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The China Outbound Travel Education Series – part 11: USA as a destination

Editor - R — Mon, 31 Aug 2009 09:00:46 +0000

With the advent of a bilateral tourism agreement signed between the US and China at the end of 2007, the Chinese industry was excited about the prospects of a new shining and sought after destination for their clients. Equally excited were the US state and city tourism promotion bodies and private tour operators eager to find a new revenue stream as America’s tourism industry suffers from a global economic downturn. Many tourism promotion bodies opened representative offices or appointed sales representatives in China in anticipation of the tourism boom. From July 2008, Chinese tour groups began to travel to the US on a tourist visas. The weakness of the US Dollar in relation to the Chinese Yuan means stronger purchasing power for Chinese consumers, who are on the whole aspiring to visit the America they see in cinema and television.
We would advise caution in reading too much into this new agreement. Even before it was inked, Chinese traveled to the US on so-called business tour groups and estimates put them at around 400,000 per year. The US authorities expect tourism to grow to 500,000 in 2011. This is a very slow, controlled and unambitious figure that makes it difficult for destinations in the US to realize returns on their investment in the Chinese market quickly.

The China Outbound Travel Education Series – part 10: Europe as a destination

Editor - R — Mon, 24 Aug 2009 09:00:58 +0000

With the United Kingdom signing the ADS agreement in January 2005, all EU member states are now ADS destinations. The non-EU member states Switzerland, Iceland and Norway have also signed bilateral ADS agreements with the Chinese government in 2004.
As a result, Chinese certified travel agencies are allowed to promote and organise tourist groups (5 people and above) to all European destinations as well as Turkey. With these ADS agreements, the biggest hurdle for opening up the Chinese market has been overcome.
Europe is considered one of the favourite destinations for Chinese. It is regarded as a multi-cultural society with a long history and diverse civilisation. When travelling to Europe, Chinese want to visit at least three different countries. Tours take up to ten countries within two weeks and hardly ever visit one country. Within Europe, France, Italy and Germany are the most popular destinations.
In Europe, Germany has been receiving most of the Chinese visitors. It is pro-active in its approach to promote tourism and encourage business links. Moreover, Germany has taken the lead by signing ADS agreement bilaterally two years before the rest of the EU. They have been generous with their visa regulations and in turn gained an advantage over other European destinations.
France is also very active in promoting its destination. The cultural year of France in China supported by both governments has had a great impact. France has for years been issuing visa for tourism groups even while this was not officially agreed upon by the government. In 2008 tourism to France from China suffered a setback due to political sensitivities involving Tibet and the Olympic Torch relay through Paris. An unofficial travel boycott against France was allegedly instigated by the Beijing tourism board leading to a dramatic drop in tourism from China.
Switzerland has been successful in destination marketing despite having no direct flights, not belonging to the EU or Schengen visa agreement and the relatively late approval of ADS. The Chinese traveller has become very interested in Switzerland thanks to extensive marketing and promotion.
Italy has been reluctant to issue tourism visas in the past, but is implementing the ADS procedure now to conform to the agreement, resulting in much higher arrival figures. But as Italy has a small number of direct flights, it is at a disadvantage.

Some themes for European destinations in 2006
•   London: 2008 the Year of China
•   Germany: 2006 FIFA World Cup
•   Austria: 250 Anniversary of Mozart
•   Direct flights are a major selling point in destination marketing. Choice of tour operator in Europe and number of nights in each destination are decided by the first port of arrival.
•   “Visa shopping” in the past meant agents would bargain with different consulates to find the cheapest and simplest visa application and with it the choice of first destination. With the implementation of the overall ADS procedure this should be not be the case anymore, as all the embassies and consulates are supposed to apply the same rules.
•   Nevertheless, visa shopping still exists as some embassies and consulates process visas faster (e.g. larger staff capacity at their visa departments), have better facilities (such as special opening hours for ADS visa couriers), communicate in a more transparent way, are more service-oriented or are less fussy with visa processing (lower rejection rates). All contribute to the image of a certain destination and have an impact on sales.

The China Outbound Travel Education Series – part 9: Where do they go?

Editor - R — Mon, 17 Aug 2009 09:00:37 +0000

Statistics on China are, in a word, confusing. The arrival figures as registered by the receiving countries and the departure figures as registered by the customs in China do not match at all. The main reason for this is the fact that Chinese customs only register the first destination upon leaving China. As so many travellers leave China at the border with Hong Kong, it is registered as the first destination, regardless of where the actual destination may be.

For example, in 2004 the Chinese customs registered 420,000 departures for Singapore, while the Singapore statistics show 880,000 arrivals from China .
Top 10 Destinations
Among the top 10 destinations, the only non-Asian countries are USA and Australia. USA has not signed an ADS agreement with China on tourism. Australia was the first western country to sign the ADS agreement with China and has done extensive promotion in China. Australia is not shown in 2004, since most flights to Australia go through Hong Kong, which is then registered as the destination,

2007 Chinese departures to world regions according to Chinese customs
Destination    Arrivals
Asia   36.3 million
Europe   2 million
Americas   1 million
Oceania   0.5 million
Africa   0.3 million

Europe is not in the list of top ten destinations though it would, if counted as one destination in the statistics. The European Union member countries do not keep uniform statistics on Chinese arrivals. The passports of China, Taiwan and Hong Kong all have the name China on them, which leads to confusion at the destination. Lack of unified computer data from all EU countries makes the statistician’s job very difficult.

The China Outbound Travel Education Series – part 8: Who is the Chinese traveller?

Editor - R — Mon, 10 Aug 2009 09:00:47 +0000

Who?
Among the 1.3 billion people in China, clearly not everybody can afford a trip overseas. Disparity in income and living standards is very high. Research shows that at least 150 million people have an income level of middle class and above, privileged enough to afford travel abroad. Given the continuous growth of the economy, this middle class is increasing rapidly even as the income gap is increasing. Among this group, we can distinguish three types of travellers .

• Official travel
Official travel is conducted by people employed in government or public service. They often travel abroad upon invitation of a related organisation in the destination country. Such travel requires approval from the Chinese authorities in advance, as it is at the government’s expense. These officials carry official passports, which are different to private passports. The visa procedure is handled by departments of the Chinese government in coordination with the embassy or consulate of the destination country.
Most of the official delegations concern meetings with foreign counterparts, so-called inspection or technical visits. These technical visits provide the justification to travel abroad. More often than not the planned official visits are shortened or even cancelled while the group is already abroad. Securing an invitation to travel abroad has in fact become a way to visit a foreign country much like tourists do. The official delegations are often small groups of less than ten people. These groups come from all over China, not only from the major metropolises. All travel arrangements are taken care of by specialised departments within the ministries responsible.

•   Business travel
This includes incentives, visiting exhibitions and inspections or technical visits. The purpose of travel is to establish business relations and get a better understanding of the foreign business climate and commercial partners. The actual purpose of travelling is still leisure. Business groups vary in size and nature and can come from anywhere in China.
Incentive travel was in the past offered by foreign investors in Chinese enterprises, but now increasingly it is the Chinese enterprises who organize incentive groups for their staff, customers and agents. Incentive travel is mostly in the field of IT, medical care, automobile and insurance. To meet the needs of the incentive market, some travel agencies have set up new departments or independent companies specialising in handling incentive groups. In 2005, the biggest incentive group is 15,000 pax travelling to Australia and the second biggest is the 6,000 pax group to Thailand. There are quite a number of incentive groups of around 1,000 pax travelling to Europe and other destinations.
•   Chinese officials and business people can be big spenders. It includes a large amount spent on private shopping. Since their travel costs are paid for, this is not surprising.
•   Both business and official travel are not quite transparent and often not directly operated by tour operators, but rather within the governmental departments or by (trade promotion) consultants. Travel is often organised through a network of private relations of friends abroad. This will change once the legal framework for travel agencies will be adjusted to allow them to freely operate various types of travel.
•   Private travel
Private travel, unlike official and business travel, is a new phenomenon in China. This type of travelling has leisure as its sole (and authorised) purpose. Due to this being a new opportunity for Chinese, their priorities are to see as many countries as possible and get a better understanding of foreign cultures. It is often regarded as an educational experience. The government of China has signed tourism agreements with more than 118 foreign countries to facilitate Chinese tourist groups, granting the so-called Approved Destination Status (ADS).
•   Groups
Most people from China are first-time visitors and travel in groups, given the language barriers and unfamiliarity with the destinations. They belong to the rising middle classes and often travel in large groups (30-45 people). Certified travel agencies in China handle the visa procedure on behalf of the customers, following the ADS agreement with the destination country.
•   Individual Travel (FIT)
The individual traveller often has a high income and big purchasing power. They are more likely to speak other languages and are experienced travellers. They can be quite demanding to their agent and supplier.
The visa for FIT travellers must be applied personally. It is up to the discretion of each embassy or consulate whether to issue FIT visas for tourism. This is not covered by the ADS agreement or any other government policy. In fact, FIT is not classified by China as tourism.
•   The demographics of private travellers vary: Pensioners are travelling during the off-season mostly sponsored by their sons or daughters; the parents take their children for travel during school holiday; and the 3 golden holiday weeks are crowded with office workers and their families.
•   For now, group travel to Europe consists of more than 5 countries in the same itinerary for the first time visitors. Success in arranging single country Europe tours will depend on how well the destination is promoted.
•   Traditionally the domain of middle-aged males, travel is now accessible to all. Tourism promotion boards, suppliers and guides should be prepared to adjust the product to suit the demands of new types of customers.
•   China has many ethnic minorities with different cultural and religious backgrounds. Hui, Manchu, Korean, Ughur, Kazakhs, Tibetans, Miao are just some of them. They are potential consumers with defining characteristics and demands.

The China Outbound Travel Education Series – part 7: Advertising and PR

Editor - R — Mon, 03 Aug 2009 09:00:05 +0000

International branded PR companies now operate in most of the big cities in China primarily servicing international companies. There are many local advertising and PR companies with outstanding performance that offer value and know their target audience well. Advertising and PR studios (small enterprises) often provide very good and specialised services.
·   It is common practice to present journalists with an envelope containing a few hundred RMB as expenses, for attending a press release or marketing event.
·   The joint promotion with the key tour operators in each has proven to be an effective way for China marketing by the NTOs in China as it will also have the input from the tour operators and the clients have tailor made products to choose.
•   The key tour operators are competitors, but sometimes they can also work together on certain products.

The China Outbound Travel Education Series – part 6: Internet, social media and online marketing

Editor - R — Mon, 27 Jul 2009 12:58:20 +0000

This is a basic overview of what travel companies and destinations should consider before embarking on a digital marketing campaign in China:

Due to the fast economic growth and high education levels in China, internet usage has been booming in the past decade. Young urban professionals are morel likely to obtain their travel information online than through any other source. All major cities have reliable and affordable broad band internet access. Most Internet providers are based in Beijing. The internet is also often used for on-line reservations for hotels (FIT travellers). Fees for Internet media advertising are relatively low and enjoy a large, professional and young audience. Payment is normally in the form of space rental rather than pay-per-click as in the West.
The main internet portals are: sina.com, sohu.com, 163.com, online.sh.cn, tom.com,.21cn.com.
At the same time as the World Wide Web is becoming increasingly popular among Chinese, the Chinese central government is getting worried about the negative effects of this new media. While some worries are justified (addiction to online games, internet gambling, pornography and credit card fraud), others stem from the tight control China exercises on all other forms of media.
The result of this concern is a high degree of censorship and restriction of internet content. As China cannot control sites that are hosted outside its borders, it resorts to monitoring and censoring what Chinese can view from external sites. This can lead to certain servers at certain times being blocked. With most websites held on shared servers, any site can be affected by this.
The other issue not yet resolved is capacity – usage outpacing investment in underwater cables and routing systems. This results in frequent bottlenecks and extremely slow uploads of external sites. Companies and organisations that want Chinese viewers to access their site need to consider that it will be frequently unavailable or load at such slow speeds that people may become frustrated and go elsewhere.
The solution is to host a mirror of your site on a shared server in China. To do this, it is important to note:
•   Chinese sites have different design requirements – often very busy sites with animation and colours.
•   Registering your domain with .CN will improve search engine performance in China and avoid your domain name being taken by someone else.
•   Chinese search engines also use registered domains in Chinese – a separate registration is required and this is only available in China
•   Only companies registered in China can legally host a website in China – an ICP license or application number is now required for any site, no matter what the content is provided the site uses a .cn domain name. Application can only be accepted from companies legally registered in China.