The only problem is the article never actually mentioned the $800M. There was only 1 sentence that even mentions the issues with graft in China:
Under Mr. Iger's stewarding, Disney has partnered with the Shanghai Shendi Group, an umbrella name placed on a panoply of government-owned companies created to facilitate Western investment as a massive anti-graft campaign is just now rattling Beijing and beyond, to introduce a Disney 'branded' park to those consumers.
The connection between bribes and the $800M was suggested by people here but it wasn't in the article. It may be a logical conclusion and all of the other points except #3 are factual.
Since it was quite a few pages back that this was posted, here is the full article again:
Disney CEO Fumbles Entry to China
Posted: 02/18/2015 4:45 pm EST
Sorry Mickey, they're just not that into you. Minnie, you either.
For that matter, you can take the whole stable -- the "Fab Five" of Walt Disney's animated creations -- and, despite a media machine that churns a very different story, China has largely been a land where the fabled wishes, dreams and magic of the Walt Disney Company and its brand have virtually no connection with the consumer. As valued as that consumer is in the economic theater of globalism, the iconic brand synonymous with America has little appeal and less traction among the newly seated audience in the Chinese mainland.
To its 'vanilla on toothpaste' helmsman, Robert A. "Bob" Iger, who has shown himself to be an able cobbler of assets but a less than visionary leader of the media colossus that is the Walt Disney Company, this troubling if known and growing headwind threatens to undermine the content-heavy but culturally aloof purveyor of demographically unshackled product. For in his zeal to expand its library of content, Bob Iger has drop-kicked the Disney moniker to enter new and expanding marketplaces only to position a product that runs well afar of the expectation of the Disney bounce.
In so doing, the once unrivaled status of the Disney brand has become a catch-all for entertainment and its associated byproducts that are increasingly a strange and sometimes conflicted ragbag of franchised acquisitions presented as some sort of media mélange for all ages and all palates. Or, as John Dreyer, the longtime and immediate past head of corporate communications for the Walt Disney Company, said upon the publication of the column Disney CEO Readies Magic Carpet for Exit, "Disney losing its Disney way."
With the company making its grandest play for a market that dwarfs all others, Disney has found itself adrift in a crisis of identity that breaches the foundation of the castle upon which an empire was built. For as turrets were raised, wings were added and a moat of meticulously positioned whimsy was filled in to expand the Disney footprint, something that looks decidedly more pedestrian than the fantastical inspiration for one of the world's most coveted brands has emerged.
Leverage has become the arch of entry into the Disney-verse, while the brand has been marginalized into a holding vehicle for assets that are worth more separately than that vested in the castle itself.
As Mr. Iger said at the 2013 Fortune Global Forum held in Chengdu:
I think the first thing you have to do is you have to obviously be aware of what your most significant brand attributes are. What makes your brand your brand? Why is it great? You have to focus on quality and on those attributes that, again, created the value in the first place. You can't look to cut corners. You can't look to make something with your brand on it that's any cheaper simply because it's going into a market that may not be able to afford it the way another market may have. You can't compromise in that regard. So it starts with what I'll call quality and a respect for an allegiance to the very brand attributes that created the value in the first place.
Now, considering Shanghai Disney is preparing to make its 2016 debut as Disney's first foray into the renminbi rich Chinese mainland after a less than stellar arrival in the former British colony of Hong Kong in 2005, there are lessons aplenty to learn from that delayed embrace and the long stalled entry into the single largest consumer market on offer to the world -- the whole of China.
Under Mr. Iger's stewarding, Disney has partnered with the Shanghai Shendi Group, an umbrella name placed on a panoply of government-owned companies created to facilitate Western investment as a massive anti-graft campaign is just now rattling Beijing and beyond, to introduce a Disney 'branded' park to those consumers. A flag in the ground for Disney. A flag that has been in the works since the prime of Michael Eisner's reign at Disney and one that nearly collapsed entirely by the summer of 2006.
Indeed, Mr. Iger had to leave the annual Herb Allen retreat for media moguls, tech tycoons and other scripters of society in Sun Valley for an unscheduled trip to Shanghai that day in 2006, scrambling to save face and leading to a denouement worthy of great scrutiny by any company -- especially those entities whose trade is in intellectual property -- wanting to enter China.
Or, as Dalian Wanda Group Chairman Wang Jianlin, whose real estate and entertainment empire is building its North American headquarters adjacent to the Beverly Hilton at 9900 Wilshire Boulevard in Beverly Hills, said on the same panel at the Fortune Global Forum:
[W]e have so many Western companies in China, but you cannot simply replicate the Western ideas and philosophies in China. They need to adapt to the Chinese realities... So for Fortune 500 companies in China it's very important, it's imperative for them to learn traditional culture in China and how is it interrelated with the modern business culture.
Curiously though, the world beyond the berm is told the 330 million or so Chinese within a three-hour trip to the site on the other side of Shanghai's Pudong International Airport cannot wait to queue up for a boat ride on "It's a small world" or whatever Disney is offering up for its reported $5.5 billion marker. As, no, there will apparently be no attraction of that name at Shanghai Disneyland.
Not in China. Not in a country where Mickey, Minne and the rest of the gang are barely known. In a country where Disney might as well be Smith or Jones or Johnson. Well, maybe not that last one as Johnson & Johnson is actually a reasonably well-known brand throughout China.
The Walt Disney Company has a history of stumbling if not outright tumbling in its efforts to export Disney's brand of Americana. For reference, look no further than Euro Disney -- now known as Disneyland Paris -- and Hong Kong Disneyland. Of the latter, it is worth note that Disney has been known to Hongkongers from the early days of the Disney Brothers Cartoon Studio. Yet, to this day, with a direct link by MTR line to points throughout Hong Kong, Disney is barely able to keep up with the brand devoid, geographically hemmed in and animal exhibit heavy Ocean Park in Aberdeen.
Over lunch earlier this month at Neptune's in the Grand Aquarium, Ocean Park Hong Kong CEO Tom Mehrmann, who began his career as a street sweeper at Knott's Berry Farm just up the road from Walt's original Disneyland, said, "Disney still has to explain to some of its guests exactly what a 'Disney Park' is. We don't have that problem."
To further illustrate this point, visit Disney's outpost on Lantau, a parcel of reclaimed land near Hong Kong International Airport, and you will notice a different Disney. Some call it 'Disney-lite'. Others refer to it as 'McKingdom'. Regardless, there is a definite feel of a diminished product -- of a diminished brand -- on stage for the public's consumption.
For, on a spit of land with an audience topping seven million attached by subway line having a familiarity and a kinship with the West, sits the real experiment of Disney's entry into the Chinese market. And there, on a recent day, at a performance of The Lion King in a theater designed for Disney's Animal Kingdom in Orlando dropped into the Walt Disney Company's first Disney branded park in China, the actors sought to lead the audience in a rendition of the hit tune from this classic of Disney's second golden age of animation: Hakuna Matata.
Hakuna Matata.
What a wonderful phrase.
Hakuna matata.
Ain't no passing craze.
It means no worries.
For the rest of your days.
It's a problem free philosophy.
Hakuna matata.
Arms raised high in the air, cast members -- on stage and off -- encouraged the capacity crowd to sing the infectious chorus. With lyrics blasting through the speakers and flashing on screens in the theater, they sought a simple singalong to the catchy and commercial hit written by Elton John and Tim Rice. Unmoved, the audience sat stone-faced. Child and adult alike.
Considering most individuals reading this are likely humming the tune or hearing it play as part of the soundtrack of their lives, that speaks poorly of Disney's penetration into the far less foreign landscape of Hong Kong. As for Shanghai, Mr. Iger continued on at the conference in Chengdu:
We're a brand that is viewed as good for me and good for my family. There are values to the Disney brand and what it stands for that have interested people all over the world. But, it's very, very important that while we bring Disney to a market we make sure that in that market it feels like, for instance, China's Disney.
In leaving the park on that recent evening, the dressed by and for Disney MTR cars filled with tired visitors exposed to, saturated in, that which is the Disney Parks experience offered up in Hong Kong. Looking to the left, to the right, all around, not one visitor had that uniquely American rite of passage positioned upon their head. Mickey ears. Not one.
And, in the second largest market for its product and the largest consumer market on the planet, Disney's Frozen, the highest grossing animated film ever having delivered over $1.27 billion in ticket sales and the fifth-highest grossing film of all time, earned little more than $48 million. Less than four percent of its global box office.
Welcome to China, Bob.
Gary Snyder is a member of the Redstone family, whose company, National Amusements, owns Viacom and CBS, among other media assets. He is an advisor on Western media and culture to China.
