Disney-Hong Kong Deal Doesn’t Look Quite So Rosy Now

Exactly one year after Walt Disney Co. and Hong Kong’s regional government reached their $3.5-billion deal to bring a Disneyland theme park to China’s front door, a small but determined group of opponents is fighting a rear-guard action against the project.

Although they appear to stand little chance of derailing the plan, which enjoys strong public backing, some observers question whether the lack of any real debate prior to last year’s announcement could provide fertile ground for these opponents if anything goes wrong with the ambitious scheme.

Local taxpayers will foot more than 80% of the total bill for Hong Kong Disneyland, which is likely to change the city’s character once it opens in 2005.

Environmentalists, including Friends of the Earth, argue the government not only got a bad financial deal in its eagerness to attract such a prestigious project, but has exposed the city to unacceptable liability risks by failing to assure the Penny’s Bay site on Lantau Island was free of toxic pollutants before it signed the Disney agreement.

The owner of a small, privately owned shipyard that has operated in the bay for much of the post-World War II era has consistently refused access to government environmental specialists, forcing them instead to work from samples taken on the yard’s periphery.

“We believe the whole area could be badly contaminated,” stated Plato K.T. Yip, assistant director of Friends of the Earth in Hong Kong.

Hong Kong government officials supervising the construction work say they are confident the bay is free of toxic pollutants.

“We’ve conducted a detailed investigation just outside the shipyard and in the seabed that butts up against it and our conclusion is that contamination levels are very low,” stated William Chow, the official responsible for Disney-related construction in the city’s Works Bureau. “We’re confident no remedial action will be necessary.”

Yip contends that the shipyard incident is just one of a series of incidents in which the Hong Kong government has violated the spirit, if not the letter, of existing environmental regulations to favor the project. Such action, he says, stems from a fundamental conflict of interest in which the government is supposed to be the regulatory watchdog over a project in which it holds a majority interest.

“The government shouldn’t get involved in joint ventures,” he said.

Under terms of the agreement, the Hong Kong government has committed to spending $1.74 billion preparing the Penny’s Bay site and transportation access to it, plus another $1.5 billion in loans and cash for construction of the park itself and its support facilities. Disney is putting up $314 million of its own money.

Hong Kong has a 57% holding in the joint venture company, Hong International Theme Parks Ltd., with Disney owning 43%.

Environmental concerns have been heightened after a series of sea-life kills were reported in a nearby fishing community shortly after land reclamation work began at Penny’s Bay last spring.

“One week after they started, we began getting affected by contamination,” said Lai Tak-Tsuen, chairman of the fishermen’s association in the village of Ma Wan, a few miles northeast of the construction work. “It’s a big problem for us.”

In the months since, Lai estimates his village has lost more than $2.5 million in income. Although there are now only around 12,000 fishermen in the increasingly urbanized Hong Kong region, they wield political clout disproportionate to their numbers, much as farmers in the United States.

The fishermen’s representative in Hong Kong’s Legislative Council, Wong Yung Kan, charged in an interview that the government badly underestimated the project’s impact on the local fishing industry and demanded it protect their interests.

“Government officials must go to these people and find out from them what’s going on,” Wong said.

Chow said the government is investigating the fish kills but that preliminary evidence indicates they are unrelated to the Penny’s Bay construction works.

“There are many possible reasons for what’s happened, but the cause doesn’t seem to come from Penny’s Bay,” he said. He noted adverse weather conditions as one possible cause, while other government officials note that other construction projects are also underway in the area.

Despite all this, the level of underlying support for the Disney project remains very strong in Hong Kong. Even Wong praises Disneyland as “good for our economic future,” albeit only if the fish problem can be resolved.

The reason for such strong backing is not hard to understand: For the majority of Hong Kong’s 6.9 million residents, Disney spells good news in capital letters.

In a city where the sharp decline of low-tech jobs has become a major political issue, Disneyland’s construction alone is expected to provide employment for 16,000 over the next five years. An additional 18,400 jobs will be connected to operating the park during its initial phase, and government projections see this number growing to as many as 35,000 if the park is expanded over the years to its full potential.

It will contribute to Hong Kong’s effort to become a regional tourist hub, adding a major family attraction for the first time to its proven ability to lure convention and business-related visitors. City officials say they expect the Disney project to pump $19 billion into the local economy over 40 years.

But above these projected financial gains, Disney’s decision to locate here has given the people of Hong Kong an incalculable psychological boost. For a region that remains uncertain of its future and fixated with its image as a global investment center three years after returning from British to Chinese sovereignty, Disney’s choice of their city over the likes of Shanghai and Singapore came as a much-needed vote of confidence.

If there is any regret about the Disney project among residents here, it is that many believe the former British colony should be seeking a greater Chinese dimension to its identity.

“Hong Kong is trying very hard to find what it means to be Chinese in the modern world,” noted John Babson, a faculty member at Hong Kong Polytechnic University, who has argued the city needs to connect more with its history and heritage than with Mickey Mouse. “Disneyland is taking this the totally wrong direction.”

As they move forward into the design process for the park, Disney executives insist they are sensitive to the need for a cultural dimension.

“We’re making sure this theme park belongs to the Chinese community, to the Southeast Asian community,” said Steve Tight, managing director of the Hong Kong Disneyland project. He noted the park would offer a mix of local, regional and western food and also celebrate typical Asian holidays such as the Chinese New Year and mid-autumn harvest festival with special decorations and entertainment overlays.

But Tight also noted that market research showed the park’s future customers--many of whom are expected to come from mainland China--wanted what he called “the quintessential Disney stories with Disney characters” that exist in the company’s two other existing international parks, near Paris and in Tokyo.

“They didn’t want us translating Chinese stories with a Disney overlay,” Tight said. “We feel comfortable with the strategy of bringing the Disneyland brand.”

But with no other high quality theme park existing in the Southeast Asian region, Disney executives admit they are unsure how Chinese customers might react to some of the high-thrill attractions under consideration for the park, such as customized roller coaster rides.

What little evidence exists indicates problems are unlikely.

Christopher Fruean, who promotes Disney’s U.S. parks in the Asia-Pacific region, recalled the reaction of a group of Tibetan schoolchildren and their chaperons who were given the chance to ride the high-speed roller coaster known as Big Thunder Mountain during a visit to Anaheim about two years ago.

“I don’t know that they’d ever seen a roller coaster before but they went crazy,” Fruean recalled. “The adults were turning a bit green, but when I asked the kids if they’d like to go again, they just screamed, ‘Yes, yes.’ ”