China’s Outbound Tourists

Go West, Young Man

Outbound tourism is outstripping even the most positive predictions of a decade ago as Chinese travellers head to the furthest reaches with wanderlust in their hearts and stuffed wallets in their pockets.

“To be wise, a man should read ten thousand books and travel ten thousand miles.” Li Bai (Tang Dynasty poet)

“After hearing so much about Europe’s beauty from the TV and magazines, we saved for three years to pay for our holiday there in June this year. When we got to Paris, we were expecting something really grand but the hotel rooms were small, the food was poor quality, the people we met seemed a bit cold and in some areas of the city, we didn’t feel very safe.” Mr. Liu Feng of Shanghai, who went to Europe for the first time in 2005.

This reaction to Europe is not uncommon from Chinese tourists who are used, in their own country, to high standard hotel accommodation at low prices, clean and modern transport systems and very low crime rates.

A few years ago, the number of Chinese tourists travelling abroad was so small that their opinions and experiences were not taken too much into consideration by the industry in Europe.

Now, however, the numbers are starting to look impressive and early movers in the travel industry in Europe are driving efforts to find out what can be done to improve the experiences of Mr. Liu and others like him.

China is now the fastest growth market for the European travel industry and with the right approach, hotels, B&Bs, shops and attractions across Europe stand to win large profits from this newly opened market.

The Market

Last year, around 31 million Chinese travelled overseas. In the main, they visited other Asian destinations like Hong Kong, Macao, Singapore, Thailand, Malaysia and South Korea, but two million Chinese also travelled to Europe and that figure is set to rise year on year. By 2020, Europe can expect 13 million Chinese visitors annually.

Travel is particularly fashionable in China’s so called ‘Golden Weeks’ – February, May and October. The working week in China is now officially limited to five days and the minimum annual leave entitlement is 14 days, giving extended holiday time.

In 2005, the travel guide publishers Lonely Planet announced that they were to begin publishing some editions of their books in Chinese in response to the increasing number of Chinese travellers. Three of the destinations for which Chinese versions of the travel book are to be published are Great Britain, Germany and Australia.

However, it’s not all plain sailing. The European PR machine is battling some unfortunate stereotypes when it comes to Chinese opinions of Europe and its people. “London is foggy, Paris is expensive, Rome is dirty and Madrid is dangerous” – and these are the opinions of not only those who have not yet visited, but also those who have, as voiced in a series of consumer focus groups we conducted recently.

Travel Agencies

The overall picture of the Chinese travel industry is one of robust growth driven by rising income levels, the relaxation of travel restrictions and more holiday periods being made available. Only a certain number of licensed travel agencies are eligible to operate international outbound travel services and, in 1997, there were only 67 outbound travel agencies in China; by 2004, that number had risen to 528. Recent years have seen privatization and restructuring of the former state owned agencies.

However, the agency market remains fragmented and there are few national players. It remains dominated by state-owned agencies, many with outdated attitudes to service. Both private and foreign capital flows to the industry are being encouraged by the Chinese government but many of the tours offered by the existing agencies are unimaginative in content and style, and the reality is that the industry has a long way to go before it genuinely services the needs of its customers.

At the moment, 90 percent of Chinese going abroad do so on group tours and the travel agencies typically get a commission of around 5-20 percent on the retail price of the tour.

Independent travel is generally not popular and one key explanation for this is language. The Chinese education system’s emphasis on reading and writing of foreign languages leaves even those with good grades in English with poor communication skills. For the majority of the Chinese population, communicating in another language is simply not an option. Given that tourist literature and road and airport signs in Europe are not yet produced in Chinese, these countries are even more closed to the average tourist.

Passports & Paperwork

Traditionally, Chinese citizens have not been allowed to travel freely and have not had passports with which to do so. In the last three years, this situation has changed dramatically.

After much negotiation, China has signed ‘Approved Destination Status’ (ADS) agreements with over a hundred partners including some European countries. ADS simplifies the exit procedure for Chinese tourists, allowing them to travel on ordinary passports and to apply for tourist visas.

Without ADS, Chinese residents can only travel on visas for business, study or to visit relatives. With ADS, individual Chinese passport holders with financial resources have no restrictions on foreign travel, provided they can obtain the individual visas necessary for entry to the countries to which they are travelling. The only restriction is that have to travel as part of an official tour group and an escort must be present at all times that the group is overseas.

For the European countries, ADS means that countries can legally promote group leisure travel through distribution and sales channels with wholesalers and travel agents as well as advertise the destination and its products to Chinese consumers.*

History:

1983 Chinese Mainlanders first allowed to visit HK and Macao on private business
2003 Chinese citizens permitted to apply for private passports using their residence permits, offering the option of international travel to the masses
2004 Germany becomes the first EU country to welcome Chinese tourists

Facts:

· Once a passport has been obtained, Chinese citizens can apply for visas to travel wherever they wish

· For ADS countries, they can apply for tourist visas and for non-ADS countries, they must obtain business or visas specifically for visiting friends and relatives. (In the case of the Schengen countries, one visa allows access to all countries that are part of the Schengen agreement)

· Although free travel is allowed within destination countries once the visa has been obtained, if travelling in tour groups it is standard practice for the tour guide to hold onto the passports of all group members

· Travel agents in China that ‘lose’ members of their groups whilst in Europe are quickly blacklisted with the visa issuing operations of the Embassies and Consulates in China. The number of permanently or temporarily blacklisted ADS-approved tour operators is steadily increasing.

Shopping

Shopping constitutes another way for European businesses to gain from the increasing wealth of China and the newly granted freedoms in travel. Whilst the numbers of tourists may not be high, the level of spending amongst Chinese tourists that do get to Europe, is.

A trip to Europe is often the first time for Chinese to travel overseas and their spending patterns can be irrational. Some simply buy anything they can’t buy in China. The spending of Chinese tourists often doesn’t reflect income levels however so looking at household income or even disposable income levels of China’s population can be misleading. Many spend much more than we may have predicted.

According to French tourist authorities, average visitors to France from China spend US$3,000 on one visit. By contrast, average spend by visitors from North America and Europe stands at merely US$1,000.

Challenges

China clearly holds huge potential but for many European operators, it is proving a difficult market.

One of the ironies of the European tourism industry is that it is heavily regulated if the consumers are Europeans; but if the customers are purchasing their products outside the EU, then few regulations apply.

One factor that is helping to drive down prices is competition from creative Chinese operators based in Europe. These agents are willing to use informal networks of business contacts that bypass many of the normal requirements of group tourism. It is difficult for an established tour operator to compete on price with a China Town agency supplying a mini-bus driven by a local waiter and until the Chinese tourists themselves demand more, this situation may not change. The good news is that we think Chinese tourists will be demanding much more very soon.

Other challenges:

-Short term bookings

-Continuous changing of programmes

-Unfair competition from small cash paying agents

-From the Chinese agents a lack of understanding about controls on long itineraries with regard to driving hours (There is hope that the new EU driving legislation will give all operators an even playing field to implement sensible itineraries.)

-Insufficient knowledge of Europe amongst Chinese salespeople

-Different habits and tastes of Chinese tourists (behaviour in hotels and restaurants is different to that expected in Europe)

-Lack of knowledge of European Law by the Chinese tour operators.

Next Post

Eurostar Connections - Travel From Brighton To Paris By Eurostar

Brighton is one of the famous seaside resorts in UK. It is situated in the south coast in the country of east Sussex nearly of the capital city London. A major tourist attraction in Brighton is the pebble beach, which has bars, restaurants and nightclubs. With noticeably rock but they […]
Eurostar Connections – Travel From Brighton To Paris By Eurostar

You May Like