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Monday, January 27, 2020

Disney’s China Woes

by Ray Keating
January 27, 2020

The Walt Disney Company announced that it was temporarily closing their Shanghai and Hong Kong resorts due to the risks tied to the coronavirus.

Regarding Shanghai, Disney, in part, stated: “Shanghai Disney Resort will assist in the refund for guests who have purchased tickets for admission to Shanghai Disneyland, have booked a resort hotel, or have booked tickets for Beauty and the Beast Mandarin Production through the original ticket purchase channel.”

And as for Hong Kong, the company stated: “As a precautionary measure in line with prevention efforts taking place across Hong Kong, we are temporarily closing Hong Kong Disneyland Park starting from January 26, 2020 out of consideration for the health and safety of our Guests and Cast Members. The Hong Kong Disneyland Resort hotels will remain open... The Standard Park Ticket is valid for six months from the purchase date. If needed, Hong Kong Disneyland Resort will assist in the refund for Guests who have purchased tickets for admission to Hong Kong Disneyland park or have booked a resort hotel.”

As of 1:00 PM EST on January 27, CNN reported that the death toll from the virus had reached 82 on mainland China, with 2,700 cases were confirmed. It was noted, “Nearly 60 million people have been affected by partial or full lockdowns in Chinese cities as the country's government steps up its response.” In addition, there were more than 50 cases confirmed outside of China, including at least five in the U.S.

This first and foremost is a human tragedy, and the primary emphasis should be in getting this under control, and aiding and praying for those suffering and at risk.

As for the business side of this, just before 1:00 PM EST on January 27, Disney’s stock price was down by better than 3 percent.

Disney, which owns 47 percent of Hong Kong Disneyland and 43 percent of the Shanghai Disney Resort, has faced a series of challenges related to China recently, namely, the Hong Kong protests, a China economic slowdown, the U.S. and China trade war, and now the coronavirus (along with controversies and accusations about his this has been handled). And this virus breakout comes at a time when Disney was looking to capitalize on the Lunar New Year holiday.

Now, while serious (and gravely so with the virus), these measures should be short term in nature. Another longer run potential issue for Disney is the increased, Maoist-style crackdowns on assorted aspects of life being orchestrated by President Xi Jinping. Xi has centralized power like no other Chinese leader since, arguably, Chairman Mao. No one knows how the Ji effort might play out, but it certainly raises questions, risks and uncertainties for the Chinese people, the country’s neighbors (including Taiwan), and for those doing business in China, like Disney.

Ray Keating is the editor, publisher and economist for DisneyBizJournal.com, and author of The Disney Planner 2020: The TO DO List Solution and the Pastor Stephen Grant novels. He can be contacted at  raykeating@keatingreports.com.

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