The Walt Disney Co has received Beijing's nod to build a theme park in Shanghai, in a major advance for the media and entertainment company in the tough China market ahead of President Obama's first China visit.
The announcement caps years of on-again-off-again talks between Disney and Shanghai, reflecting the tough road that Western media firms have faced in China in general.
China is one of the most dynamic, exciting and important countries in the world, and this approval marks a very significant milestone for The Walt Disney Company in mainland China, Disney CEO Robert Iger said in a statement.
Lack of central government approval was seen as a major stumbling block for much of the last decade as Disney has sought to build a park in the wealthy city of Shanghai.
Disney already has operations in Hong Kong, where its fifth resort was built in 2005, but that location has not been as successful as initially envisioned.
Despite years of effort, companies like Disney, Time Warner and News Corp have surprisingly little to show for their efforts in China, which strongly controls the activities of foreign media companies in its market.
The breakthrough comes just weeks ahead of a scheduled trip to China later this month by President Barack Obama, leading some to say the timing of the announcement could be related to the trip.
Following the central government's approval of Disney's project application report (PAR), the city of Shanghai and Disney must still work out more details on the park, said a Disney spokeswoman in Hong Kong.
Essentially the PAR approval represents one milestone in the process, she said. The next stage enables us to proceed with detailed discussions with the Shanghai government to produce a final deal.
Earlier rumors Disney had secured approval for the park also boosted shares of property developers that have holdings in Pudong. The city had decided on a site in Shanghai's Pudong New Area for the planned project but was still in discussions to determine who the local business partners might be, a government source told Reuters earlier this week.
Media reports have placed the cost of the park at around $3.6 billion.
The new Shanghai park, which would be Disney's sixth, will inevitably affect the Hong Kong park, though the impact will be limited as the two parks will draw from different areas.
Visitors from Guangdong and southern China will still find Hong Kong more convenient while Shanghai will attract visitors from northern and eastern China, said Paul Tang, chief economist of Bank of East Asia.
Shanghai is close to a number of other major cities within easy driving distance, including Nanjing, Suzhou and Hangzhou.
Disney also doesn't view the two parks as competitors.
From our point of view the Hong Kong and Shanghai parks are not competitors, they're complementary, the spokeswoman said. We really believe that the greater China market is big enough to support multiple parks.