The Walt Disney character Mickey Mouse greets visitors at the Hong Kong Disneyland park. [China Daily]

Mickey Mouse and chums have come one step closer to their new home in Shanghai, with Walt Disney Co signing a deal with its Chinese partner to build the Disneyland resort in the city.

The agreement between Walt Disney and Shanghai Shendi Group, a State-owned firm specifically established for the Disneyland project in August, was reached on Friday in Shanghai, according to Xinhua News Agency reports, which gave no further details.

Disney confirmed that the company has taken another step forward in the approval process with the Shanghai government, and added that it has been involved in discussions with the local government "for quite some time".

"We are still awaiting final approval from the central government on the incorporation of the related joint-venture companies and the completion of the necessary regulatory processes," Walt Disney said in a written statement to China Daily on Friday.

The central government last November gave the green light to develop Shanghai Disneyland amusement park, which will cost 25 billion yuan (US$3.75 billion) and take up an area of 4 square kilometers.

Jiang Liang, governor of Shanghai Pudong New Area, where the new Disneyland park will be located, said in April that the resort will be completed within five to six years. The theme park is expected to break ground this month, according to media reports.

The ownership of the project has yet to be revealed, but media reports say the joint venture's Chinese side, Shanghai Shendi, will consist of three large State-owned firms, including property developer Shanghai Lujiazui Finance & Trade Zone Development Co Ltd, which will own a 45 percent stake, and Jin Jiang International (Group) Co Ltd that will hold a 25 percent stake.

The park will be 57 percent owned by the Chinese operator. The remainder will be held by Walt Disney, local media reported earlier.

Neither the local government or Disneyland have confirmed the reports so far.

Spurred by the agreement announcement, shares of Lujiazui rose by the daily maximum of 10 percent to close at 21.7 yuan on Friday. Its shares have advanced by more than 25 percent since Sept 30.

Shares in Jin Jiang International Hotels Group Co Ltd, Jin Jiang International (Group) Co's subsidiary, also rallied on Friday.

"Disneyland's foray into China will pose threats to its Chinese rivals On the other hand, it will help boost the fledgling theme park industry in the nation by attracting more tourists to the park via its strong brand awareness among Chinese," said Zhan Dongmei, a researcher from China Tourism Academy.

The arrival of Disneyland will lift the overall service level of China's theme parks and help explore the market potential, even though the industry competition will heat up, said Annie Zhang, spokesperson from rival Shenzhen Overseas Chinese Town Co.

(China Daily November 6, 2010)