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Why Shanghai Disneyland's spell is wearing off after six months

High prices and subpar service leave visitors disenchanted

Shanghai Disneyland is still on track to hit its first-year visitor target, but all is not well in the Magic Kingdom. (Photo by Daisuke Harashima)

SHANGHAI Half a year after its ballyhooed debut, Shanghai Disneyland is struggling to keep the turnstiles spinning as complaints about high prices and disappointing service spread online.

On a clear morning in early December, lines at the gates were almost nonexistent. Gone were the crowds seen around opening day back in June. In the afternoon, electronic signboards showed only short waits -- five to 50 minutes -- for all but the most popular attractions. Workers killed time chatting at deserted gift shops.

Many of the visitors who did make the trip brought in packed lunches and drinks from convenience stores, including thriving shops inside the nearby subway station. Come lunchtime, patrons spread out on benches to eat.

"I heard everything in the park was expensive, so I bought lunch ahead of time," a college student from Jiangxi Province said, adding that she did not plan to pick up souvenirs or gifts.

EXPENSIVE FAIRY TALE Shanghai Disneyland, the core property of the Shanghai Disney Resort, drew 4 million visitors in its first four months, and the park is on track to reach its initial-year target of 10 million. But business is less brisk than expected, said an official for the city of Shanghai, which holds a majority stake in the park's operator.

Shanghai Disneyland's gates on June 16 -- opening day
The scene at the gates on Dec. 3 shows what a difference half a year makes.

A team from The Nikkei asked 20 visitors in late November and early December about Shanghai Disneyland's highs and lows. Of that group, 45% praised the attractions, while 40% said they appreciated the park's atmosphere. One in five spoke of convenient transportation to the park. The state-of-the-art computer graphics in various attractions, as well as the venue's appeal to both adults and children, drew plenty of praise.

"When the lights turn on at night, it's almost like a fairy tale," said a 22-year-old woman visiting from Beijing. She called the Shanghai park "a clear winner" over its siblings in Hong Kong and Paris. A 36-year-old Shanghai man with his family in tow said the property is "very convenient" to reach, with a parking lot nearby.

High prices were the most common complaint among the visitors. Admission runs 370 yuan ($53.50) on weekdays and 499 yuan on weekends and holidays -- sizable sums given the average monthly wage is just under 6,000 yuan even in Shanghai, where people tend to earn more than in other areas. Tokyo Disneyland, by comparison, charges 7,400 yen ($64.30) for a day's admission.

A 26-year-old Dalian woman visiting with friends said she spent over 2,000 yuan, or half a month's wages, on the two-day trip, including lodging and airfare. The group initially intended to stay at a "Toy Story"-themed hotel run by Disney, she said, but the nightly rate of 1,000 yuan prompted them to opt for a youth hostel instead.

"Food or merchandise in the park costs 100 yuan or so -- it's pretty expensive," the woman said. She passed up bottled water and made do with a small 30 yuan hot dog although she was hungry. To "enjoy the atmosphere," she visited a gift shop, but all she did was don a hat topped with Mickey Mouse ears and take photos.

Shaun Rein, founder and managing director of China Market Research Group, said visitors complain most about the cost of food and souvenirs rather than ticket prices. Chinese consumers tend to hesitate on these types of costs, he said, adding, "I would actually raise ticket prices and lower prices for food."

Poor service and operations were also an issue for 40% of respondents to The Nikkei's survey. A 30-year-old woman from Suzhou visiting with five other family members complained of staff doing nothing about line-jumpers, as well as workers' "coarse" manner of speech. Given how close they live to Shanghai, the family members would like to keep coming, she said, but they will not return unless park operations improve.

"There are plenty of staff around, but they can't even give clear directions," a college student from Hangzhou said, having asked two separate workers for navigational help, to no avail.

MANAGING EXPECTATIONS China's baseline for customer service tends to be considerably lower than in richer nations -- something residents are resigned to, even if they are not happy about it. But the involvement of Disney, a lauded global entertainment company, pushed expectations for Shanghai Disneyland much higher -- deepening the frustration when those hopes are dashed.

Two in five of those polled by The Nikkei said they expected the park to be more crowded than it was. Disney faced substantial opening-day issues in Shanghai, Rein said. The park was "too packed, and so they had people waiting in line for three hours for one ride." Pictures of the long lines and complaints from those waiting flew across Chinese social media, giving the park a reputation that will take a good deal of time to counter.

For any amusement park, a high number of repeat visitors is key to success. Shanghai Disneyland has begun offering 100 yuan gift certificates, usable at restaurants and other facilities inside the park, to get potential customers in the door. It has also started selling season passes through March 2017. These passes are not valid during the Lunar New Year holidays, but the weekdays-only ones are relatively cheap at 925 yuan for adults. At that price, they pay off with just three visits.

Ongoing expansion projects could burnish the venue's appeal. But large-scale renovations are also in store for Disney parks in Tokyo and Hong Kong, creating more competition. If Shanghai Disneyland cannot solve its customer service problem, cultivating repeat customers will remain challenging, limiting growth in admissions.

Hong Kong Disneyland suffered its first net loss in four years in fiscal 2015, through Oct. 3, amid a drop in the number of mainland Chinese visitors. Mainlanders account for roughly 40% of admissions at the Hong Kong park, and market cannibalization by the Shanghai facility likely contributed to the decline. Disney has its work cut out to keep both parks humming.

Nikkei staff writers Yusho Cho in Shanghai and Shinya Abe in Hong Kong contributed to this story.

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