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China Outbound Travel Handbook

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China Outbound Travel Handbook

China Outbound Travel Handbook
by Roy Graff of ChinaContact and Hu Huaming of DPS-China

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    China Outbound Travel Handbook China Outbound Travel Handbook Document Transcript

    • The China Outbound Travel Handbook 2008 2008 written by: Roy Graff Hu Huaming 1
    • About the authors: This handbook was written from two distinct business views - Chinese local expertise and Western experience of doing business in China. As such, it provides practical information you can use as well as insight into the challenges of dealing with China’s tourism industry and how to prepare for them. Mr. Hu Huaming DPS China (Destination Promotion System) Hu Huaming began his outbound travel career in 1991 when China first opened the outbound travel market. He has been the general manager of the outbound department of CYTS. DPS specialises in destination promotion, dedicated to servicing international partners for the marketing and representation of their tourism products and services to China's booming market. Mr. Roy Graff ChinaContact www.chinacontact.org Roy Graff has served as E-commerce director for Gullivers Travel Associates and Chief Representative of Octopusavel.com in China from 2002 to 2005. He runs ChinaContact based in London and Beijing. The company provides full service representation to tourism destinations, hospitality and travel companies as well as bespoke service covering consulting, strategy, business development, training and product localization. Roy also maintains the ChinaContact Tourism Network which allows travel professionals worldwide to network and interact online. Roy administers the most comprehensive source of China travel sector news in English through his blog news.future-of-travel.org and directs the annual forum on China’s tourism industry in London – China, the Future of Travel. The China Outbound Travel Handbook will give you the basic understanding and insight to begin operating in this challenging, complicated but potentially hugely profitable market place. You will learn who is travelling abroad, what are the best ways of reaching them, how the travel industry is organised in China and how to show your hospitality to Chinese visitors abroad. This handbook is the travel industry professional’s definitive and user friendly tool for effective promotion and marketing in China. It will facilitate the establishment of profitable relationships with the right counterparts in China and improve your ability to welcome the Chinese traveller successfully. We wish you a pleasant and informative read. 2
    • Table of Contents Forew ord ................................................................................................................4 o rd The C hines e Tr av el I n dust ry ...........................................................................6 hi nes Trav Government tourism bodies ___________________________________________________7 Approved Destination Status (ADS) policy ________________________________________8 Wholesale and retail travel agencies____________________________________________10 WTO and China____________________________________________________________12 The Chinese currency _______________________________________________________13 Passports and visas ________________________________________________________14 The C hines e Me dia ...........................................................................................15 hi nes Media characteristics________________________________________________________15 Television ________________________________________________________________15 Radio ____________________________________________________________________16 Newspapers_______________________________________________________________17 Magazines ________________________________________________________________17 Trade Magazines___________________________________________________________17 Internet __________________________________________________________________17 Advertising & public relations _________________________________________________19 The C hines e Tr av el le r......................................................................................20 hi nes Trav elle r Who? ____________________________________________________________________20 Where? __________________________________________________________________23 How many? _______________________________________________________________27 When? ___________________________________________________________________28 How much? _______________________________________________________________30 What are their expectations?__________________________________________________31 Cultural differences _________________________________________________________33 Consumer behaviour ________________________________________________________34 Hos pi tality ...........................................................................................................39 tal ity Service and etiquette________________________________________________________39 Language_________________________________________________________________40 Illegal immigration __________________________________________________________41 Sal es & Ma rk eti ng i n C hina ...........................................................................42 Sales eting hin a Governmental organisations __________________________________________________42 Travel trade _______________________________________________________________42 Direct consumers___________________________________________________________43 Suggested marketing methods ________________________________________________43 Competition from other destinations ____________________________________________44 COTRI , CTW awards and Quality Label ________________________________________45 Exhibitions in China _________________________________________________________45 Challenges and recommendations _____________________________________________50 Forums and Conferences in China _____________________________________________52 Forums about China in the West_______________________________________________53 Lookin g to t he f ut ur e .......................................................................................54 Looki ng Furt her Inf orm ati on onli ne .............................................................................55 I nf ation on li Co nta ct det ail s .....................................................................................................55 3
    • Foreword As China is about to show the world all that it has learned and accomplished since the open door policy begun with the staging of the summer Olympics, the world’s business community is eagerly awaiting to see greater opening up and to seize opportunities to sell more to China’s growing middle and wealthy classes. This is also the day, considered auspicious in Chinese custom (the number eight is pronounced ‘ba’ which sounds like ‘fa’ for wealth), that the 2008 updated edition of China Outbound Travel Handbook is published electronically as a free resource for practitioners and academics in tourism. The book is available without cost or subscription fee through the ChinaContact Tourism Advice Network to anyone interested in China’s outbound tourism market. As I write this forward in Beijing before the Olympic Games Opening Ceremony, I feel that this day marks the true beginning of what my friend and colleague Professor Wolfgang Arlt of COTRI called ‘the third phase’ of China’s tourism sector development. China’s travelers are now as discerning and sophisticated as their counterparts in other countries and demand more choice, better quality and more control over their travel. This Handbook will be the first step to reach these customers. Roy Graff, Beijing 8-8-2008 The Dragon awakes! After twenty years of successful reforms, China has become an active player in the international tourism industry. Travelling abroad is now a regular part of the lives of many people in China, for both business and leisure. Doing business in China and with China, has been the subject of countless books and training courses for more than a decade. These books and manuals have dealt with general business practices that can be applied to as many industries and sectors as possible. While they are useful for background knowledge and some insight into China’s business culture, ultimately they cannot answer specific questions about China’s tourism industry. Tourism is one of the youngest industries in China, with outbound tourism literally the ‘baby’, still learning to define itself and realise its potential. The industry suffers from lack of regulatory enforcement and a ruling body several steps behind the private sector. There are between 200 and 250 million Chinese today that are financially able to travel overseas i. 2007 outbound numbers reached nearly 41 million, an increase of 18.6% over 2006. WTO estimates a minimum annual growth of 12.8%, reaching 100 million by 2020. There are over 700 licensed outbound travel agencies in China. The number of countries given ADS (Approved Destination Status) is more than 135 and still increases. It is an exciting time to be working in tourism, with China representing the single greatest growth opportunity in the world to western travel destinations and tourism companies.
    • Disclaimer: Every effort has been made to check the reliability of the information given in this book. All figures, statistics and numerical representations are updated at time of publication. The author accepts no responsibility for differences between stated figures and those published elsewhere. Due to the dynamic changes in China and the lack of reliably accurate statistical data, we recommend that you check for updates on the market regularly and not rely on statistical data alone. Rights to this publication belong to ChinaContact (CContact Limited). Unauthorised printing, copying and sharing of content included in this document for purpose other than personal use is not allowed. Please contact the publisher ChinaContact if you wish to quote, re-publish or reprint content under a commercial agreement at info@ccontact.com or +44 20 3239 9688. 5
    • The China Outbound Travel Handbook 2008 edition www.ChinaContact.org - all rights reserved) The Chinese Travel Industry Introduction The travel industry in China is complex and vague for two main reasons. First, the industry has only recently been confronted with new free market mechanism where consumers are free to choose their travel destinations. Second, despite this, the industry is still largely controlled and directed by the government. So what effect these two seemingly conflicting factors have? This situation is comparable to other sectors in the Chinese economy which are in a transitionary phase from centrally controlled policies to free market mechanisms. The market mechanism is clear to Western players in travel and tourism: the consumers’ demands must be met by suppliers with a premium on value added. But the overwhelming role of Chinese governmental institutions is often misunderstood by Western businesses. In the Chinese travel industry, the national, provincial and city governments influence greatly the development of the market. We expect this influence to gradually decrease over the coming years, in light of WTO regulations and increased openness to the west. As it stands, only a limited number of licenses are issued to Chinese travel agents allowed to operate international travel. There is no distinction between retail and wholesale business. Foreign tour operators are not allowed to conduct outbound travel in China in any legal form though there are signs that this situation may change in the future. The limited number of Chinese travel agents engaged in outbound travel clearly cannot meet the growing demand for travel abroad. This has resulted in an extensive grey network of travel agents operating without a license. The big disadvantage of this grey network is that they are not legally liable, are not allowed to deal with foreign exchange or handle visa applications. But this unofficial sub-sector has been the most active, succeeding in gaining a sizeable market share by focusing on business travel or using ‘franchised’ licenses. 6
    • The China Outbound Travel Handbook 2008 edition www.ChinaContact.org - all rights reserved) Only one third of the travel business is actually operated by official travel • agencies, the rest passes through other organisations such as government bureaus, trade promotion bodies, consultants, private networks and contacts abroad. Gaining access to the Chinese market and developing a successful strategy • requires first a good understanding of the complicated situation. Freelance agents often ‘rent’ or ‘franchise’ an outbound travel license number • from an established agency to sell and operate their own independent groups and individual travel business. Government tourism bodies China National Tourism Administration (CNTA) • CNTA is comparable to a Ministry of Tourism and financed by the government. It does not, however, have the full status of a ministry and lacks enforcement power. Its main functions are: • Defining the legal framework within which the travel industry operates. • Defining and implementing the strategy for the development of the travel industry overall. • Promoting inbound and domestic travel. • Decision-making on the (legal) establishment of foreign travel organisations within China. • Overseeing events concerning the foreign travel industry (e.g. CITM). • Signing tourism agreements with foreign governments on behalf of the Chinese government. Local government tourism bureaus • Each province and city has a tourism bureau which is a branch of CNTA; they are responsible for implementing the policies on tourism as defined by the CNTA. Their budget however comes from the local government and this often creates conflict when it comes to implement policies. When operating in China, it is as important to cultivate good relations with the local level tourism bureau, as it is to maintain good relations with CNTA head office. 7
    • The China Outbound Travel Handbook 2008 edition www.ChinaContact.org - all rights reserved) CNTO • China National Tourism Office is the international representation of CNTA and has offices in some of countries that maintain diplomatic relations with China. CNTO operate independent offices in the Los Angeles, New York, Toronto, Sydney, Seoul, Tokyo, Osaka, London, Paris, Madrid, Zurich, Frankfurt, Kathmandu and Singapore. They primarily deal with promoting China as a destination but have the additional role of promoting bi-directional tourism links. Governmental institutions like CNTA are non-commercial and not allowed to • directly cooperate with private companies. CNTA and the local tourism bureaus are partners of many European national • tourist offices for marketing and promotions in China. CNTA is usually the official partner for organising travel of Chinese citizens to • major cultural or sports events abroad. Business and official travel arrangements are not under the jurisdiction of CNTA. • The Ministry of Commerce and other ministries are in charge of these arrangements, often in cooperation with trade (promotion) consultants or similar organisations. Approved Destination Status (ADS) policy The emphasis of the Chinese government is clearly on developing inbound and domestic travel. The holiday economy is focused on promoting consumer spending within the country. Inbound tourism has priority as it brings in foreign currency. As for outbound private travel (tourism), the policy is chiefly concerned with controlling and regulating the travel trade and maintaining a sustainable gradual development of this sector ADS was first introduced in the early nineties for destinations in Southeast Asia such as Singapore, Thailand and Malaysia. Prior to ADS, travelling abroad was only allowed for business purpose and official visits with government approval needed for every single visit. ADS policy was created to account for the growing interest of Chinese citizens in foreign travel and the fast increase in disposable income. ADS is granted to overseas destinations through a bilateral government agreement. The ADS only concerns tourism groups handled by assigned Chinese local travel agencies. Business and official travel to overseas destinations are not included in ADS agreements. The purpose of ADS is to have a control mechanism on the organising parties on 8
    • The China Outbound Travel Handbook 2008 edition www.ChinaContact.org - all rights reserved) both sides (local travel agencies and international tour operators) in order to guarantee safe and reliable tourism services for the Chinese customers. An important issue within ADS is to avoid possible illegal immigration through tourism channels. All tourism groups travelling within the ADS framework are supposed to be monitored by both Chinese and foreign authorities to ensure they return to China. Embassies and consulates apply different methods to monitor the return of the Chinese tourists. Whenever a tourism group member does not return to China, the local travel agency is held responsible and sanctions are applied. Only certified ADS travel agencies are allowed to promote and organise tourist groups including visa application and payment of foreign currency to foreign parties. Each of the certified travel agencies must assign special couriers to handle the visa application procedure. Countries without an ADS agreement are not allowed to receive tourism groups from China or to promote their destination in China for tourism and are restricted to business and official travel groups only. CNTA keep a list of approved tour operators for outbound travel and publish it on their website in Chinese for every destination country (www.cnta.gov.cn). When listed with CNTA it might simplify the procedure regarding guarantees, payments and visa application. Each country in Europe has differing methods of selecting approved inbound operators to submit to CNTA. The online directory is not updated regularly and is normally several months behind. 135 different countries and territories have signed an ADS tourism agreement with the Chinese government and 100 countries were actively engaged in tourism promotion as of December 2008ii. The reason for this discrepancy is that after signing the agreement, the two countries then negotiate the fine details of operating and monitoring the tourist groups and agree on an implementation date. All the EU member states are included in the ADS agreement as concluded in • 2004. The United Kingdom was the last EU member state to sign an ADS agreement with China in January 2004 and began operation from end of July 2005. Switzerland, Norway and Iceland have separate bilateral ADS agreements with • China as non-EU members. The USA finally signed a bi-lateral tourism agreement (akin to ADS) in • December 2007 which took effect in July 2008. 9
    • The China Outbound Travel Handbook 2008 edition www.ChinaContact.org - all rights reserved) Requirements for local travel agencies to handle ADS groups Certified travel agencies for international travel with at least a one-year track • record of incoming tourism. No previous violations of travel related laws and regulations. • International and national travel agencies have differing insurance obligations to • resolve disputes (such as compensations or fines), 600,000 RMB and 300,000 RMB respectively. Licensed outbound travel agencies must have an additional insurance fund of • one million RMB, or 1.6 million RMB in total. Tour leaders and group size Contained in the ADS agreement is a stipulation that a Chinese certified tour • leader must accompany the tourism group. The certificate of a tour leader is reassessed on a yearly basis by CNTA. The minimum size of a group is five people including a tour leader. • China has 17,400 certified tour leaders. • Travel groups with less than five people do not fit into the ADS agreement and • therefore need to apply for business or official visa and justify their travel using invitation letters of receiving parties. They can also apply for a normal visa on an individual basis directly with the consulate without the intermediary services of the travel agent. The FIT market is not regulated through any tourism agreement. It is up to each • consulate to issue visa for individual tourists. The German embassy has been the most accessible for FIT visa applications. • They have issued over 20,000 individual visas for tourism. Most other EU embassies shun individual applications fearing possible illegal • immigration. Wholesale and retail travel agencies There are 1,472 international (inbound) travel agencies in China, out of a total of more than 15,339 travel agents. Only 700+ agencies are licensed to operate outbound travel. These travel agencies vary greatly in size. Some of them have branches nationwide while others operate in certain regions only. There is no clear distinction between wholesale and retail travel agencies yet. As tourism has only 10
    • The China Outbound Travel Handbook 2008 edition www.ChinaContact.org - all rights reserved) been developed recently, the services provided to the customer are still rather limited. Traditional transactions are concluded by sales people visiting the clients, based on their personal networks. This way of operating is not transparent and highly dependant on the sales person. These networks are the so-called grey areas. Although their name card may show the name of a certified travel agent, they operate independently and often switch from one agency to another (and so does their name card). The flow of staff between travel agencies is very common and staff retention is a major challenge. Any database of travel agencies in China must take this into account. These days, more travel agencies sell their services and products at the counter to meet the demand of the growing number of customers. Customers are becoming more sophisticated and therefore demanding more quality and transparency. Branding of high-street travel shops is not developed, with travel products mostly looking the same regardless of where they are purchased. When wholesalers exist, they are mostly based in Beijing, Shanghai and Guangzhou. They normally sell both to trade and direct consumers and operate multiple brands. The wholesalers collect their clients from all over China, through a personal network of relations. Pressure from below (the consumers), from above (government regulations) and from the outside (foreign competition) is expected to increase in the near future. This will lead to local companies developing clear brands and diversifying their products. There are several well known names within the travel industry. These are the travel agencies set up by different departments of the government in the days that all travel was controlled by the government. CTS, CITS, CYTS have offices all over China, but should not be considered as either a wholesaler or a national brand. Each of their offices is managed separately and must build its own reputation in the region in which it operates. Other nationally known brands include: China Comfort, CITIC, China Merchants among others. CTI, which is owned by Hong Kong CTS, is the only ‘foreign’ company that can legally operate outbound travel. Recently, CITS and CTS began buying back a controlling part in many of their own-brand offices across China. However there is no automatic distribution of products through the chain of offices and each can choose their own suppliers. 11
    • The China Outbound Travel Handbook 2008 edition www.ChinaContact.org - all rights reserved) Many sales and marketing staff or departments operate independently within a • travel agency. When disputes arise the travel agency might not be held responsible for the services of their staff or departments. When cooperating with such people it is important to double-check their actual contract with the travel agency. Franchising is a common way to operate as a certified outbound travel agency. • Unfortunately the franchising contracts are often not legally binding. Franchising or using another company’s license does not automatically imply • that the travel agent is unreliable. One needs to assess the actual quality of the total product and judge the potential for cooperation on a case by case basis. The logo or agency name on the name card is not an indication of who owns the • agency or how reputable it is. Always check for their license number, which company it was issued to and what is the relationship to the agent you are dealing with. WTO and China Until recently the scope for foreign tour operators was very restricted. Only representative offices were allowed to function as liaison offices engaged in collecting information on inbound travel to China. Subsequent to the World Trade Organisation (WTO) agreement on the Services sector, China has gradually (some would say reluctantly) opened its travel market to foreign investors from 2004. The establishment of both joint ventures and wholly foreign owned travel agencies in China was allowed in 2004, but the requirements are set very high. An annual business turnover of at least US$40 million is required for a joint venture and an annual business turnover of at least US$500 million for a wholly foreign owned enterprise with a registered capital of at least 4 million Yuan (US$483,000). Gulliver’s Travel Associates (GTA), a wholesale supplier of global travel products, now part of Travelport, launched its China subsidiary in Beijing in August 2004, becoming the first European travel agency licensed to operate in the country. Another two Japanese companies, Jalpak International (China) Co. Ltd. and All Nippon have been granted licenses to provide inbound and domestic travel services in China. Under the regulation announced by CNTA in June 2003, foreign-controlled or funded travel agencies are not permitted to arrange tours for Chinese mainland citizens to foreign countries (Including Hong Kong, Macao and Taiwan that are officially Chinese regions). 12
    • The China Outbound Travel Handbook 2008 edition www.ChinaContact.org - all rights reserved) China revised its regulations on foreign investments in wholly or majority owned travel agencies in China effective from 17 February 2005. The changes include the lowering of registered capital to RMB2.5 million and removal of restrictions on locations. However foreign funded travel agents still cannot engage in China’s outbound business. From the 1st of Jan. 2006, the requirement of annul turnover is above 25 million USD for Hong Kong and Macao tour operators to set up wholly owned tour operator in mainland China while it is 12 million USD for just joint venture tour operator. Facing increasing competition, domestic tourism companies have also begun to form partnerships. In April 2004 China Beijing Quanjude Group and Beijing New Yansha Group, two major tourism companies in the Chinese capital, merged to form the Beijing Tourism Group (BTG). The merger resulted in a new company with assets exceeding 15 billion Yuan (US$1.8 billion). China International Travel Service officially acquired the China Duty Free Group to form the CITS (Group) Corp. in November 2004. Most foreign tour operators of small and medium size in Europe are not able to • meet such high requirements regarding turnover and registered capital and therefore have restricted access to the Chinese market. In light of the above regulations, the local tour operators enjoy protection that • gives them an unfair advantage over foreign operators. Within the framework of the WTO negotiations, the EU will demand the principle • of equal treatment to be applied to the travel industry, removing all requirements or limitations to foreign enterprises in China’s travel industry. The Chinese currency The Chinese currency is called ‘Renminbi’ (RMB), literally ‘people’s money’. One unit is called ‘Yuan’ or ‘Kuai’. RMB is not convertible and banks outside China do not accept it. Foreign exchange bureaus now accept limited amount of RMB for purchase or sale. One needs special approval to purchase foreign currency within China whenever travelling abroad or paying in foreign currency for certain products. The State Administration of Foreign Exchange (SAFE) is responsible for all foreign currency exchanges in China. Only certified international travel agencies are allowed to make payments in foreign currency through the bank with approval of SAFE. Other travel agencies or organisations do not have access to foreign currency and can only make payments in RMB. 13
    • The China Outbound Travel Handbook 2008 edition www.ChinaContact.org - all rights reserved) Chinese citizens are allowed to take a maximum of 5,000 USD and 20,000 RMB in cash when travelling overseas for their expenses abroad. They can use RMB credit card in of the foreign countries. The Chinese government has revalued the RMB against the USD which means Chinese’ overseas purchasing power has increased. When dealing with a local travel agent or organisation one has to clarify in • advance in what currency and through what channel payments are to be fulfilled. Passports and visas China has several types of passports: diplomatic, public affairs and private passports. When travelling to Macau, Hong Kong or Taiwan special travel permits are issued for Chinese mainland citizens. Depending on the purpose of travel the Chinese citizen holds different passports. Only private passports are used for tourism and ADS visa is issued to private passport holders. Only certified international travel agencies listed on the ADS list are allowed to handle visa applications on behalf of their clients. The ADS licensed travel agent will submit the application to the embassies or consulates involved, including documents on the social, economic and financial background of the applicants. The ADS procedure for the Schengen member states is the same for every member country. Visa application procedures for individual, business or official travel are different with each consulate. 14
    • The China Outbound Travel Handbook 2008 edition www.ChinaContact.org - all rights reserved) The Chinese Media Media characteristics The media in China is not fully privatised and is controlled and/or monopolised by the government. Reporters and journalists can choose to write whatever they think is interesting as long as it is in line with government policies. There is no need to strive for excellence in the sense of ‘scoops’ or ‘breaking news’. Reporters and journalists often work on the basis of their own network, not necessarily based on market mechanisms as in the West. The tasks and responsibilities of reporters and editors are often not clearly divided. It is often confusing who the decision-makers are. Editors do not have as much freedom as those in the west and normally need to obtain approval from propaganda or censor bureaus of the government. Competition is nevertheless increasing, forcing the media to optimise their economic performance. Given the rapid developments in media, it is useful to seek advice from specialised consultants. These consultants can provide a good network of relations within the media circles. They can exercise influence on the editorials or advertorials size, content, lay out and depth. Most of the magazines regarding economics and finances are focusing on the white-collar class. Automobile and IT magazines are suitable for tourism promotion since their readers have a relatively high income. Fashion magazines target the white-collar female readers. Television All television stations are state owned and controlled. China Central Television (CCTV) has 12 channels broadcasting nationally and internationally. Every province has at least one other local channel. Most households receive about 50 different Chinese channels. Many requests for cooperation in promotion of foreign destinations come from TV stations and this demands careful study of the potential exposure. Foreign channels are not broadcast in China by terrestrial means but satellite dishes are the norm in international chain hotels and expatriate compounds. Fees for television advertising are high. So far only Australia, Hong Kong and Singapore have used this medium. 15
    • The China Outbound Travel Handbook 2008 edition www.ChinaContact.org - all rights reserved) Travel programs on television include: “Travel Compass” CCTV National “Travelling the Four Seas” Travel Satellite TV “Travel Column” “Beautiful Mountains, Beautiful Beijing Beijing Television Rivers, Beautiful Feelings” Shanghai Shanghai Television “Life On-Line: Fun” Shanghai Eastern Satellite “China is More and More Fun” Guangdong Guangdong Television “Wandering” Hong Kong Phoenix Satellite “Across China” Europe Phoenix CNE Satellite Radio All radio stations are state owned and controlled. Radio listeners are usually older people, students and (taxi) drivers. As many people of the middle class take taxis or drive their own car, radio stations can be good partners in advertising. Traffic Radio in each cities has very big influence on the market. Like in Beijng, 103.9 is a famous radio channel and the tour operators are willing to co-operate with it. Most large travel agencies have contracts with stations for tourism advertising and features. Main travel programs on the radio: National Central People’s “Morning News” Broadcasting Station Beijing Beijing People’s “Traffic Station – Relaxed Travel” Broadcasting Station and “Music Station” Shanghai Shanghai People’s “Travel Bus” Broadcasting Station Guangdong Guangdong Radio “Travel Macau and Hong Kong” 16
    • The China Outbound Travel Handbook 2008 edition www.ChinaContact.org - all rights reserved) Newspapers There are only two news agencies in China, Xinhua News Agency and China News Agency. There are thousands of different newspapers in China. The main two national newspapers are the “People’s Daily” and the “Economic Daily”. The only newspaper specialising in tourism is the “China Tourism Report” of the CNTA. Evening Newspapers in each city are widely read by the locals and considered most valued by advertisers. The segmentation of readers based on economic class or background is prevalent in China. Examples include “Beijing Youth” for white collar workers, “Shopping Guide” for the fashionable young, papers with a focus on specific provinces and those intended for expatriates from Taiwan, Japan or Korea. Magazines Glossy travel magazines are gaining popularity among the many lifestyle magazines selling well in China. “Trend Travel”, “Traveller”, “Travelling”, “Deep”, “City Travel”, “Travel” and “China National Geographic” are distributed nationally. Other Beijing magazines that publish travel features are “Sanlian Life”, “Fortune”, “Global Entrepreneur”, “New Economy” and “Beijing Youth”. “Huaxia Travel Geographic” and “Travel Agent” are published in Shanghai. Other Shanghai magazines that publish travel features are “Shanghai Week”, “Rainbow” and “Shanghai Top”. Trade Magazines TTG China, Travel Weekly, TTN and Travel Agent Magazine are distributed to the travel industry in Chinese free of charge. Airline magazines include “China Civil Aviation”, “International Aviation”, “International Aviation News”, “Eastern Aviation”, “Western Aviation” and “Southern Aviation” and “Global Travel”. Internet 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. 17
    • The China Outbound Travel Handbook 2008 edition www.ChinaContact.org - all rights reserved) 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. 18
    • The China Outbound Travel Handbook 2008 edition www.ChinaContact.org - all rights reserved) Advertising & public relations 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. 19
    • The China Outbound Travel Handbook 2008 edition www.ChinaContact.org - all rights reserved) The Chinese Traveller 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 travellersiii. 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. 20
    • The China Outbound Travel Handbook 2008 edition www.ChinaContact.org - all rights reserved) 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 21
    • The China Outbound Travel Handbook 2008 edition www.ChinaContact.org - all rights reserved) 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 major Markets and their defining characteristics • Northern China (Beijing and North-east China) As Beijing is the political capital, most of the official travel is from Beijing. • Beijingers are proud since they live in the capital. They are engaged in • politics and love socializing. Work comes second to friends and family. It is also the cultural capital and the people of Beijing have a great sense of • history. 22
    • The China Outbound Travel Handbook 2008 edition www.ChinaContact.org - all rights reserved) Eastern China (Shanghai and the coastal provinces Zhejiang and Jiangsu) These are regions with a history of overseas travel dating centuries, resulting • in many with relatives living abroad. These areas are considered wealthiest in terms of average income. • Shanghainese are trendy and internationally oriented. • Shaghainese dialect is commonly used in business, although all know • Mandarin Chinese. People from this region are known as very price-driven. They are shrewd • business people and drive hard bargains. Shanghai and surrounding areas are well developed for international • business. South China (Guangdong province and neighbouring provinces) Guangdong has benefited from its proximity to Hong Kong as the commercial • gateway into China. Its capital city, Guangzhou, is a major trading and commercial centre. People in the south speak Cantonese and prefer not to use Mandarin. • Consumer spending is the highest among China’s provinces. • People in the south prefer higher standards of service to cheap prices. • Comparing market sensitivity to various business factors: Factor Beijing Shanghai Guangzhou Price sensitivity Low High High Quality Middle High High expectation Service Middle High High expectation Brand awareness Middle High Middle Where? 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. 23
    • The China Outbound Travel Handbook 2008 edition www.ChinaContact.org - all rights reserved) For example, in 2004 the Chinese customs registered 420,000 departures for Singapore, while the Singapore statistics show 880,000 arrivals from Chinaiv. 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, The top ten destinations for Chinese in passenger numbers (CNTA) 1999 2000 2001 2002 2003 2004 2005 1 HKG HKG HKG HKG HKG HKG HKG 2 Macao Macao Macao Macao Macao Macao Macao 3 Thailand Thailand Thailand Thailand Japan Japan Japan 4 Japan Russia Japan Japan Russia Russia Vietnam 5 Russia Japan Russia Russia Vietnam Vietnam S. Korea 6 USA S. Korea S. Korea S. Korea S. Korea S. Korea Russia 7 S. Korea USA USA USA Thailand Thailand Thailand 8 Singapore Singapore Singapore Singapore USA USA USA 9 N. Korea N. Korea N. Korea N. Korea Singapore Singapore Singapore 10 Australia Australia Australia Australia Malaysia Malaysia Malaysia 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. 24
    • The China Outbound Travel Handbook 2008 edition www.ChinaContact.org - all rights reserved) Destination Europe 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. 25
    • The China Outbound Travel Handbook 2008 edition www.ChinaContact.org - all rights reserved) Some themes for European destinations in 2006 London: 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. Destination USA 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 and have decided on visa quotas to control the actual numbers that can visit on a tourist visa. 26
    • The China Outbound Travel Handbook 2008 edition www.ChinaContact.org - all rights reserved) How many? Chinese customs registered 28.85 million outbound travellers in 2004v, an increase of 42% over 2003. 31.03 million outbound traveller in 2005,up 7.53%; 34 million in 2006 and 41 million in 2007. Clearly of all the outbound travel the majority goes to Asia. The huge increase can be mainly attributed to the simplified procedures of visa applications for overseas destinations. For example, Hong Kong was limited to group travellers, but is nowadays also accessible for FIT travellers. As mentioned before, it is not clear how many Chinese travellers actually visit Europe as the statistics are not available or do not match. When we look at the available figures of overnights, visa, arrivals and departures we can only estimate that at least 600,000 Chinese travellers visited the Schengen member countries in 2004. This is approximately 3% of the total reported outbound travel market. 2004 outbound statistics reported from variousvi sources: Destination Overnights Visitors Chinese customs Germany 650,000 n.a. 220,000 France n.a. 400,000 200,000 U.K. n.a. 160,000 170,000 Italy 119,000 Sweden n.a. 30,000 15,400 Scandinavia n.a. 55,000 n.a. Netherlands 80,000 n.a. 49,000 Turkey 35,000 n.a. 11,500 Switzerland 230,000 140,000 16,500 27
    • The China Outbound Travel Handbook 2008 edition www.ChinaContact.org - all rights reserved) The discrepancy in the various figures comes from the fact that Chinese • customs only register the first point of arrival of the tourist. In the case of Switzerland for example, there are no direct flights so most arrivals will be registered under a different destination. Most European destinations registered an increase of about 30% in Chinese • visitors but this figure is influenced by the relatively low figures of 2003 because of the negative impact of SARS. The increase of 43% of total outbound travel is mainly the result of simplified • visa procedures to Hong Kong, Singapore and Macau. China is numbered fourth source for inbound travel to Australia with 230,000 • visitors and to Japan with 440,000 visitors in 2004. China is numbered second source for inbound travel to Singapore with 800,000 • visitors in 2004. When? Travel takes place throughout the whole year. As about half of outbound travel is for business and official travel, it is not reliant on peak seasons. Domestic and regional travel is often booked at the last minute. This is also true for European destinations, as the agent could not know if the visa application was successful until one or two days prior to departure. With more information available on the overseas destination (climate, prices, attractions, events etc.) and more accessible visa procedures, customers have started planning longer ahead. Nowadays agents can advertise tours one or two months in advance and receive bookings, safe in the knowledge that a tourist visa can be obtained. Paid holidays • Paid holidays are not common, which is why people tend to travel only during the public holidays for private travel. A public discussion to introduce more paid holidays in order to spread the tourism flow throughout the year resulted in a change to the holiday leave system in China from 2008. Employees won the right for 5 to 15 days of paid leave in addition to (shorter) public holidays. Employees of International companies or foreign-invested companies enjoy better holiday conditions, with a sliding scale of paid holiday each year additional to the national public holidays, based on years in service. These white-collar workers are also higher paid and form an attractive potential market sector for outbound travel. 28
    • The China Outbound Travel Handbook 2008 edition www.ChinaContact.org - all rights reserved) Public holidays and school vacations • The public holidays were extended from 3 to 7 days in 1999, creating the opportunity for people to travel at their own expense (private travel). Private travel is now mainly concentrated during the public holidays. The school vacations take place around Chinese New Year (4 weeks) and in summer (July and August). Travelling with the family is a new phenomenon as these extended holidays have only recently been introduced. China has implemented a strict one-child policy during the last twenty-five years. Families in the cities have one child only. Families from the countryside are allowed to have two children. Travelling is also often considered an educational experience for the only child. When a family goes travelling it might also include the grandparents, making it three generations and a terrific challenge for the travel planner. The spring festival is a time for families to meet and spend time together. The preferred destinations for this holiday are warm places closer to home. Domestic destinations and South East Asia are the popular choice. During October and May, more holidays were taken to long haul destinations. Many people took up to two weeks holiday during these periods. However from May 2008, the May week-long holidays was shortened to 3 days only and new public holidays were introduced. New holiday system from 2008 New Year’s day 1 January (one day off) Spring Festival Varies according to lunar calendar (3 days off extended to (Chinese New Year) 1 or 2 weeks) Tomb Sweeping 5 April (one day off) Festival Labour Day 1 May (one day off) Dragon Boat festival June, varies according to lunar calendar (one day off) Mid-Autumn festival September, lunar calendar (one day off) National Day 1 - 3 October (3 days off extended to 1 week) As the concept of paid holidays is relatively new in China, people often travel • with the excuse of business or official travel. 29
    • The China Outbound Travel Handbook 2008 edition www.ChinaContact.org - all rights reserved) How much? A trip to Europe equals roughly the average yearly disposable income of people living in the cities (1,500 Euro). As the cities in China have a population of millions, it goes without saying that quite a few people enjoy an income significantly higher than the average. Economic disparity is extremely high and cause for concern for the Chinese government. Estimates are that about one third of the urban population can afford to travel. Their average daily spending on travelling in Europe is around 300 Euro. Shopping is one of the highlights of travelling abroad for several reasons. Firstly, Chinese consumers are generally price conscious and consumers of luxury goods typically seek the lowest price if this is easily identifiable. Prices of luxury commodities can be at least 20 to 30 per cent higher in the mainland compared to Hong Kong or Europe as a result of the high import tariffs and consumption taxes. Secondly, gift giving is an important aspect of Chinese culture. When travelling, they tend to bring back gifts representative of the countries they have visited, often branded products otherwise inaccessible in China. In addition, in the business world buying expensive gifts is a common and accepted practice and is seen as a way to show respect. Last but certainly not least, despite the recent expansion of most luxury brands, the variety of luxury products available in the Chinese mainland is still limited when compared with Europe. And some brands do not offer their full range of products on the Chinese mainland. This is an additional incentive for the Chinese tourists to buy when travelling overseas. Average spending per trip to Australia is almost 3,000 USD per Chinese visitor, • compared to 3,600 USD per Japanese visitor and 3,870 USD per American visitorvii. Shopping of luxury goods focuses on jewellery, leather goods, watches, • accessories and ready-to-wear. Chinese travellers still tend to carry cash, domestic credit cards • getting popular. of the foreign destinations now can accept Chinese credit cards. Singapore has introduced a visa policy connected to Visa platinum and gold • cardholders, they can apply for tourist visa with multiple entries based on their credit card credibility. 30
    • The China Outbound Travel Handbook 2008 edition www.ChinaContact.org - all rights reserved) Economic hubs in Chinaviii • Area Cities Urban population North China Beijing, Tianjin, Dalian, Haerbin, Shenyang, Jilin, Xian 50 million Eastern China Shanghai, Hangzhou, Nanjing, Jinan 30 million Southern China Guangdong, Shenzhen, Fuzhou, Kunming, Xiamen 20 million Western China Urumuqi, Lanzhou, Tianshui, Lhasa 8 million Central China Wuhan, Changsha, Hefei, Chengdu, Chongqing 60 million Average yearly disposable income per person in Euro (2003) • Beijing Shanghai Hangzhou Guangzhou Fuzhou Chengdu Wuhan Changsha 1,400 1,500 1,300 1,500 1,020 882 850 994 Average consumer yearly spending per person in Euro (2003) • Beijing Shanghai Hangzhou Guangzhou Fuzhou Chengdu Wuhan Changsha 1,112 1,104 995 1,157 734 645 725 833 What are their expectations? Travelling is a big deal for Chinese and doubly so when travelling abroad. The freedom to travel to Europe without the need for official permission is the beginning of an era for the tourism industry. Tourism, however, is not a new phenomenon. Under the pretext of business of official delegations, hundreds of thousands of Chinese had visited Europe in the past decade. The historic background of travelling abroad was often based on “friendly relations” with other countries. Until the late eighties the world was divided in two camps engaged in cold war. During this period China made a clear distinction between friendly nations and adversaries. Officials were allowed to travel abroad only upon official invitation to enhance friendly relations. It was therefore very much limited to officials and seen as a great privilege. With the fall of the Berlin Wall, the consequent change in world order and economic reforms in China, outbound travel had moved from being the privilege of officials to a business necessity. As disposable income and leisure time increases, it is now becoming a part of ordinary people’s lives for pleasure and education. However, visiting other countries is still regarded as an exchange of friendship and goodwill. This cultural background can influence the expectations of Chinese travellers. One often still feels honoured or privileged to travel abroad and expects a corresponding hospitality from the hosts. With the changing times, privileged Chinese visitors are 31
    • The China Outbound Travel Handbook 2008 edition www.ChinaContact.org - all rights reserved) not necessarily received ceremoniously; rather they are often treated as a cash cow. Frequently, the Chinese visitor is disappointed in the level of service and hospitality he/she finds in Europe. To experience Western society first hand is very much a culture shock. Europe is not the hyper-modern society they have expected compared to China which has always depicted itself as backward and poor. The first groups of travellers to Europe received a great deal of publicity and have set the tone for Europe’s image in Chinese eyes. They view with respect Europeans’ regard for cultural heritage, the environment and personal freedoms. The positive experience often comes from such things as access to casino’s, to luxury goods and visits to famous traditional landmarks like the Eiffel tower and Dutch windmills. As national tourism boards and tour operators are finally allowed to promote and advertise their tourism products and services, the Chinese consumers will now have unprecedented access to information. This offers a choice on what type of travel they would like and leads to a quick diversification of the market. Although shopping is high on the list, the negative experience of many on high pressure ‘shopping tours’ to Southeast Asia and Australia is slowly changing the priorities. Interest in attractions, museums and nature, variety of accommodation and means of transport will all be expressed by this market in the next few years. Based on a research by the China Economic Prosperity Inspection Centre in 2002 among 700 Chinese citizens from Beijing, Shanghai and Guangzhou, it was surmised that over 60% intend to travel abroad within one year. Excerpts of the survey: Do you intend to travel abroad within one year? I have been abroad already and have the intention to travel again 21.6% I have not been abroad, but intend to go 42.25% I do not intend to travel abroad 36.2% Do you intend to travel abroad within three years? Yes No Not sure 38.2% 19.6% 42.2% When planning a trip abroad, what do you consider the most important issue? Sightseeing schedule 27.40% Service quality 25% Variety of destinations 18% Standard of accommodation and food 17% Transportation 10.40% When planning a trip abroad, what is your main concern? That promises made by the agent are not fulfilled 31% Complicated procedures 28.90% Price may be prohibitive 20.10% That complains will remain unresolved 11.40% Lack of choice among travel agencies 8.60% Source: Huanya Economic Research Institute 32
    • The China Outbound Travel Handbook 2008 edition www.ChinaContact.org - all rights reserved) Cultural differences Travelling in Europe can be a culture shock for Chinese as we have mentioned. It can also be so for the hosts. Managing expectations is equally important for the hotels and service suppliers that engage Chinese tourists. The concepts of privacy and space are quite different for Chinese and • Westerners. Being loud and nosy is an expression of enjoying oneself and caring for each other, but this might be experienced as rude by Westerners. With such a dense population, Chinese are accustomed to very little personal space and are not used to being on their own. Smoking is entrenched in Chinese society as the domain of men. They will find it • difficult to accept smoking bans in public spaces. At the same time, they will be puzzled over the prevalence of public smoking amongst women in Europe. As China’s history dates back thousands of years, Chinese are not impressed by • cultural sites that are ‘only’ a few hundred years old. This is a distinct advantage of Europe over the new world destinations of Australia and North America. The cultural and historical links between China and Europe should be highlighted as much as possible. When travelling abroad it is a rare opportunity to experience certain activities that • are forbidden in China. Casinos and cabaret shows cause a lot of excitement among visiting Chinese for this reason. In China, travel is a service and travel agents are expected to bend over • backwards to satisfy their paying customers. In turn, those agents expect their partners in the destination to go along with the client’s demands under any circumstance. The find it difficult to accept the western attitude. What we consider a fair service for a fair price, they would consider inflexibility or lack of caring. Because visa approval is still sometimes unpredictable, air tickets and hotels are • often confirmed at the last minute. Business people, used to flexible domestic travel, expect to be able to change their plans frequently and therefore do not plan carefully enough to avoid late changes. Compared to other nationalities, Chinese groups are never booked months in • advance. There is tremendous pressure on travel agents, visa consulates, local suppliers, hotels, guides etc. to provide instant quotations and high quality tours on extremely short notice. Inevitably this often leads to problems on the road and subsequent complaints from the clients. As ADS procedures become the norm and visa application standardised, we expect to see this problem ease. 33
    • The China Outbound Travel Handbook 2008 edition www.ChinaContact.org - all rights reserved) Consumer behaviour Food and drink Chinese cuisine is world famous. Chinese travellers do not easily accept other cuisines. Whenever Chinese cuisine is not available, Chinese travellers will have a hard time adjusting. At least one Chinese meal a day should be arranged. Chinese meals are shared together which often results in less expensive dining compared to Western restaurants. Chinese food abroad was adjusted to the taste buds of Westerners and is often not up to Chinese standards. Depending on which province they come from, Chinese have very different tastes when it comes to food. People from Guangdong like fresh food with little spice, people from Sichuan, Hunan and Hubei enjoy very spicy food; people from Shanghai, Jiangsu and Zhejiang prefer sweet and people from the North of China eat more salty and oily cuisine. Chinese often bring their own dried instant noodles, which they can eat at any meal, should the food they find on their trip not be suitable or not fill them up. Instant noodles are prepared by pouring hot water on them. Though it is difficult to satisfy a Chinese traveller when it comes to food, paying attention to the choices of cuisine will certainly be highly appreciated. A host that takes the care to find out what kind of Chinese food the clients like, or a hotel that goes the extra mile to add Chinese elements to the breakfast buffet, will win the respect and appreciation of their Chinese guests. When it comes to drink, Chinese tea is ubiquitous. Unlike the black tea prevalent in Europe (‘red’ tea in Chinese), Chinese drink green tea leaves, which are less processed and therefore lighter in flavour compared to black tea. Nowadays, sweetened iced red tea is becoming popular amongst the young. Chinese visitors often bring their own tea leaves, since they do not expect to find it in Europe and prefer leaves to tea bags. Hotels and restaurants would do well to provide hot boiled water to brew tea or instant noodles even if they do not stock these items. In China each hotel and restaurant provide unlimited hot water or green tea free of charge, so this is expected in Europe as well. It is worthwhile stocking disposable chopsticks even if serving western food. Beer is popular during a mealtimes and hard liquor for the men. Women are less inclined to drink alcohol and normally stick to tea or soft drinks. People from northern China are more likely to drink more potent stuff, such as rice wine (mijiu) or sorghum wine (gaoliang). 34
    • The China Outbound Travel Handbook 2008 edition www.ChinaContact.org - all rights reserved) Meals times tend to be early – 7 AM for breakfast, 11:30-12:00 for lunch and • around 6 PM for dinner. All dishes are to be served at once or in the order they are prepared and rice can • be served in one large bowl to be shared by the guests. In northern China people eat soup at the end of the meal, while in southern China • people soup is a starter. Chinese usually don’t like sweet desserts such as cakes and are used to eat fruit • at the end of the meal. In contrast to European cuisine, Chinese welcome a variety of meats and • vegetables in one meal. Fish, poultry, beef etc can be served together, with rice and soup as a staple. People from Northern China love dumplings (similar to ravioli with meat, seafood • or vegetable filling) as any meal of the day. Muslims make up a large minority in China who do not eat pork. • There are very few vegetarians in China so no special arrangements need to be • made, unless it is a Buddhist group. Accommodation Accommodation is normally arranged by the European tour operator. Hotel chains traditionally do not have direct contact with Chinese travel agencies although this will change. Chinese consumers are not familiar with the range of hotels in Europe or the standards. They form their expectations based on hotels in China and assume that the standards are the same across Europe. Managing their expectations and providing more information in advance in very important. Chinese travellers often judge the hotel by the size of the lobby. They prefer large hotels with a modern look and state-of-the art equipment. A double room in China means 2 separate single beds, the equivalent of twin room in Europe. This is also referred to as ‘standard’ room and is preferred by Chinese guests. 35
    • The China Outbound Travel Handbook 2008 edition www.ChinaContact.org - all rights reserved) Hotels that feature Chinese restaurants or with a Chinese restaurant in the • vicinity are always preferred. Shopping areas within walking distance have preference. • It is helpful to provide information in Chinese where the nightlife takes place or • where there are casinos. Chinese people are not used to drink tap water. They expect hot water flasks or • water kettles in the room. We recommend stocking the mini bar in the room with green tea leaves and • instant noodles. It is important to clearly show which items are for sale. Chinese electric plugs are 3 pronged and different to any European country. • They use the same wattage, but adaptors are needed to suit the local sockets. Chinese people travel light so a basic selection of accessories such as • toothbrush, toothpaste, razor, comb etc. in the room will be appreciated. Chinese international satellite programs are available all globally. CCTV 9 is an • English language channel while other CCTV channels are all in Mandarin. Many satellite channels available in Europe are in Cantonese, so this is a point to notice. Providing such channels is a very good selling point. Transportation Coach: Comfortable, fast, safe and economical arrangements are expected. Chinese groups mainly travel by coach through Europe. The Chinese travel agencies are not familiar with the rules and regulations covering coach drivers in Europe and try to extend the driving hours to fit more in to each day. Local tour operators should clarify this area and provide (where possible) a seamless service throughout Europe. Rail: Travelling by train through Europe is gaining in popularity, particularly for FIT. There is a room for much more promotion as Chinese are very used to this mode of transport, but have no awareness of how advanced and comfortable the rail system in Europe is compared to their own. Air: The main requirement is direct air connections. There is a bottle neck on air routes from China to Europe and many choose connections via Asia or the Middle East. Air routes to Europe from Chinese cities other than Beijing, Shanghai and Guangzhou are preferred as currently almost all travel to Europe must transfer via these cities or Hong Kong. Some agencies even arrange charter flights during the peak periods to resolve this. 36
    • The China Outbound Travel Handbook 2008 edition www.ChinaContact.org - all rights reserved) Chinese-speaking cabin staff are vital, as there may be many tourists who are • flying for the very first time. As a courtesy, any local maps translated to Chinese will help the tourists gain • courage to venture on their own. Sightseeing Many Chinese travellers to long haul destinations are leaving their country for the first time. They prefer to visit at least three countries during their trip. Mono-destination itineraries are still rare but gathering interest. Attractions and itineraries are often decided by the European tour operator and are pretty standard. To promote new attractions or itineraries, the European providers will need to build long-term relationships with the Chinese travel agencies to gain their trust and support. As travel bookings are often last minute, less attention is paid to the details of the itinerary. With the limited knowledge of the agent this cannot be checked. Of course, it is does not help customer satisfaction at all, but will improve only with more experience, longer planning time, better visa procedures and consumer sophistication. The Chinese-speaking tour escort or guide is of great importance to the Chinese tourist. Whenever the tour guide is not up to scratch, complaints will ensue. Checking in advance the source region of the group can help to match them with a suitable escort/guide. The tour leader coming with the groups is supposed to speak English, but don’t be surprised if communication proves difficult. Recent experience of ADS groups shows that agents try to save money by not paying their tour leader or hiring young, inexperienced ones. The tour leader then attempts to make up their revenue from shopping commissions. 37
    • The China Outbound Travel Handbook 2008 edition www.ChinaContact.org - all rights reserved) Shopping Shopping opportunities must be included in coordination with the travel agent and tour leader. The Chinese travellers love to purchase souvenirs during their trip, as it is their habit to offer presents to all their friends, relatives and colleagues back home. A large proportion of their trip budget is spent on gifts both in proportion to their income and in real terms. Chinese people are very socially aware and care what people think of them. They may all purchase the same goods once one member made a buy. Brand is very important to them. They will purchase items so as not to be outdone or not to embarrass the tour leader. However pressure selling is having a negative effect on the reputation of many destinations and travel agents. Though shopping is integral to the experience, discretion should be used. In China, shopping malls have long opening hours so it is important to inform the clients what the opening hours are in your region, to avoid disappointment. Favourite gifts: clothing, jewellery, cosmetics, watches, regional delicacies and • souvenirs. Some groups already travel solely for the purpose of shopping. This started in • HKG and Singapore and now also happens in France and Italy. 38
    • The China Outbound Travel Handbook 2008 edition www.ChinaContact.org - all rights reserved) Hospitality Service and etiquette Chinese people are quite patriotic and proud of their culture. It is considered ill-mannered to criticize China for sensitive issues like human rights, Taiwan or Tibet, which are based on Western media information they have no access to. As leisure tourists they do not expect to enter into political discussions. Based on China’s history of occupation by foreign nations, they are sensitive to racial stereotyping and bias. If they feel this to be the case with any service provided to them, their offence will be severe. Chinese feel free to ask direct personal questions out of simple curiosity (personal income, blood type, date of birth and family relations for example). This is an expression of concern and friendship and not meant to be rude or intrusive. The differences between Chinese people from various regions can be just as pronounced as between different countries in Europe. Before receiving a group it is useful to know which area they are from in order to adjust your service and planning accordingly. Credit cards are becoming more popular but international cards are difficult to obtain and normally require a large deposit in China. Therefore for travel, cash is still king. Unfortunately the large amounts of cash they take for shopping make Chinese tourists a target for robbery, so safety is one of their greatest concerns and should be addressed head-on. Name cards are always exchanged at business and social meetings and should be handed out and received with both hands holding the card. If receiving Chinese guests, or visiting China, it is a good idea to prepare Chinese versions of your name card. They will show your guests/partners how to pronounce your name and what is your position. The Chinese surname always comes before the given name, usually consisting of one syllable, although there are exceptions. Names of ethnic groups in China are different. It is acceptable to shake the hands of people of the same gender while with younger people social handshaking is much the same as in the west. Social kissing, which is normal in Europe, is not the norm in China. As Chinese avoid head on confrontation at any cost, you may be excused for thinking after a visit that everything went smoothly and to their satisfaction. In fact, the reason they do not complain is because they fear it will lead to an embarrassing confrontation. The concept of 'face' is extremely important. MianZi in Chinese, can be lost (shi mianzi) or given (gei mianzi). Losing face happens when someone is put 39
    • The China Outbound Travel Handbook 2008 edition www.ChinaContact.org - all rights reserved) in an embarrassing situation. Making a Chinese person nervous in an already uncomfortable and alien environment will definitely lead to a loss of face. Even when in the wrong, avoid a direct confrontation. If there is a tour leader, it is best to discuss problems with him or her first and ask him/her to facilitate the resolution. Finding a compromise is always seen as the best way. It is usually likely that the guests will return to China and either complain to their travel agent or just to their friends and family. In any case, a responsible host will try to find out their real thoughts of the experience before they depart. Some tips on how to accomplish that: Ask the agent - Follow up visits by checking with the tour operator or travel agent • if they had received any complains or comments on the services. Formulate questions differently – rather than asking “is everything ok?”, rather • “how can we make your experience better?” or “what suggestions can you make to improve our service?”, so that the reply will be perceived as friendly and positive. Never assume you have received an honest reply. The cliché about yes meaning • maybe and maybe meaning no is very much a fact in China. Language Knowledge of foreign languages is very limited despite compulsory English studies at school. There are no opportunities to practice and Chinese are inherently shy about what they do not master. Information in Chinese is a necessity on board airlines, in restaurants, tour attractions, hotels and so on. This can begin with marketing collateral and extend to websites, information at consulates, tourist information desks at airports and in city centres. Chinese who travel abroad read up on Chinese language guide books written by Chinese. The information that you provide to the guests should consider what they are interested in, instead of direct translation of the same collateral that is used for a western audience. The mainland uses a simplified form of Chinese written language, while Hong Kong and Taiwan use the traditional form. These must not be confused. Spoken Mandarin Chinese is the official dialect of China and Taiwan and ostensibly Hong Kong although Cantonese is the preferred lingua-franca in South China and Hong Kong. In Shanghai, though Mandarin is understood, Shanghainese dialect is the preferred business language. 40
    • The China Outbound Travel Handbook 2008 edition www.ChinaContact.org - all rights reserved) The satisfaction of a tour group often depends on the skills of the Chinese speaking tour leader. Where possible, matching the dialect or background of the guide with the group will automatically put the tourists at ease. Illegal immigration As there is such disparity of income within China, people traffickers profit from the desire of poor people to look for opportunities to immigrate to the west. The advent of tourism groups unfortunately gives these criminals another tool in their effort to smuggle people over. The methods they employ include fake passports and national ID cards, fake invitation letters and bribing travel agents to help with visa application. To deal with this threat, CNTA has strict criteria for ADS approved agents as well as mechanisms to prevent abusing the system. Local travel agents check very thoroughly all applicants, before the consulates do the same. Normally, travel agents ask for a deposit of up to RMB 50,000 per person, refundable when the customer returns to China. Some consulates require the travel agent to show the original passports and boarding cards of the tourists upon their return as an additional precaution. The agents are liable to cover the entire cost of repatriation from their insurance fund and be blacklisted with the consulates. The tour guide usually carries all passports of the group members. • Both travel agents and consulates keep lists of cities in China that are regarded • high risk for illegal immigration. Travel agencies operate screening procedures on customers that are similar to • those employed by consulates. 41
    • The China Outbound Travel Handbook 2008 edition www.ChinaContact.org - all rights reserved) Sales & Marketing in China Introduction Chinese consumers and trade are different and marketing to them is the main challenge for new entrants into this market. Adaptability, creativity and willingness to listen and be flexible with plans, will be rewarded. Frequently, strategies will need to be adjusted or refocused to keep in line with a fast changing market place. The Swiss National Tourism Office, German Tourist Office, Italian Tourist Board, Maison de la France, Finnish National Tourist Office and Visit Britain have now all established themselves as well-known travel promotion organisation in China. Their extensive network within the trade and media is an excellent gateway to the Chinese market. National and Regional tourism boards have the option of using a local travel • consultancy to deliver tailor-made marketing strategies before they embark on establishing their own branch. Chinese business is based on personal relationships and trust. When selecting a • local partner, agent or representative, consider their existing personal network with the travel trade, media and government. Governmental organisations Maintaining good relations with China National Tourism Administration (CNTA) and its local branches cannot be stressed enough. CNTA is responsible for implementing the ADS policy and their public or tacit approval is always needed. Any marketing campaigns should be advised to them and ideally gain their approval and cooperation at both national and local level. Travel trade The initial partners are often the more than 700 certified international travel agencies who are authorised to handle tourist groups. They are in direct contact with targeted customer groups. Profitable cooperation will come through designing a joint promotion and marketing. A win-win solution found through incentive schemes or marketing cost sharing is advised. Cooperation can include further parties such as airlines, media and other overseas travel organisations (hotels, shopping areas, attractions etc.). Though more complicated, it is also more effective and allows the agents to offer a fully designed package. Low budget and boutique hotels are more of interest to FIT travellers be it corporate or students. Working with one of the many on-line hotel reservation centres will 42
    • The China Outbound Travel Handbook 2008 edition www.ChinaContact.org - all rights reserved) bring the benefits of their local knowledge and market reach at minimal marketing expense. Travel agents are eager for practical information in order to understand overseas destinations since they themselves have not travelled abroad much. Familiarisation tours are very useful and serve to enhance mutual relationships. Cooperation should be planned for long term profit, as the industry is still in its developing phase. Direct consumers Local media, with travel agent support, will be the most effective route to reach the target consumer. Press tours are more effective when combined with familiarisation tours for travel agencies focusing on a range of products. For example, the cooperation of Swiss National Tourist Office with Beijing Traffic Radio Station and CITS resulted in a successful campaign promoting Ski Holidays in Switzerland. There are many opportunities as people in the media are extremely eager to promote travelling abroad. New ideas for stories do not come often so it is possible to secure firm commitments for new items and advertorials on the basis of well executed press tours. Suggested marketing methods FAM tours were mentioned above. They are not only useful for raising awareness but also for improving relations with key contacts. Cooperation of different tourism related bodies to provide a seamless package to the consumer as suggested above, helps overcome the agent’s lack of knowledge and initiative in promoting new destinations. Any new marketing campaign will require high profile press events and direct contact with the trade through newsletters promoting new itineraries and products. Involvement of either government bodies or one of the main Chinese tourism groups will help with the publicity and the follow through. Attention should be paid to the dominant players in each geographical region. Plan your campaign in a gradual way, since it is impossible to cover all of China with one single campaign. This market is too large and shifts constantly as it develops. Since Chinese place high value on famous brand names, marketing strategies can be adapted to suit. Joint promotions with famous brands of electronics, drinks, watches, cars etc. that play into this characteristic have a higher chance of success. Certain target groups cannot be easily reached through the mainstream retail travel sector. These include the affluent, corporate and incentive travellers. In order to market to them, other channels should be tapped that will require assistance from 43
    • The China Outbound Travel Handbook 2008 edition www.ChinaContact.org - all rights reserved) local specialist consulting companies, trade groups, clubs, associations and government bureaus. Competition from other destinations Many other outbound destinations have been active in the Chinese market for many years before Europe joined the fray. Their experience is worth noting, although some have distinct advantages over Europe in terms of geographic distance and cost. • Hong Kong has touted itself as the shopping paradise and focused on visiting relatives from southern China. Another campaign focused on students. Hong Kong joined forces with Macau, Shenzhen and Guangdong to further develop the Zhuhai delta as a tourist destination. It has benefited from higher spending power of individual tourists following the decision to allow FIT travel to HKG. • Thailand is now focusing on improving its image following customer complaints over high pressure shopping and low standard of tour guides. Quality logos have been introduced in cooperation with the local government tourism bureau. • South Korea runs a campaign in cooperation with CNTA. In Beijing several South Korean themed events take place, like a film festival, food weeks and travel exhibitions. • Japan’s strategy focuses on Greater China (mainland China, Taiwan and Hong Kong). Vouchers for travel on the subway and light rail, museum visits and so on are distributed locally. Visa procedures have been simplified and visa fees reduced. • Singapore is targeting MICE and FIT travellers. Though FIT customers are higher spenders compared to groups, most consulates restrict visa applications due to fear of illegal immigration. In contrast, Singapore’s visa regulations have been relaxed for FIT and the visa extended, for example, from 14 days to 30 days. • Australia and New Zealand have a joint marketing campaign. They often focus on nature and adventure in tourism, spend high amounts on advertising in TV, billboards and public transport and engage travel agents in training and promotion programs. • USA has begun promotion in the Chinese market in 2008 and is the most aspired to destination for Chinese. However the US authorities limit the number of visas they issue and require personal interviews and biometric scans, thereby restricting fast growth from China to USA. 44
    • The China Outbound Travel Handbook 2008 edition www.ChinaContact.org - all rights reserved) COTRI , CTW awards and Quality Label In 2008, For the fifth time the COTRI (China Outbound Tourism Research Institute) has given awards to international tourism companies and organizations which provide excellent services and products for the growing Chinese Outbound Tourism market. The “CTW Chinese Tourists Welcoming Award 2008” winners were presented with the awards during the COTTM China Outbound Travel and Tourism Market on April 14th, 2008 in Beijing Prof. Dr. Wolfgang Georg Arlt, Director of the German-based COTRI emphasizes the need for the CTW Award: “Chinese tourists are increasingly willing to pay more for better service. The CTW Award helps them to identify destinations and service providers which are going the extra mile to cater to the specific needs and expectations of Chinese travelers. With more than 40 million Chinese traveling across the border in 2007, this is a market which cannot be ignored.” Started in 2004, the CTW Award is presented in five categories: Product development, Marketing, Internet/New Media, Service Quality and Overall Performance, with Gold, Silver and Bronze awards given away by an international jury. Starting in 2008, COTRI will verify companies and institutions, which are engaged in offering excellent services to Chinese visitors, with the COQ China Outbound Tourism Quality Label. After going through an online self training, these tourism organizations - including destinations, transport, hospitality, attractions and retail - have to submit an action plan, containing measures for improved services to Chinese tourists. Several appointed affiliates around the world including ChinaContact have been authorized to offer the training necessary to obtain the quality label. Further details about the Quality Label can be found on the ChinaContact website. Exhibitions in China For a country where less than 2.1% of the population takes overseas trips, China has developed quite an early fascination with travel & tourism exhibitions. This year, six international fairs featuring outbound travel will be held, in addition to numerous domestic and inbound fairs run by provincial tourism boards across the country. Two of these only started in 2005. Despite the hype from tourism boards and exhibition companies, most fairs are dogged by low public attendance and a lack of proper 45
    • The China Outbound Travel Handbook 2008 edition www.ChinaContact.org - all rights reserved) organisation. Visitor figures cannot be trusted to show a realistic account of a fair’s outcome. Why is supply running far ahead of demand? Since the government introduced three 'golden' holiday weeks and with ADS policy spreading to more countries, tourism has become a major economic (and political) factor in China. Many tourism groups and hotel chains are invested by powerful, connected people. The potential to make money from travel companies by holding exhibitions, when added to the desire of city governments to gain international exposure and credibility, becomes irresistible. CITM The most established travel exhibition running since 1998, China International Travel Mart is organised by the China National Tourism Administration (CNTA). Held on alternate years in Shanghai and Kunming each November about one week after WTM, it is regarded as the largest and most important fair in China. Though it focuses on domestic and inbound tourism, outbound travel makes up about 1/4th of the total space of around 46,000 square meters. After the SARS epidemic of 2003, Kunming CITM failed to attract many buyers and the organisers did a poor job at providing adequate infrastructure and planning. Shanghai 2004 at the new Pudong International Convention centre was much better although buyer attendance was disappointing. In 2005 there were almost 700 international stands representing 81 countries. Kunming’s new exhibition halls mirror those in Beijing though they seem too massive for the city. In 2006 and 2007, the exhibition continued to grow in size but still lacked professional management leading to complaints of thefts and loss of marketing collateral. The 2008 fair is held again in Shanghai. It is unfortunate that such an important show is still held in Kunming every other year, as western China is still not a large enough market for outbound travel. Domestic destinations are much more popular for the local population at this time. Nevertheless, presence at CITM is important as this is the main official international travel expo in China. Maintaining good relations with CNTA (China National Tourism Administration) and local tourism boards is important for national tourism boards and multinational companies. With the current interest in China’s outbound sector, there is no doubt that CITM2006 in Shanghai will be the largest ever. BITE Not to be outdone by CITM, Beijing municipal tourism board (BMTB) started its own travel show in July 2004, BITE (Beijing International Tourism Expo) at the old soviet 46
    • The China Outbound Travel Handbook 2008 edition www.ChinaContact.org - all rights reserved) era Beijing Exhibition centre in west Beijing. It is smaller and attracts few foreign NTO's, mostly from Asia. Most of the visitors tend to be consumers as it takes place during the summer school holidays, when travel agents are at their busiest. The domestic travel market takes the bulk of the space, with regional tourism promotion boards using ever fancier, colourful stands and music/dancing to attract visitors. BITE is managed by a Singapore based exhibition company with the support of BMTB. GITF Guangzhou, the commercial centre of south China, hosts GITF each March in a small area of the brand new and immense International Convention Exhibition centre outside of town. Focusing on domestic travel for the most part, it attracts mainly regional interest and Hong Kong companies. It has been held since 1993. Guangdong province is the largest single exporter of outbound tourists (which includes Hong Kong and Macau on its borders). To tap into this vibrant market, representation at this fair can be useful. WTF Back in Shanghai, WTF (World Travel Fair) was the first event focusing on ADS outbound destinations. Held at the same location as CITM in January for the past two years, it has moved to March this year at a new location, the Shanghai Exhibition Centre on Nanjing West road. This allows for more time to elapse after CITM, better weather and a more convenient location in central Shanghai. Officially, 1.5 days are reserved for trade-only visitors. The experience in 2005 was that many non-trade visitors were let through due to management confusion. This led to scenes of crowds grabbing brochures and gifts while attempting to hold business negotiations on the stand. WTF is privately organised by VNU Exhibitions with the sponsorship of Shanghai Municipal Tourism Administrative Commission. In 2009, the fair will be held at the larger exhibition centre in Pudong. COTTM China Outbound Travel and Tourism Market is focusing on being the only China outbound travel market purely for the trade. Organised by Tarsus Exhibitions, a UK company, it started at the Agricultural Exhibition Centre near the embassy district in east Beijing in 2004. The first ever BITTM was held with maximum of international marketing effort – a novel phenomenon for China. Local participation however was less impressive as the organisers did not spend the same energy on local promotion for buyers (though they did sponsor 200 qualified buyers). Some of the exhibitors 47
    • The China Outbound Travel Handbook 2008 edition www.ChinaContact.org - all rights reserved) felt attendance was too low and some of the agents visiting said the show was too small. Other exhibitors were extremely satisfied by the quality of the buyers visiting and told me they were able to negotiate contracts at the show and received new business as a direct result. As a new concept it still needs to be accepted by China’s travel industry, however this event benefits from the experience and professionalism of a European event management company. The organisation, monitoring and auditing is all done to a European standard, which addresses some of the issues mentioned in the next part. From 2007, the fair was held at China World Exhibition Centre and has grown quickly attracting many first-time foreign exhibitors. Event report 2008: The exhibition took place at the China World exhibition hall in east Beijing on the 3rd east Ring road. There were 2 joined halls holding the exhibition. Of the European countries' tourism boards only Belgium participated but private companies from across many countries were there as well as the tourism boards of several African, Middle East and Asian countries did participate. From the second day it was very quiet, most of the time I met with agents that had pre-arranged appointments. The 3rd day was probably superfluous and many people had gone to attend the IFCOT forum that took place on that day. In terms of quality of buyers, we still have to see what actual business comes out of it. Many of the agents I know that attended are in senior positions and are decision makers. But there were also many operations staff that only wanted info and did not really have any actual business to discuss. So I would say it was a mixed audience and not enough of high-level managers that take decisions on the product. As the travel trade events in China are traditionally not very effective in facilitating B2B meetings and discussions, this is still better organised than those exhibitions that combine public and trade visitors. In the setup days there were thefts (also during the exhibition itself people stole brochures - for recycling) and the security did not prove efficient enough. I was based at a stand right next to an entrance and witnessed how the single guard had to constantly block and pull back unauthorized people throughout the day. I received feedback from other exhibitors that were new to China that they would have liked to attend a seminar or workshop preparing them to dealing with the Chinese buyers and to negotiating with Chinese clients. In 2005 ChinaContact organized a one day forum precisely for this purpose which was well attended. The feedback from Belgium Tourism board was about the same issue of people sneaking in to take brochures for sale to paper recyclers and many requests for 'invitation letters' for European visa. Final word - this is very much a regional event for Beijing and North China. Even paying the agents to fly over does not seem to entice them if the invitation is not made through the right connections. So unless more is done to guarantee an attendance by Shanghai and Guangzhou agents, it will be up to the exhibitors to attend events also in those cities during the year, not just 1 exhibition. 48
    • The China Outbound Travel Handbook 2008 edition www.ChinaContact.org - all rights reserved) CIBTM China Incentive and Business Travel Mart is organised by Reed Exhibitions after a smaller event held in Shanghai in 2003 failed to attract the desired attendance. It is the only event focused on corporate travel, catering to buyers from multinationals, Chinese companies and government departments. The location is China World hotel and convention centre. This is a rather small exhibition which offers good opportunities for those specifically targeting the corporate client. The event is held in July in Beijing but was not run in 2008 due to the Olympic Games. Scheduled to resume in 2009. IT&CM China Organized by TTG Asia and held in Shanghai in March. This is an exhibition with several forum sessions alongside it, addressing corporate travel issues. The exhibitors are mainly hotel chains and destinations appealing to corporate travel buyers. The visitors include Chinese business travel agencies, corporations and hosted buyers from the West. ALTM Asia Luxury Travel Mart is the sister fair to ILTM in Cannes and was held in Shanghai since 2007 at the same venue, Shanghai Exhibition Centre on Nanjing West road, opposite the Ritz-Portman Hotel. The fair is targeting suppliers of luxury travel products and services and provides fixed appointments during the 3 days exhibition of 20-25 minute duration. On the opening day of the fair a half day conference is held for all exhibitors and delegates with keynote speeches and panel discussions. This year the topics covered were the emergence of luxury consumption in China and image PR in China. Most exhibitors used the shell scheme while a few national tourism boards and hotel groups opted for designed stands. In 2008 it was held on 16-19 June. Several companies and groups used the event to launch products or services: Gulf Air launched its direct flight Shanghai-Bahrain • Ritz-Carlton announced that it will be launching an ultra brand of resorts, • Reserve, which will be targeted at the top spending 2% of its clientele. Hyatt Hotels and Resorts announced that it will be developing several new • properties in the Asia Pacific region under its boutique Park Hyatt and larger Grand Hyatt brands over the next 12 months. 49
    • The China Outbound Travel Handbook 2008 edition www.ChinaContact.org - all rights reserved) Sample Geographic split of buyers for one exhibitor: Australia – 5 Bangladesh – 1 Singapore – 9 Canada – 1 Russia – 2 Taiwan – 2 Usa – 1 Thailand – 2 HKG – 6 Bahrain – 1 Korea – 2 China Dubai – 1 Malaysia – 2 Beijing – 10 India – 4 Japan – 6 Shanghai – 8 In terms of quality buyers, the show proved to have mixed success and feedback on the experience will be sent to the event organisers. It was crucial to have researched the buyers in advance and select the right people to meet. However the online description of agents is not always accurate so some of the meetings did not produce any concrete potential. ALTM assessment Pro: Ability to meet decision makers from many countries in Asia Pacific in one place, saving on travel and research costs; exposure to media contacts and potential trade partners such as hotel groups and private jet companies; gives a good overview of other players in the market and the direction product and service is heading. Con: Production values of the show were not as high as expected and in some aspects disappointing; Research into buyers seemed to lack when it came to Chinese buyers with some either too small to have purchase power or engaged in mass tourism rather than luxury. I am not certain if I would recommend clients to attend again next year. This is mainly due to the quality of Chinese buyers which was well below the quality of buyers from other countries. I know very well how difficult it is to put up a quality luxury event in China and I commend the ALTM team for the work they have put into this year's event. Challenges and recommendations There are several problems shared by all events, for prospective international exhibitors who want to introduce their products to the Chinese market, whether trade or public. English is useless even when dealing with the trade. If you don't have an • interpreter and Chinese language marketing collateral expect your experience to be a waste of time. Statistics are (nearly) useless. A CITM official admitted that they can get no • reliable data on visitor attendance numbers, not to mention demographics or other analysis. Monitoring is outsourced without reliable control and ticket forgery is common place. Most brochures and give-aways are wasted on freebie hunters and paper • recyclers. Costs charged by the official contractors for set-up, construction, translation and • other services can be as high as in Europe when they charge foreign clients. The 50
    • The China Outbound Travel Handbook 2008 edition www.ChinaContact.org - all rights reserved) cost for local companies is much lower. Despite officially declared trade only days at all fairs, controlling this policy is • tricky, and you will find many time wasters during these days. Chinese are cautious with new business contacts and do not normally conclude • business at fairs. They regard travel exhibitions as a place to pick up new ideas and begin a dialogue with prospective suppliers. Costs can often escalate. Aside from booth rental there are management fees, • set-up fees and other extras that may not be clear from the outset. What can you do to make your investment in exhibiting in China a success? To maximise your exposure, effectively market your products and reduce your • costs you should focus on one or two fairs that cater to your target market and plan your visits to China around them, including follow up visits to potential clients. Use a localisation company to convert your brochures, website etc. to Chinese • and employ an interpreter with travel industry experience. Prepare to invest in an eye-catching design and Chinese signs/posters. • Make appointments in advance. If public fair days are not a priority, use this time • to visit clients in their office or at the hotel. Invite high potential clients to lunch or dinner stressing socializing rather than • business talk. Register early as discounts are available up to 3 months before start date. Times • and discounts vary depending on fairs. There are many exhibition and consulting services in China that can help to make the arrangements. It’s important to work with ones that have specific experience in travel fairs and no communication barriers. They will save you time and money and understand the local market needs. Travel exhibitions are still experiencing growing pains, but are already a good introduction into the market and a great marketing opportunity for inbound organisations. 51
    • The China Outbound Travel Handbook 2008 edition www.ChinaContact.org - all rights reserved) Recommended events for companies or promotion bodies in the West who are thinking of exhibiting in China. For Asian destinations the choice will be different as their source market covers more areas of China. COTTM: It is the only purely outbound B2B expo in China and has the potential • to become a major event on the calendar, provided the organisers can skilfully combine their international expertise with local knowledge. The ability to hold business talks on your stand without being hoarded by public visitors looking for free gifts is very valuable. Note that this is mainly for Beijing and North China agents. http://www.cottm.com/ • CIBTM or IT&CM: managed by a well known international exhibition company • and focusing on the corporate travel sector only. Focusing on regional business in either Beijing or Shanghai. http://www.cibtm.travel/ • http://www.itcmchina.com/ • CITM: Important for good relations with the Chinese authorities and credibility in • the market, even if not managed extremely well. http://www.citm.com.cn/ • WTF: Can be of use to tourism promotion boards of ADS destinations. Regional • show for Shanghai and Eastern China. Has been making efforts to appeal more for B2B. They also feature a full day forum on Chinese outbound tourism. http://www.worldtravelfair.com.cn/ • Forums and Conferences in China International Forum on China Outbound Tourism (IFCOT) • http://www.outbound-tourism.cn/english/intro.asp • China Travel Distribution and Technology Summit (CTDTS) • http://www.traveldaily.cn/AdLinkCount.asp?id=52 • 52
    • The China Outbound Travel Handbook 2008 edition www.ChinaContact.org - all rights reserved) Forums about China in the West China – the Future of Travel (ChinaContact forum on China’s Tourism Sector) • http://www.future-of-travel.org • The ChinaContact forum is the only event outside China that brings together • both Western and Chinese experts on the topic of Chinese tourism industry development. Through forums and interactive panel discussions delegates deepen their insight of China as a tourism market and destination. This landmark event was held at World Travel Market annually since 2006. Support is given from international organizations and industry leaders as well as global travel trade media partners. 53
    • The China Outbound Travel Handbook 2008 edition www.ChinaContact.org - all rights reserved) Looking to the future By the year 2020 the number of Chinese outbound travellers will reach 100 million, according to projections of the World Tourism Organisation. This is a remarkable average increase of 12.8% yearly. China is considered as one of a few dynamic tourism growth markets in the world. These are realistic projections given the economic growth and the fact that so many people are eager to travel abroad and are interested in foreign cultures. China was a closed society for many years and experienced fast paced and dramatic opening up in the past two decades. Promotion and marketing are now the vital tools in exploiting the market potential. Consumer target groups require more information on the range of products available to raise their level of sophistication when making travel choices. Most popular tourism destinations have signed ADS agreements with China with very few exceptions. Canada is the last major tourist destination not to be sanctioned as an open destination for Chinese tourists. Soon Chinese will have as much choice as tourists in western countries and competition for their business will be fierce. Companies who intend to tap into this market must establish an early presence and be willing to adapt and develop their products and service as needed. 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. Improved access to internet distribution will allow more suppliers to directly offer their services to the market though the prospects of direct online credit card bookings are not great in the near future. Knowing how to tailor the product and the marketing message to a Chinese audience is crucial to success in China, as is carefully selecting partners for cooperation. Take care in evaluating your chances and researching your potential collaborators and agents. If an offer of business seems too good to be true then often it is. China still harbours many pitfalls for new entrants and the best advice is to ask for help from those that have done it before you. 54
    • The China Outbound Travel Handbook 2008 edition www.ChinaContact.org - all rights reserved) Further Information online ChinaContact website: http://www.chinacontact.org • ChinaContact Tourism Advice Network: http://network.chinacontact.org • China Travel Industry Blog: http://news.future-of-travel.org • China Outbound Tourism Research Institute: http://www.china-outbound.com • China Business Network: http://www.thechinabusinessnetwork.com • China Business Services and China Business Blog: • http://www.chinabusinessservices.com Great Eastern Studio: http://www.greateasternstudio.co.uk • China Advisers Network: http://www.china-advisers-network.com • Contact details If you have any comments, or for further information and advice on accessing the fantastic potential that is the Chinese tourist market, please contact ChinaContact for a free consultation: ChinaContact London, UK E-mail: info@chinacontact.org Tel: +44 20 3239 9688 Skype: ccontact88 www.chinacontact.org Also available on these online networks: LinkedIn, Plaxo, Video, Xing, Twitter, FriendFeed, Google Friend Connect Sources i China National Bureau of Statistics and media reports – statistics vary ii China National Tourism Administration (CNTA) iii Survey by Tourism Research Institute of China Academy of Science in 2003 iv Singapore Tourism Board v CNTA vi CNTA and relevant foreign NTO vii Tourism Australia viii China National Bureau of Statistics 55