RETAIL: Disney Advances in Shanghai with Uniqlo Tie-Up

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Bottom line: Disney’s Uniqlo tie-up highlights its new focus on China retailing as the opening of its Shanghai Disneyland draws near, and could be followed by a major film-production tie-up in the next 1-2 years.

Disney in new China retailing tie-up

Entertainment and retailing juggernaut Disney (NYSE: DIS) is turning up the volume of its advance into China, with Shanghai emerging at the epicenter of its campaign. In the latest move on that front, the company has just announced it will launch a new concept store in China’s commercial capital in partnership with Japanese fast-fashion retailing juggernaut Uniqlo. That particular move comes just 4 months after Disney opened its first China Disney store in the heart of Shanghai’s financial district. That store was also Disney’s largest in the world.

This sudden retailing push comes as Disney prepares for the main event in the first half of next year, which will see it open its first mainland Chinese Disneyland, also in Shanghai. That opening will cap years of lobbying and planning, and will be the first new Disneyland since the last one opened in Hong Kong a decade ago.

We can probably expect more similar developments from Disney in China and especially in Shanghai, the commercial capital of a country that looks likely to pass the US over the next 2 decades to become the world’s largest entertainment market. One of the most interesting of those developments could be a film production tie-up, similar to a host of others that have been recently announced with big western names as China slowly opens its tightly controlled media market.

But let’s return to the retailing front for now, where Disney and Uniqlo have announced they will jointly roll out a store concept called “Magic for All”. The new stores will be themed around a stable of characters that includes Mickey Mouse and Donald Duck, as well as characters from other Disney units like Marvel and its Star Wars franchise. (English article; Chinese article) Under the tie-up, Uniqlo will operate separate “Magic for All”-themed stores within its larger stores.

Mention of China doesn’t come until the bottom of the announcement, where the pair say the first of the concept stores is currently under construction in an existing Uniqlo store in Shanghai. That flagship store will become the first permanent outlet under the partnership when it opens on an entire floor in Uniqlo’s largest store in the world by the end of September.

Good Partner Choice

In this particular instance Uniqlo certainly seems like a good partner for Disney, since the chain has rapidly become a major fixture in Shanghai’s retailing landscape, alongside other fast-fashion brands like H&M and C&A. Up until now Disney has done most of its China retailing through licensing agreements allowing third parties to make clothing, toys and other products based on its characters. But this latest tie-up, combined with the massive Disney Store opening in May, indicates Disney plans to get much more aggressive on the China retailing scene as Shanghai Disneyland prepares to open.

Disney certainly isn’t the only major media company that’s become bullish on China and Shanghai lately. Warner Bros (NYSE: TWX) last week announced the formation of joint venture with Shanghai’s leading media group, though the venture itself will be based in Hong Kong. (previous post) DreamWorks Animation (NYSE: DWA) also has a major joint venture in the city with that same partner, Shanghai Media Group (SMG).

Disney is slightly different from the others in its concentration on theme parks and now retailing, compared to a focus on filmed entertainment by the others. That was certainly a smart move in the past, when movies and TV series were still tightly controlled under China’s strict censorship policies. It still seems like a good strategy even today due to  the less controversial nature of such consumer products. But as Beijing relaxes its grip on filmed products as well, perhaps we’ll see Disney launch its own major film production tie-up in the next year or two as its love affair with China and Shanghai grows.

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