Opening up the tourism business
In its inexorable march towards globalization and meeting its commitment to the WTO, China announced that it will permit joint venture tour operators to benefit from the booming outbound tourist business. So far the foreign and joint venture operators were restricted to participating only in the inbound and domestic travel business – though last year China did permit Hong Kong and Macau funded companies to start managing outbound tours to these two territories. While this change offers a tremendous opportunity for foreign travel agencies to secure a share in this lucrative market, it also poses a challenge of successfully meeting the unique needs of the Chinese overseas traveler.
Chinese tourists
This announcement offers a significant opportunity to foreign travel trade as the outbound Chinese tourism grows rapidly and “holiday abroad” becomes an integral part of the lifestyle of urban elite. One is used to the sight of monuments and galleries of Europe and other tourist attractions of the world being overrun by Handycam wielding Japanese tourists. However, the Japanese chatter at the Colloseum and the Louvre is likely to be drowned in Chinese twitter, as the number of Chinese outbound travelers for the first time last year, exceeded the Japanese.
It was only in 1984 that the first post liberation ordinary Chinese traveled abroad to Hong Kong. And it was as recent as 2004 that the first Chinese from the mainland visited Europe on a tourist visa. However within a short span of time, hordes of Chinese are heading abroad for a holiday. Over 40 million Chinese visited abroad last year – up 19% from 2006 – and it is believed that this figure will reach 100 million by 2015.
Choice considerations
While collectively Chinese consumers are a formidable force, individually the disposable income levels even in the big cities are still a fraction of the developed countries. It is not surprising, therefore, that the Chinese tourist carefully watches the budget while planning a foreign trip. However, interestingly, the figures suggest that, the Chinese tourists’ total spend on visits abroad is quite high. While the tourists scrimp on hotel and seldom dine in chic restaurants, they spend the savings on buying watches, jewelry and clothing – not just for themselves but as gifts for relatives, colleagues and friends back home. Apart from sightseeing and leisure over 40% of potential tourists mention shopping as a key reason for foreign tourism (a figure which goes up to 47% among female tourists).
Given the fact that for the Chinese traveling abroad is a relatively recent phenomenon, the excitement of travel is often mingled with a feeling of apprehension. The feeling is further compounded by a realization that lack of fluency in English or other foreign languages may create unexpected problems. As a result, safety is stated as an important concern while traveling abroad, particularly by the older consumers. This possibly also explains the fact that a large proportion of the Chinese tourists prefer to travel in organized groups. The younger tourists, however, are less concerned about safety and are happy to set off on their own.
Golden week
While most potential Chinese tourists state that the travel abroad will be during their “paid leave”, many hope to combine their leave with a “golden week” (one of the three week long holidays, achieved by compensatory working on weekends) to enable them to prolong the sojourn abroad. However, last year after much discussion and fanfare, China cancelled the May Day golden week and substituted it with holidays for three important traditional Chinese festivals. While the general response to this change has been positive, it is not surprising that the potential foreign visitors are a little perturbed by this and many of them feel that this cancellation will affect their ability to holiday abroad. The three new holidays, on the other hand, will offer opportunities for shorter trips to nearby destinations, which may increase in popularity.
America here we come!
Hong Kong was the first destination to welcome the mainland tourists, and its proximity, shopping allure, Disneyland and other attractions, still keep it at the top of the table of the preferred destinations of Chinese tourists. Europe is next, and Southeast Asia and Australia figure next in line. US which is a very salient and influential country among the young urban Chinese, figures much lower down. However, this is not because of lack of interest in the country, as research has shown that US is greatly admired as a centre of arts, science and also for its significant tourist attractions.
The reason for this is the fact that even now the Chinese tourists can only holiday in those countries which are conferred an “Approved Destinations Status” (ADS). Other places can be visited but only on business, for education or to visit relatives. Only 20 destinations enjoyed an ADS status in 2002, but this has leapfrogged to 134 destinations now.
So far the US was not an approved destination for the Chinese tourists. Chinese could travel to the US (some 320,000 of them did so in 2006) but the travel was restricted to business, visiting friends or relatives or education. However, this has changed and US has just obtained an ADS status, and the first Chinese tourists may set off to the US as early as this spring. This is a source of great excitement to the Chinese to see a country which is a source of great interest to them, and which also exercises considerable influence through its popular art and entertainment. While the appreciating yuan against the dollar makes the travel cheaper for the Chinese, it is an opportunity for the Americans to lower their negative balance of payment by rolling out the red carpet for the Chinese and making them feel safe and at home.
Based on an online research among 403 Chinese, aged 15-44 and living in key tier 1 and tier 2 cities of China. The research was conducted by TNS, the largest marketing information provider in China, and the second largest research agency in the world.
Written by Ashok Sethi
The author lives in Shanghai and is the head of research methods and analytics for TNS.
