. 

There are two broad reasons why the Hong Kong Disney Land is advantageous in terms of Chinese context. “Firstly, after the financial storm in 1997, the economy development in Hong Kong slowed down during these few years. It was mainly because the economy of Hong Kong overly relies on the property sector. So when the property market took a nosedive during the financial year of 1998-1999 after the financial storm, a budget deficit of HK$32 billion was resulted. HK Government needed to find out a method in order to turn over the plight. Secondly, the unemployment rate has stayed in a high position after the financial storm. Before the crisis, the unemployment rate in Hong Kong remained relatively low, not exceeding three percent. However, the unemployment rate surged to six percent within two years after 1997. As a result, many Hong Kong citizens have had a sense of job insecurity. This resulted in a much more caution about spending money which created a bad effect on Hong Kong economy.” (ivythesis.typepad.com). Therefore, these are some external pressure that forces Hong Kong people to love and protect HKDL so that they can protect themselves too. Another reason to say HKDL strategic assets are in advantageous position is that HKDL is the favorite place for the kids then Ocean Park, the main competitors of HKDL. But analyzing  its competitiveness and financial performance one can argue that HKDL strategic assets are in disadvantageous position because high percentage of visitors gripes that Hong Kong Disneyland generally boil down to a lack of rides and attractions. And fairly speaking, this is true too. The park is constantly expanding, however what's available now very much feels like a work in progress. To put it into figures, there are currently less than 28 'entertainment items' in Hong Kong Disneyland, compared to 44 in Paris and 65 in California (gohongkong.about.com).

While analyzing individual strategic assets of HKDL like products, practices and ideologies we can say that these strategic assets are more in disadvantageous position. For example HKDL products like Mickey Mouse, Cowboy and Souvenirs are not popular in China. Chinese people or Hong Kong people don’t like Mickey Mouse, and Cowboy. Next things are that HKDL practices are not good enough to attract the Chinese or Hong Kong residents because HKDL’s practices like service orientation. Personnel management and training are not successful. There are so many incidents that proving that HKDL service is not as expected by the visitors for number of reason. HKDL’s personnel management is not transparent as there is huge employees turnover and employees complaint for overworked and underpayment. Besides this, training program in HKDL is also not effective due to the lack of employees speaking dual languages of Chinese and English. 

Finally HKDL ideologies like Disneyland and Foreignness is are less popular in China and even in Hong Kong because Chinese people believe more in reality then in fantasy. And they loved their own culture, traditions, food and way of leaving and they don’t much care about foreignness’.

3.      Identify two issues challenging HKD’s current operations and propose corresponding solutions.

One of the major challenge of the Hong Kong Disney World is that it needs to tailor its philosophy and niche attractions to the local Chinese culture, environment, and mindset while keeping the Disney theme intact, something that has proved challenging to Disney executives (Marr, 2007). By integrating itself into the Chinese cultural context, another challenge of the Disney is to avoid problems of cultural backlash, customs, and traditions (allacademic.com). Hong Kong Disney Land is so unpopular that a Hong Kong transvestite bar nearby was attracting more visitors from the mainland China (Holson, 2005). Therefore another challenge of the World Disney is that they are unable to attract visitors from the main land China as per their expectations. Beside this, employee’s retention, highly demanding nature of the business in terms of sales, creativity and innovation, need of brand consistency and product differentiation are also some of the considerable challenges of the Hong Kong Disney Land.

One of Disney’s biggest and most unexpected challenges has come from Ocean Park. The park, which sprawls across both sides of a mountain in southern Hong Kong, was overhauled a few years ago in preparation for Disney’s arrival. Furthermore, Hong Kong Disney Land is relatively small in size then other Disney World like Tokyo Disney and France Disney. As it is mentioned in the case, even customers also complained that the park is too small and that it had too few Hong Kong-themed attractions. Quantitatively, Hong Kong World Disney has 22 attractions which are 18 fewer than that of other Disney theme parks. Not only this but also, Hong Kong Disney Land has poorly managed employees relations. The character performers at the Hong Kong Disney (HKD) are dissatisfied with the pay and they often complained that they are overworked and underpaid. It is mentioned in the case that the spokesperson of the staff union stated that workdays of more than 12 hours and inadequate rest breaks had overwhelmed many workers, causing work related injuries, such as joint and muscle strain. Some other claimed that there are some employees who believed that the work in HKD is less rewarding and more physically challenging.

Beside this, “Negative publicity plagued the Hong Kong theme park in its preparation leading up to the opening. Green groups asked the park to ban shark's fin soup from the resort's wedding banquet menu. District councilors accused Disney officials of discrimination for refusing to switch to the more environmentally friendly fireworks technology as used in California. Local unionists attacked the poor working conditions and long hours at the park. If those were only the tip of the iceberg, the ticketing fiasco during Chinese New Year hammered home the message - the Disney formula was not working. Given the nature of the incidents, it was questionable whether this was a case where antagonism of a foreign culture contained the magic of the Magic Kingdom, as it was claimed in Disneyland Paris” (Bennett Yim Josephine Lau).

4.      What would be some of the foreseeable challenges for T he Walt Disney Company if it chooses to enter the China market?

“Not content with just the one Disneyland in Greater China, The Walt Disney Company has finally reached an agreement with the Chinese Government to develop a new theme park attraction in the Pudong district of Shanghai. Disneyland Shanghai will cost US$3.7 billion to build and is scheduled to open in 2014” (Jane Leung and Kate Nicholson). “Compared with the Hong Kong attraction, Shanghai Disneyland promises to be more squarely aimed at a Chinese audience. Unlike Hong Kong, Chinese consumers will not need a visa to visit the Shanghai attraction. And the huge number of people living within a few hours’ drive of the park bodes well for ticket sales.” (Jane Leung and Kate Nicholson). But going to China is not an easy task for the World Disney. Firstly there are lot more cultural restrictions in China then in Hong Kong.

Edmund Ng, business director of Greater China at brand specialist consultancy Cowan, also advises that a “different strategy is needed to target mainland (China) consumers. Imposing the traditional Disney framework will not work. Chinese audiences are different, and these differences must be acknowledged. The planned theme park in Shanghai looks to address specific needs of the China market and has the potential to be a big hit. The park should also help increase demand for other Disney-themed products and services such as Disney English and Disney-branded clothing and paraphernalia. Unlike its experience in many markets, Disney has only limited (legal) distribution of its media content to reinforce its brand. It does not own channels in China and the amount of content that can be imported from the US is heavily restricted. It has built some relationships and collaborations with local partners to develop and air movies, and has allocated a budget to China to grow its local movie production in the future. Wolf says the future of Disney in China is based on three factors. Disney World in China is not going to see a Disney Channel in China any time soon, but Disney’s desire to replicate its identity in China in a locally appropriate fashion is based on characters, media and experiences. This doesn’t have to be in the form of animation. The brand needs to look at how it’s going to get mileage out of its global characters and how to adapt its stories to China to include content and Chinese characters.”(Jane Leung and Kate Nicholson).

Another biggest challenge of Disney Land for going into China is that there is high awareness about Disney Land, but familiarity with a Disney theme park is not necessarily so high. Hong Kong Disneyland's head of sales and travel trade marketing. According to D’Amaro there's a much more integrated marketing approach that needs to happen, there needs to be an education process. People need to understand what Buzz Light-year is (referring to Disney's bionic toy character).  Beside this, if the Disney started its operations in the main land Chinese market then it will cannibalize the Hong Kong Disney World because around 25 percent of the total visitors of HKD are from the main land China. According to Jason Cochran, even before the economic turmoil, Hong Kong Disneyland drew a third of its visitors from Mainland China (plus a third from abroad, and a third from Hong Kong itself). If that crowd can get to Disneyland Shanghai easier, Hong Kong's share will plummet. Disney is on the verge of not needing Hong Kong anymore. Without expansion, its attendance won't rise, and Hong Kong Disneyland will be doomed. Furthermore, in China they will face human resource problems and language barriers as most of the Chinese people only speak Chinese which will also be challenges for the China Disney Land.

5.      How can experience gain from running HKD help Disney’s intended expansion into the China Market?

Lesson learnt by the Disney in the Hong Kong market is important to the World Disney to improve its presence in the main land China. First and the most important lesson learnt by Disney in HKD is that Disney in China should be big enough in terms of size and attractions as Chinese people like big things. Beside this, they should have policies and mechanism in place to handle the overwhelming crowd during holydays and weekends. Due to the weak capacity management in HKDL the average queuing time was 45 minutes at the restaurants and more than two hours for the rides. As mentioned in the case, HKD faced pressure to lower the daily capacity limit. But rather than reducing the daily capacity limits, HKD proposed other measures, such as extending the opening time by an hour and encouraging visits during weekdays by offering discounts which are the key issues Disney in China should overcome.

            Beside this Disney also realized the need of effective human resource management to increase operational level output and improve guest satisfaction. Furthermore, when HKD started its operation in Hong Kong, some locals called the park’s management policies “absurd.” Therefore, well developing China Disney policies, World Disney should consider the cultural and environmental issues transparently as Chinese people are more culturally sensitive than that of Hong Kong citizens. Disneyland underestimated Hong Kong environmentalism by announcing that it would serve shark fin soup at wedding banquets at its hotels. This caused uproar among environmental groups, who argued that shark populations are being decimated by the shark-fin industry, which usually hacks off the fin before tossing the fish back into the sea to die (Michael DeGolyer).

In order to return the magic back to Disney in Chinese Market, it has to add in more effort from management. First of all, staffs are the best sales force and must be well managed otherwise employees morale is threatened. In order to recover and build up a strong intellectual capital, a proper reward system should implement to increase motivation. A good working environment should be provided and flexibility built into working practices. It is important to increase employee’s relationship in order to ensure they share the same values as HKDL and provide the best visitor experience. Moreover, employer branding can also attract and retain human capital, this directly relate to HKDL’s corporate social responsibility planning as CSR (Corporate Social Responsibility) directly affects the image of the company. (Chan Bo Yee, Bowie)

References:

Phatak, Bhagat & Kashlak, International Management, 2^nd ed., McGraw-Hill Irwin, 2009        

http://www.wdwradio.com/forums/other-disney-parks/8762-disneyland-struggles-hong-kong.html

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