Nov. 5 (Bloomberg) -- Jackie Liu and his girlfriend gave up on Hong Kong Disneyland after one visit, even though it will be years before ground is broken on another Disney park in Shanghai.

The mainland Chinese couple, wearing matching Donald Duck T-shirts, spent two hours in the theme park on a cool afternoon before heading back onto the train for more sightseeing in Hong Kong. The visit will be their last, they said.

“The Hong Kong park is quite small,” said Liu, 25, a college student from the southern Chinese city of Xiamen. “I will for sure visit the Shanghai park, as air tickets to Shanghai are inexpensive.”

That probably means more woes for Hong Kong’s four-year-old park, where visitor numbers hover below projections and the government is spending another HK$3.63 billion ($468 million) to add three areas. The venture took a blow yesterday when Walt Disney Co. said it won government approval to build another theme park in Shanghai that may be more than five times bigger, according to the state-run Xinhua News Agency.

The Shanghai park will cost 24.5 billion yuan ($3.6 billion), according to Hong Kong newspaper Wen Wei Po.

The plan gives Burbank, California-based Disney, the world’s largest media company, access to more than 20 million people in mainland China’s richest city. About 80 million people will be within 3 hours’ driving distance, according to China Market Research Group.

The resort in China, the world’s most populous nation, will be Disney’s sixth, and its fourth outside the U.S.

‘Small’ Disneyland

“It’ll very likely take away a lot of customers from Hong Kong as Hong Kong Disney is the smallest in the world,” said Hong Kong lawmaker Emily Lau, who has criticized spending public money on the park. “Disney is definitely eyeing the mainland market now because it can sell its products to the whole country. It is now turning away from Hong Kong.”

The Hong Kong park, a venture between the city government and Disney, hasn’t met expectations as a tourist draw since opening in September 2005. It received 14 million visitors in its first three years, averaging 4.5 million to 4.6 million a year, government economist Helen Chan told lawmakers in July.

That compared with an initial target of 4.2 million to 5.6 million a year, she said. The park sits on 311 acres, compared with 25,000 acres for Walt Disney World Resort in Florida.

The Shanghai park will occupy about 7 square kilometers (1,730 acres), according to Xinhua.

‘Not Worth It’

The Hong Kong government invested HK$3.25 billion for a 57 percent stake and spent HK$13.6 billion on landfill, roads, sewers and a rail line. Disney, the largest theme-park operator, invested about HK$2.5 billion for the remaining stake.

“The Hong Kong government money to build Disney is not worth it,” said Mei Cheung, 45, a hotel industry worker visiting the park with her niece. “The attractiveness of the Hong Kong park will for sure diminish once the Shanghai one is built.”

The Hong Kong government said China, with 1.3 billion people generating the world’s third-largest economy, can support two Disney parks. The city will develop new tourist attractions, including the Hong Kong National Geopark, and promote itself as a “shopper’s paradise” and hub for wine and gourmet foods, said Rita Lau, secretary for commerce and economic development.

Recoup by 2029

Hong Kong Disneyland’s expansion will begin by Dec. 31, she said. Disney will spend HK$3.5 billion to add rides such as “Toy Story Land” and “Grizzly Trail.” The government will turn part of a loan to the park into equity.

“We at Hong Kong Disneyland are focused on getting our exciting project under way as soon as possible,” Andrew Kam, the park’s managing director, said in a statement yesterday.

Disney’s investment will cut Hong Kong’s stake to 52 percent from 57 percent. The government said it may recover its capital investment by fiscal 2029. The park has declined to disclose net income publicly.

Mainland Chinese need visas to visit the former British colony, which operates under separate legal and financial systems.

“It takes me a whole month to get the visa to Hong Kong, while it’s much easier for me to go to Shanghai,” said Lu Zhi, 50, of Hubei province, who was visiting with colleagues from the service industry.

Chinese Names

Last year, Disney tried to connect better with locals by having Mickey Mouse and Minnie Mouse wear Chinese-style clothing to celebrate Lunar New Year in February. Characters use Chinese names such as Shui Gongzhu, or “Sleeping Princess,” and Baixue Gongzhu, or “White-Snow Princess.”

“The company won’t let one die out because it has invested just as much into the Hong Kong project as it will in Shanghai,” said Paul Leung, chairman of Hong Kong Inbound Travel Association.

The other Disney park in Asia is Tokyo Disneyland, which opened in 1983. The 494-acre site, which includes Disneysea, attracted 27.2 million visitors last year.

Mainland China’s first Disneyland will be in Shanghai’s Pudong district and include a Magic Kingdom-style theme park with characteristics tailored to the region, Disney said in a statement. Shanghai has in 17 years transformed Pudong from a rural farming community into a commercial district with the country’s tallest skyscrapers.

“I am very excited about the opening of the Disney park in Shanghai and will definitely visit it,” said Yao Lina, 29, an accountant in Shanghai. “There’s no need for me to go to Hong Kong or Tokyo anymore.”

To contact the reporter on this story: Wing-Gar Cheng in Hong Kong at wgcheng@bloomberg.net

Last Updated: November 4, 2009 11:00 EST