“I fully expect that double-digit growth in the outbound Chinese tourism market will continue for at least the next five years. That might not be an obvious conclusion if you follow the economic story of China recently.
Economic growth as an indicator can be misleading as a indicator for several reasons. Overall, China’s economy is headed towards a slow down and reduced demand for goods and services. This is based on a reduction in global demand for goods made in China and a shifting of manufacturing to lower cost countries. There are also the environmental and social impacts of high speed growth that I believe have not been managed so well. We now see strong government reaction to official corruption that has a knock-on effect on retail and tourism. The famous scenes of smog in Beijing, the experience of car jams and food scares, are all significant signs that the economy will be facing severe bottlenecks that will prevent the same rate of growth we have seen in the past 20 years.
This might logically indicate that tourism will also slow down. Indeed, it is because of environmental factors that inbound tourism to China has shrunk. But in reality, the conditions in China seem to be driving those that can afford to, to use travel as a means of recharging and detoxing themselves. The fact remains that so many people are eager to travel abroad and are interested in foreign cultures. The economic growth has given them disposable income to do so now. China was a closed society for many years and has experienced fast-paced and dramatic opening up in the past two decades. The cost of travel is also falling as more air routes are opening up from secondary cities across China. Access to visas to foreign lands is becoming easier, and could be made easier still to entice more Chinese visitors. Information about outbound destinations is at everyone’s fingertips in their own language and localised to their culture and needs. And one thing that people sometimes forget, is that culturally Chinese consumers are living in almost every country on earth and respond to the same messages delivered in the same Chinese language channels. Whether they are Chinese students in London or young professionals employed by multinational companies, they have the propensity to travel the world, the income to do so and a network of friends and relatives in China that see them as destination advisors for their own travel plans.
Consumer education and promotion, trade engagement and direct digital marketing are now the vital tools in exploiting the vast Chinese market potential. Chinese travellers require more information on the range of products available to raise their level of sophistication when making travel choices. Companies who intend to tap into this market must establish an early presence and be willing to adapt and develop their products and services as needed. The level of detail and the amount of questions they have is way above what you will get from American or European tourists and you should anticipate this and offer easy, user-friendly access to the information. With the sheer choice on offer now of destinations and experiences, you are operating in a crowded field.
On a 1-5 year projection, we can expect further segmentation and specialisation in the market as Chinese consumers look for specialists in niche tourism sectors such as sports tourism, adventure and cultural tours. The increased sophistication and expanded range of destinations that Chinese are prepared to explore will give many more suppliers an opportunity to enter the market and profit from it. Provided you focus on brand building, customer service and safety, you can earn the trust of the Chinese consumers.
Improved access to internet distribution will allow more suppliers to directly offer their services to the market, creating the need for distribution and marketing plans via social media channels like Weibo and WeChat, SEM on Baidu and the other search engines, and ecommerce solutions that bypass restrictions on foreign companies selling online in China.
The move away from mass tour groups is happening but will not be the same as with the Japanese market in the 80s and 90s. Those that come from 2nd and 3rd tier cities will still be travelling in groups, as will the pensioners and school groups. For the 25-55 age bracket, small, self organised tours and independent travel will become the norm. There will, for a long time to come, be a need to address the specific needs and expectations of Chinese travellers that are based on their culture and experience of travel within China. Be it the type of breakfast they expect or language requirements and sensitivity to cultural norms and taboos, it is important to learn the basics and continue to keep abreast of the quick paced changes in this market. The book provides the basic background information to culture and etiquette as well, and is a good start. But just like Chinese language, Chinese business is a life long learning process.“
By Roy Graff during the launch of China, the Future of Travel on 21st of April 2015.
MAY