Walt Disney Co chief Bob Iger was one of the panelists at Thursday’s Fortune Global Forum in Chengdu, China, discussing the interaction between culture and economics and brands in the future development of China:
I think there’s a misconception that exists in the world, because technology and development overall has created access to markets, to territories, to countries that is unprecedented, meaning we’ve never seen it before, that maybe the world is gradually becoming kind of a one world culture. And I think that’s absolutely not the case.
I think you can really trip a company up if they start believing that, because the pride that geographies or countries, or markets have for their own culture, and the desire to own and control it still is quite existent, whether it’s for political reasons, economic reasons, or just nationalistic reasons.
And so if you are a global brand like Disney, and we’re different from a brand perspective because we’re not a consumable, really, even though people consume our products, they buy our product. We’re much ore of an experience brand, whether you’re watching a movie, watching a television show, certainly going to a theme park. And I think because we are an experience brand, we touch culture in a very different way than a typical luxury brand might.
And when that happens I think you have to be very careful. You have to have a very deft hand, because on one hand the Disney brand and what it stands for is of interest to the culture and to the people in the culture. Disney, that’s certainly the case we’re an optimistic brand or an inclusive brand. 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. It can’t just be the Disney that exists in carbon copy form somewhere else in the world.
Where we’re most in tune with this is the development and the design and the construction of Shanghai Disneyland. We spent 11 years negotiating for the ability to bring Disneyland. Disney has had four parks around the world, two in the United States and California, and in Orlando, one in Paris and one in Tokyo. Tokyo opened 30 years ago. And some time in the ’90s started looking further a field in Asia for other markets. Hong Kong was an obvious one. But, even back in the ’90s China was starting to show signs of emerging. And it’s amazing when you think about what’s happened since then, of course, because it doesn’t look anything like it did then.
And the company made a decision that Hong Kong should come first, that Shanghai, and we looked at other places in China, but it was clear that Shanghai was the number one choice, that Shanghai should come second. So we negotiated a deal to put Disneyland in Hong Kong, started the negotiation in Shanghai, and that lasted 11 years, 11 years. I was involved since 1999, and dealt with multiple entities, all with a desire on the Chinese side to bring Disney here. But, there were some very, very large complications on so many levels, financial and creative and logistical, and you name it.
But, finally we were able to close a deal, break ground in 2011 and the castle is going up as we speak. There will be soon some 14,000 workers living and working on the property, constructing Disneyland Shanghai in Pudong, actually, to open some time late in 2015. Now that can’t be the Disneyland that Walt built in 1955 for all kinds of reasons. But, it can’t be the Disneyland that Walt built in California, because this is China. It has to look, feel, resemble China’s Disneyland. And that has taken a lot of thought, a lot of work. Now, there will be things about it that will look very familiar. It has a castle. And there will be things about it that will not exist, or that don’t exist in any of the parks that we have.
You never know 100 percent [about local sensitivities] until you open it. You listen to a lot of voices and a diversity of opinion about it. And one of the first things that we discovered is that the initial people that we were dealing with were of one generation, had certain ideas, but there were whole other generations, and there were other geographies in China that had different ideas. So we essentially collected a multitude of opinion, and ultimately when you’re creating something you can use all the research in the world that tells you what you’re supposed to make. In the end it comes down to the gut feel of the creator to make what they really felt would they want to make, but what they feel is right, what the audience wants. In the end this will really be our decision, but based on a lot of time spent in the market and a lot of collaboration, a lot of listening, and we’ll keep our fingers crossed that we’ve done it right and chances are there will be things about it that won’t be perfect, and we’ll learn and adapt quickly.
By the way, one of the interesting learnings, I don’t mean to belabor this, but one of the things that we discovered in Hong Kong, which is very different than anywhere else in the world, is that the people who visit Hong Kong Disneyland like to spend twice as much time eating than they do in Florida, or California, or even Paris and Tokyo. We couldn’t figure that out. So when people take twice as long to eat you’re turning tables over in a restaurant basically at a much lower speed. And we didn’t have enough. We just didn’t build enough eating capacity. Now, we quickly adjusted, but that’s something all the research in the world I don’t believe would have taught us. By the way we made sure the menu was right. But, we didn’t get it quite right in terms of how long it would take them to eat the food that we were making.
[China] has been an incredible growth market, not just for Disney, but for global media companies because of the substantial investment in infrastructure that traditionally delivers or distributes our products. So for instance, movie screens which Wanda has obviously been a big part of. This market has very quickly emerged as one of the most important markets in the world for the movie industry. That was unheard of five years ago.
We just opened Iron Man 3, it’s done $121 million of business in China already. I think that speaks to the whole notion of authenticity. People are not only looking for luxury brands, they want them to be authentic. They want them to be real. They want them to be high quality. And when you’re talking about a movie, there’s nothing more authentic, nothing higher in quality than that experience of seeing it in one of Wanda’s great theaters, for instance, a great big screen, great audio quality. And the investment that’s being made in that infrastructure alone has turned this market into an extremely important market for the movie industry, of which obviously we participate.
Television is the same. There’s been great growth there. But there you have restrictions still on international brands, international intellectual property. Yet we’ve managed to increase our presence in the market operating within regulation. This is also a market that is leapfrogging traditional media in many respects. And we’re seeing this dramatic increase in mobile devices. They are really media platforms in so many ways. I know they’re commerce platforms, and communications platforms, social platforms, but they’re phenomenal media platforms.
So the notion of needing to be on television so that we can program on a fixed screen in a household is no longer the case anymore. It’s about getting on mobile platforms, and mobile devices. So that’s all very exciting.
You referenced a retail growth, too. We’re in the retail business. So obviously this is a big market for us. What you mentioned about Disney English, or what was mentioned earlier, we recognize that English was definitely a second language value here in China, and also looking at trends in terms of spendable income particularly on discretionary items, and the desire by parents and grandparents for their children or their grandchildren to be smart and to learn, we felt there was an interesting opportunity to get involved in the English language learning business.
We opened up a pilot school in Shanghai not very long ago, which was a Disney-branded English language learning program, where parents or grandparents take their child to the school weekly for I think it’s two one-hour programs, or one two-hour program a week as a supplemental product. We got the approval of the Shanghai School system fairly early on. We invested a lot in the curriculum. We’re very, very serious about that. And that needed to be effective and real.
And then we decided to start expanding it. And we now have over 45 schools. There are two in Chengdu. And there’s obviously opportunity to grow. It’s also a people intensive business, meaning there are operational challenges because we have to train good teachers to do this all over China, and make sure that the experience that children have when they come to our learning center is a Disney experience. It has to be clean. It has to be safe. It has to be high in quality. And it has to be basically successful from a learning perspective. So it’s not something where you immediately say we’re going to build 250 of them, and you’re there. I know 45 sounds like a lot, but we’re still walking before we run.
It has to be a blend, not whether we own or license, but the product and the experience that we’re going to offer in Disneyland Shanghai, and in Hong Kong, is not just about bringing Mickey Mouse to China, it’s about looking at China today and seeing what’s popular and figuring out a way that we can have a commercial relationship with that product, that intellectual property, so that we can offer it to the people who visit. And that’s what we did with Xi Yang.
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.
Then I think you have to be, as we talked about earlier, and come up a few times, you have to be incredibly aware, you have to have your ear to the ground, you have to have people on the ground from that market that are essentially teaching you enough about the market, it’s likes and its dislikes, so that the product ultimately feels right for that market. In our case, again, I think because of what I said earlier about pride and local culture, and ownership of local culture, it has to feel like theirs. It has to feel like the markets.
I don’t think it’s necessarily going to work if it feels like it’s some other market’s product, at least in the product that we make. It’s very, very important. What was discussed with high school musical was a successful television franchise in the United States. We could have brought it here and just put a Mandarin language track on it and put it on and I’m sure it would have gotten some consumption. Instead we decided let’s take it to China and let the Chinese make it for themselves, not just with their own language track, but their own characters and then adapting it, as was discussed rather articulately to the market, so that things that may have worked for it in the U.S. didn’t work.
There are so many different components, I think, that go into it. I was also discussed in today’s world social media and the proximity that you can create to your customer base is so incredibly intimate. It didn’t exist before. You’ve got to monitor that very carefully and then adapt very quickly. So that also means that the speed of adaptation has gone up tremendously, too. You can’t simply wait for a market to catch up to you very easily. You’ve got to react to the market pretty quickly.