Disney is a global powerhouse in the animation business, renowned for narrowing the gap between reality and imagination to create joy for individuals via narrative. Disney’s worldwide presence highlights the notion of internationalization, the unification of consumer desire, and the establishment of a globalized economy, allowing the company to surpass its rivals, NBC Universal and Warner Media (Hua et al., 2021). This paper will investigate how Disney entered the Chinese market and which trade theory best describes Disney’s worldwide approach. In addition, the paper analyses environmental factors that may impact Disney’s operations and any particular difficulties, such as banking, bookkeeping, taxes, advertising, foreign recruitment, and employment concerns, that Disney must address for its Shanghai Company. The study will shed light on how the new Disney Park in China will affect the local surrounding, entertainment sector, and job market.
The Method that Disney uses to enter the Chinese Market
The breakthrough into the Chinese market might depend on government affiliation and benevolence. The Chinese authorities keep track of prohibited and unregulated sectors, as well as a five-year plan indicating growth needs (Lu et al., 2022). Disney’s first attempts to penetrate the Chinese market were unsuccessful because, as a media firm, it belonged to a limited category. The establishment of Disney English, a network of English schools for children, was a unique way for Disney to enter the Chinese market. The instruction business in China is unregulated, and it is simple to get the necessary accreditations. Disney’s entry into the China market as a broadcasting corporation was facilitated by the growth of its school network in many cities due to the popularity of Disney English (Lu et al., 2022). In addition, Disney English assisted in establishing productive relations with the Chinese stakeholders, as seen by the countrywide expansion of amusement, theme parks, and licensing.
Global Strategic Rivalry Theory
The global strategic rivalry hypothesis of worldwide commerce was created to study the influence of international strategic competition between multinational corporations (MNCs) on global markets. Corporations such as Walt Disney, NBC Universal, and Warner Media engage in constant worldwide cat-and-mouse games with one another as they seek to capitalize on their strengths and minimize those of their competitors. Given that Disney operates on a worldwide scale, it has several opportunities to achieve a durable competitive edge.
There are numerous ways in which Disney has a comparative advantage, such as possessing patent rights, developing new technologies, obtaining scale economies, capitalizing on knowledge or the learning algorithm, and forming strategic partnerships. Disney has acquired a competitive edge over its rivals by spreading its activities into new areas. Upon entering China, Disney used a joint venture (JV) collaboration model. Shanghai and Hong Kong were joint venture partners in which Disney had a 43% and 47% share, respectively (Wenjie, 2019). In contrast to Tokyo, where Disney settled on a license arrangement, its positioning strategy to form a joint venture with the Chinese government due to the country’s volatile economic and political climate proved advantageous (Wenjie, 2019). The notion of Guanxi affected Disney’s choice, which is described as the formation of interactions as a complicated social structure that incorporates components of solidarity and mutual duty.
A JV proved advantageous despite the authorities being the most significant stakeholder as Disney was reliant on the government for meaningful choices; this highlighted the importance of Guanxi and creating trust. Disney’s JV approach was successful; securing the government’s cooperation reduced political and cultural difficulties, allowing Disney to understand the local traditions and establish a good rapport with China’s administration. As a result, the Chinese government invested $2.9 billion in park land, roads, and train linkages (Wenjie, 2019). While also attempting to curb the counterfeiting of Disney items by closing down imitation hotels and shops, removing their economic risks.
Moreover, investing in research and development (R&D) is the most certain route to the pinnacle of the creativity, inventiveness, and patent acquisition rankings. Disney spends in the Chinese society to secure the longevity of its engagement with Shanghai and Hong Kong through planting trees, giving away reservations, and cooperating with tour firms (Wenjie, 2019). To achieve successful cooperation, Disney must thus cede more authority and comply with the Chinese jurisdiction to prevent the problems seen in Hong Kong.
Environmental Constraints in International Business
International Business Environment (IBE) refers to the global sale and purchase of commodities and offerings. IBE links possible interactions across two or more jurisdictions while retaining administration in a single nation. The breadth of International Corporate is expanding as it concentrates on the possibilities and difficulties associated with the worldwide business climate. Global operations differ from domestic activities in that it works in a surrounding characterized by complete uncertainty and quick change, with the potential for increased revenue and client base.
As stated in this subsection, there are numerous significant elements of IBE that have an impact on Disney. China’s cultural context presents a challenge to Disney due to the perception that Disney’s western foreign policy undermines China’s legacy, despite the fact that the Chinese language and cooking techniques are vastly different. Due to China’s collectivist society, Hofstede’s study demonstrates a significant cultural gap between the United States and China (Yang, 2019). Disney, as a symbol of American cultural imperialism, would not be accepted by the communist regime of China. Moreover, Disney faces significant dangers as China’s political officials fear that the increasing popularity of Disney among young children may cause youngsters to lose interest in and empathy for Chinese culture.
Additionally, Disney faces risks by entering China’s business climate owing to the industry’s unpredictability, which might negatively affect revenues or raise expenses, weakening the US currency. As profit is contingent on the economic market’s status, recessions would result in less visitation and expenditure on Disney items (Zhang, 2021). Disney’s entertainment and consumer goods are challenged by the sector for fake products and video infringement in China. Disney prolonged local premieres due to government restrictions, allowing rivals to sell similar movies at a lower price. Disney is susceptible to China’s regulations and confronts risks owing to the unpredictability and applicability of the regulatory environment, which may affect its administration of multimedia and amusement parks (Zhang, 2021). Disney may pay expenses to comply with China’s regulations and protect its copyrights.
Special Issues
As the major global economy with the most incredible growth rate, China continues to provide appealing options and commercial prospects for start-ups. Management Of human resources remains at the top of the agenda of organizational problems for international businesses doing business in China, despite the fact that there are numerous important considerations, such as the economic condition or monetary and currency hazards. Hiring is a complex process in China, especially concerning corporate executives. A competent HR department will guarantee that its organization has acquired the most qualified candidates from the skilled workforce. Foreign corporations who fail to do so may suffer one or more of the following difficulties: International enterprises are required by the regulatory environment to comply with stringent and complicated rules (Wei, 2018). Foreign commercial offices, investment firms, and corporate entities are prohibited from directly hiring staff. They must work with properly approved HR administration firms. While some Chinese small and medium-sized enterprises (SMEs) may get away with slight illegalities, foreign-owned corporations such as Disney are often held to a higher standard.
Advantages of Disney’s Business in China
Some of the benefits that accrue to Walt Disney by operating in China are discussed herein. Disney would gain from China’s commercial climate since household expenditure on leisure events surged by 56% (Feng et al., 2017). As the second-biggest economy globally, China’s market offered several demand potential for Disney due to the country’s higher discretionary income, cheaper infrastructure, and labor expenses. China’s unemployment incidence of 6.9 percent gives Disney a chance to generate jobs to refill the Chinese market, reinforcing the notion of globalization (Feng et al., 2017). As China develops its entertainment business outside its borders and departs from a purely mercantilist mentality, it will be more inclined to seek alliances. With government help, Disney is thus able to enter the market and satisfy consumer demand.
In addition, Disney has built a strong reputation among the younger population in China due to the success of films such as Kung Fu Panda, The Avengers, Mulan, and Star Wars. Disney can use nostalgia to lure older generations and provide residents the opportunity to see something untouched by their culture, which appeals to some Chinese who desire a genuine American experience without visiting abroad, to Disney’s favor.
Impact of Disney Park in China
People’s desire for high-end cultural entertainment projects continues to rise with fast economic growth and rapid improvements in people’s living conditions. The China Disneyland project combined entertainment, decoration, leisure, learning, and experience with other services to suit the need for high-quality cultural tourists (Ge et al., 2021). In addition, it offers excellent management and service requirements for maintaining domestic theme parks.
The Unbalanced expansion of China’s high-end market will result from the predatory growth of high Tourism services. On the contrary, when Disneyland was resolved in Shanghai, the benefits of its cultural tourism, such as the tourism and recreation project design scheme and adept commercial operation abilities, had to generate a divert influence on the high-end tourism consumer resources in and around Shanghai if not the entire country.
Influence on Shanghai’s social environment involves increasing job prospects in Shanghai will result in a decline in other sectors. Due to the vast assets of Shanghai-Disneyland, the development of the theme park’s catering, hotel, entertainment, and other amenities will undoubtedly generate significant employment opportunities, generate more than five million jobs opportunities for the local community, and reduce the unemployment rate in other regions. There are several restrictions on the local environment of Disneyland, including the height of neighboring buildings, the usage of nearby property, and the number of planes allowed to fly above the theme park, which would negatively impact the local economy.
Not only has the establishment of Disneyland in China stimulated the local economy, but it has also raised the living standards of the local population. Disney has 330 million consumer categories within a three-hour radius, and the park’s first section is 1,300,000 square meters in size (Ge et al., 2021). Such a land-intensive, labor-intensive, and capital-intensive consumer space is certain to play a significant role in fostering economic growth in Shanghai and enhancing the living conditions of the local populace. Additionally, like Disneyland real estate, this construction has a sustainable influence.
Functional Operations in International Business
The strategic planning hierarchy at Disney comprises functional plans, which are formed from tactical tactics. In order to promote higher-level strategy and planning, every functional unit or department at Disneyland has been assigned particular goals and targets to achieve. Functional strategies provide the results that should emerge from specific departments’ daily activities. Functional plans reflect the reality that most strategic and tactical objectives need the cooperation of numerous functional domains, such as departments, sections, and branches (Shams et al., 2021). Consequently, the tactical plan is broken down into the tasks and objectives of each functional area.
The purpose of functional business strategies is to enhance the implementation of corporate and company strategies. Human resource and marketing strategies at Disneyland are instances of functional strategy. Typically, they include resource allocation, operational expenditure reduction, and product enhancement. The functional planning level is concerned with designing and executing departmental function-improving plans. In strategic planning, functional strategies are often developed as a component of the general corporate strategy for the different functional sections of the organization’s organizational structure. It supports managers in concentrating the company’s efforts on its primary operational areas of activity.
Social and Ethical Issues and the Future of International Business
As organizations develop worldwide, they must not only comprehend an organization’s purpose, vision, objectives, policies, and initiatives but also consider the ethical and legal difficulties that arise in international commerce. In order for a company’s long-term development into a foreign setting to be successful, it must face significant moral and ethical issues and make difficult decisions. Outsourcing, religion, working conditions, workplace diversification and equal opportunity, human rights, trust and integrity, the political sphere, the surroundings, and graft and corruption are among the most prevalent ethical concerns in international business (Buckley et al., 2017). State and federal safety standards, environmental laws, monetary and fiscal policy reporting rules, and civil rights acts must be complied with in full by businesses that trade globally.
A corporation must confront serious moral and ethical dilemmas and make tough choices if it hopes to prosper in a foreign environment over the long run (Buckley et al., 2017). Every culture and country has its heritage, customs, traditions, and ethical code. In nations where women are denied the same rights as men, gender may be a problem. Religious festivals and other cultural festivals may sometimes restrict commerce. A global company must act in line with ethical and cultural ties to acquire customers’ support and business and create a competitive edge in a specific market.
Conclusion
In conclusion, Disney is a worldwide leader in the animation industry, recognized for bridging the gap between reality and imagination to bring people to delight through storytelling. Disney’s entry into the Chinese market may rely on official connection and favoritism. By expanding its operations into other sectors, Disney has gained a competitive advantage. Disney used a JV partnering strategy to enter China. China’s cultural backdrop confronts Disney with a dilemma owing to the idea that Disney’s western foreign policy threatens China’s heritage, despite the fact that the Chinese language and culinary practices are considerably different. Foreign-owned firms such as Disney are often expected to perform better than Chinese SMEs that may get away with minor violations.
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