Aug 10 2006

Yes Virginia there is a China

For some time now I have been delivering a message that China’s impact is not far off but now and real.

This is a story from ETN that has some significant pointers in it and facts you all should know

Cheers

Timothy

Knocking of the great door of Chinese tourism

By Hazel Heyer l Special to eTN

With a projected 100 million travelers by 2020, China is poised to become the world’s hottest outbound tourism market. China’s gross domestic product (GDP) grows by 9.9 percent per year. Its economy surging to US$3 trillion and expects to quadruple its GDP in 20 years, averaging 7.3 percent annual growth. Alongside numbers reflecting positive trends is population of 250 million upper-middle class with an increasing disposable income.

Bigger budgets have afforded China to think about travel. In 2005, there was a 43 percent increase in Chinese outbound tourists to 31 million. According to the United Nations World Tourism Organization, Chinese travelers are the second fastest in spending in the world today, twice the global average. Last year, it ranked number 7 in travel and tourism. In 2015, it is estimated to rise to rank number 2 in travel and tourism demand, second to the United States.

“The US is the most popular destination for Chinese travelers. America is the top destination out of 10 long-haul destinations for the Chinese traveling outside of Asia. It is number 8 for all outbound destinations topped by Hong Kong, followed by Macau, Japan, Vietnam, Korean, Russia, Thailand before the US, ” said Jennifer Lee, Commercial Representative, in-charge of tourism at the US Embassy in Beijing. Lee addressed tourism leaders and Florida travel executives at the Visit Florida’s 39th Annual Governor’s Tourism Conference held August 6 to 8.

Direct flights have made connecting the two countries a lot easier in favor of China.
The 2004 US-China Aviation Agreement has increased the number of US airliners flying to China. Permits have been increased five-fold that weekly flights have spiked up from 54 to 250 in a matter of a couple of years. Charters and the US network have extended inland into China as well.

China’s door flung wide open for the US. Unfortunately, the reverse is not the same, a reminder of the trade imbalance existing in commodities exchange.

The Approved Destination Status (ADS) - countries approved by the People’s Republic of China for designated PRC travel companies to organize group tours to - does not apply to the US. Though it applies to business travel, or group travel, it does not hold for group leisure travel. Chinese travelers are unable to travel in groups to countries without ADS. They also cannot advertise for group tourism to non-ADS countries.

“The visa issue also confronts the Chinese traveler wanting to see a slice of America. One must travel only on business or individual tourism but not group tourism. Increasing number of B1/B2 (business/tourist) visas was reported in 2005 registering 292,248 non-immigrant visas, of which 77 percent are visas issued as B1, B2 or B1/B2,” said Lee. Chinese travelers to the US peaked at 405,000 (135,000 from Hong Kong and 270,000 from PRC) in 2005 generating 1.9 B dollars in receipts. This influx made China rank 12th as one of the US top international arrivals in 2005, up 33 percent from 2004.

Lee noted that the average Chinese travelers in the past were mainly businessmen or students. She also said today’s trend for travel relate to boutique, authentic tours, leisure or luxury, higher living accommodation, individual travel in contrast to previous preference of business travel, economy/package tours, whirlwind sightseeing and cheap accommodation.

“Most of the youth of China today have increasing disposable income, most of them women who enjoy spending on travel,” said Alexander Glos, CEO if i2i Media Beijing, China. He added travel is number one on the Chinese agenda for spending because bills take up as much as 10 percent of the household income.

There’s a lot left available for travel and shopping.

Best markets to approach are those with US embassy/consulate areas such as the expansive regional markets where 72 percent of the outbound comes are Beijing, Shanghai and Guangzhou including the Changdu and Shanyang. Visa interviews happen in these big cities, hence the outbound volume.

“Chinese today are young (between 25-40 years of age) and career-driven called the billion boomer generation with incomes comparable with the US. There has been a clear shift of 40 percent from business to leisure with Chinese first-time travelers. Business tops the agenda at 49 percent, followed by VFR at 48 percent, vacation then holiday,” said Lee.

Glos said, “Women, more than men, travel outside China today. Sixty percent is female, Choice for activity: predominantly shopping for signature, luxury goods not available in the country. They like entertainment Hollywood-style and excitement like skiing, scuba-diving, anything absolutely not Chinese.”

They like to spend a lot of money on their visits considering there are already half a million millionaires in the country.

In America, they prefer to visit California at 86 percent, Pacific at 58.5 percent, 37 percent to the Mid Atlantic and Mountain at 25 percent. To lure them, Lee advised marketing and promotion to travel users and end-users should be non-stop. Joint ventures with government designated outbound travel agents sell services to Chinese end-users. CVB’s and receptives are the best to represent their products to the Chinese.

Glos tipped Chinese should be lured to travel during the so-called “three golden weeks” including the Chinese New Year (first half of February), May Day holiday around May 1st and around National Day of October 1st (7 to 10 days around the holiday. These are the national holidays they travel a lot. In 1990, the Chinese developed the Golden Weeks to spur largely domestic tourism – the only weeks they get off for vacation.” Tap them wisely in these breaks.

Group travel is no longer a choice as there’s less independence, costly, regimented and against the young’s mentality. Glos said the further the destination is, the longer they stay. Chinese people travel over 20 days in the US. Though they don’t spend on hotels, they do spend for shopping and entertainment – a minimum of $1700 per person per trip.

Harrods in the UK and other department stores in France and Germany are hiring so-called Chinese ambassadors to be available in the store to assist customers.

Finally, Glos recommends attract them with advertising. They are lured by what they see on paper and on the internet. “Also credit card offers – since these are so new to the Chinese people they spend almost 35 percent of their shopping on credit.”

Timothy J O'Neil-Dunne
Managing Partner - T2Impact Ltd
Global Travel eBusiness
Tel (US) +1 425 836 4770
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