Enticing Chinese tourists

Sri Lanka: A destination for Chinese travellers:

Global tourism has been growing steadily at almost five percent per year in the past decade amidst political turmoil and natural disasters in various parts of the world recording a figure of 930 million international arrivals in 2008. It is significant that always around the corner lies the next potential tourism gold mine. In the 1950s and 1960s, it was America, as the US tourists surged into Europe, Asia and elsewhere. In the 1980s, the Japanese first began to travel in large numbers, and in the late 1980s and early 1990s, travellers from Korea and Taiwan likewise began to travel en masse, lifting the profit margins of hotels and airlines throughout Asia and the world.

Potential tourism

And now, the latest - and perhaps the greatest - potential tourism gold mine has been identified: mainland China. In 2000, just 10 million Chinese travelled abroad, but in 2008, more than 45 million did so. With its huge population, rising wealth and a government that has steadily liberalizing outbound travel, China has enormous tourism potential. The Chinese outbound market is growing at a phenomenal rate and is expected to exceed 51 million tourists in 2010; a rise of

seven percent from 2009. The World Tourism Organization predicts that China will be the fourth largest source of outbound tourists by 2020 with a predicted 100 million travellers per year. Up to now, China has become one of the world’s top international tourism destinations as well as a source country. Since the late 1990s, China has ranked No 1 in the Asia and the Pacific, and No 4 or 5 in the world in terms of both international arrivals and income. It is amongst the world’s top ten in terms of international departures according to UNWTO.

China remains the world’s fastest growing outbound travel market despite global economic downturn. Indeed, during the Spring Festival, the Chinese New Year holidays in recent years, over a million of Chinese went abroad. Three factors are driving outbound tourism from China. One is income growth. With a per capita GDP of around US $ 3,000 and having a growing middle class, for these people, leisure touring and visiting abroad have become a part of their consumption. The second factor is the appreciation of the RMB not only against the US dollar, but also against the Yen and most other Asian currencies. This has increased the purchasing power of the Chinese, which in turn helps tourism. Thirdly the steady relaxation on travel restrictions by the Government has also contributed positively to this growth.

Although the per capita spending on tourism in China is still relatively low, at just US $ 30 per year, it is also interesting to note that Chinese travellers continue to be the top spenders with an average of US $ 6000 per trip per person in the USA according to the National Tourism Authority.

A number of surveys show that Chinese visitors spent on average Euro 1,359/- per person on shopping for luxury goods alone in Europe. It is also reveled that the monthly expenditure by Chinese outbound tourists has amounted to USD 235 million on average. Travel agencies say that more middle-income travellers have begun to join the outbound tour groups and their monthly family income ranges from RMB 5000 to RMB 30000. In addition, China’s outbound travellers spend more on shopping and entertainment than on food, accommodation and air tickets.

The interest lies not only among the experienced travellers, but also among novice travelers. Surveys reflect the strength of the industry and should be a confidence boost to the travel industry in Sri Lanka as well. Short-haul outbound trips are the most popular, with more than six in 10 Chinese travellers intending to take outbound trips in Asia, followed by Europe (43 percent), Oceania (24 percent) and North America (20 percent).

Room to develop

Tourism is now regarded as one of the growth points of the Chinese economy, and is playing an increasingly vital role in the China’s development. Outbound tourism is still in its early years, and it has much room to develop and it is gaining momentum. Sri Lanka should take these factors into account in trying to attract more and more Chinese Tourists to the Island. To better understand the facts of China’s outbound tourism, it is important to look at the following characteristic.

Outbound departure stands for border-crossing departures made by all Chinese passport holders, including group tourists, business travellers, and day-trippers to Hong Kong, Macau and other bordering countries.

Leisure tourists

Generally speaking, only those who go overseas in tour groups and some independent travellers to certain regions are considered as real leisure tourists or holiday makers. Although the number of group tourists is increasing, their share of all departures is still rather small. Compared with the population of 1.3 billion people still the share of outbound tourists in real sense is rather small among all Chinese residents, much smaller than that in developed countries, even smaller than some of the developing countries.

Income gap

The present higher spending of the Chinese outbound tourists reflects the income gap among the Chinese residents, not the real income level of all Chinese residents. The present outbound tourists represent a higher income social group. Besides, the higher spending is a result of irrational consumption, a special behavior in the early days after being open to the outside world. Once outbound travel becomes a frequent activity for the majority, the spending behavior may be rational. According to UNWTO, the overall Chinese outbound tourism expenditure in 2004 accounted for 3.1 percent of the world, and average outbound tourism expenditure per capita was less than USD $ 15, some 1/6 of the world’s average. There is much room for further growth.

When selecting where to go and which region to travel, owing to various policies and economic and cultural reasons, major destinations for the Chinese outbound tourists are in the Asia and the Pacific region, particularly the Northeast and Southeast Asian countries. Especially with the ASEAN - China Free Trade Agreement coming into force from this year, we will be able to see a marked increased in future to the ASEAN Region. In all outbound departures, those for Asia, accounts for 90 percent, and for Hong Kong and Macau make up over 70 percent. The number of long-haul international tourists is increasing; however, its share is still rather small.

China As a large country both in area and population, economic and social development remains rather imbalanced. As a result, most outbound tourists, especially leisure travellers, generate from the more affluent areas like Beijing, Shanghai and Guangzhou, and from strong areas such as the eastern or coastal regions. Like elsewhere, young people are the majority.

Chinese like to shop, they tend to stay in budget hotels and they often pack as many sights into their itineraries as possible.

First-generation travellers usually come with a group, and when they come to any country, they try to cover as many sites as possible There is a Chinese saying, zou ma kan hua - you are riding on a horse looking at flowers, and you want to go through the garden at the fastest speed, since many of them are first timers to go abroad.

Overseas stays

Apart from the business travellers in various kinds still making up the lion share in overseas stays and spending, the number of people who go abroad for education and training is increasing too.

Because the Chinese are in the early stages of outbound travel, and also because in many cases they are required to do so, owing to the language barriers and inexperience of overseas travel Chinese tourists tend to travel in tour groups.

Chinese visitors prefer more tour groups with their relatives and friends, especially for the long-haul destinations. Language is a major stumbling block for Chinese in any country. While most major hotels and shops in big tourist centers can manage a smattering of English, French, Italian or other languages, virtually nobody speaks Mandarin.

Owing to the limited knowledge about the overseas destinations, the Chinese outbound visitors like more to see the most famous monuments and tourist attractions. Except for some special destinations like the Maldives, Chinese like more to visit many cities in one trip rather than to stay longer in one place as holiday makers.

Investment and advancement

Shopping is one of the important activities during the overseas visits although more complaints might be related to these activities. They like to spend money on jewellery and electronics, which are heavily taxed in China, and they like to buy souvenirs. Chinese travellers are extremely price sensitive, they spend a lot of money, but they don’t spend a lot on hotels. They’ll spend more money on good food, and on things to buy and bring back to China. A trip abroad is an investment in forwarding status and advancement. That money has to be invested wisely, and spending too much on hotels is considered not wise, so people are going to be price sensitive.

China’s national economy has maintained a sound growth in the past two decades or so, and the country’s annual GDP growth has kept a momentum of around 8-10 percent or more. As a result, the country’s GDP per capita is over US $ 3000 as a whole, over $ 5000 in some large cities and developed areas. China’s foreign exchange reserves, the world’s largest, grew 23 percent in 2009 and surged beyond two trillion USD. Besides, residents have more sources of foreign exchanges, and private foreign exchange savings increase rapidly. The bottleneck of foreign exchange shortage in the country is no more the case. And the strong Chinese currency may encourage the Chinese people to consume abroad.

Foreign currency

For the past decade or so, the Chinese government has further relaxed the traditional controls over outbound travel. The limit of foreign currency taken by residents out of the country has been lifted for a few times, and various credit cards (dual-currency credit cards in particular) have made such limits nominal. The China National Tourism Administration has piloted a project in 2008 to select joint venture tour operators to handle some outbound business. It was the first time that the administration has decided to open its outbound business to joint ventures and foreign investors.

As the Chinese holiday system is improving, China will develop into an enormous tourist market. The outbound and domestic travel markets will both develop fast as people have more free time to enjoy, and what is more, these policy adjustments are considered as an encouragement for residents to travel and holiday. With the introduction of paid holiday system, leisure tourism and holidays may become gradually a part of life for more and more people in China.

The dynamic economic reforms and the policy of being open to the outside world, have changed the country’s economic system as well as operating mechanism, and at the same time, they have also imposed strong impacts on people’s life and the traditional way of thinking. At least, three outstanding changes can be well noticed, namely, from ‘money saving’ to ‘money spending’, from ‘save for others’ to ‘enjoy themselves’; from ‘purchase of goods’ to ‘seeking for personal experience and well-being’.

Chinese visitors

While China remains the most attractive and a safe tourism destination, more Chinese residents are able to go overseas for leisure and holiday thanks to the convenience and facility provided by the host destinations.

It has been noted that the world attention to China’s tourism has been shifted from ‘China visit’ to ‘Chinese Visitors’. Driving promotion campaigns from overseas, governments and the industry have aroused desire and enthusiasm of the Chinese residents for outbound travel. In recent years, aiming at the Chinese market, overseas destinations have arranged a host of promotion campaigns such as Year of Visit, Cultural Weeks or Road Shows. Tourism commercials and advertisements have flooded in on various media to introduce their tourist attractions and products.

It seems that China’s annual Tourism Expo has become a marketplace for selling overseas destinations to the Chinese operators rather than selling China’s products to the world market.

In summary, there are two distinctive factors worth noticing. One is that the increase of income of the Chinese residents in general and the gap of income among residents in particular support the constant growth of outbound trips, while another is that the non-self-paid visits including various business travels are still playing the leading role.

According to a recent survey, the most desired closer destination for the mainland, with 21.7 percent saying they wanted to visit was Hong Kong, Macao and Taiwan in the next three months. Another 4.3 percent look to foreign destinations, topped by Bali in Indonesia, the Maldives and Singapore. The challenge for Sri Lanka is how to lure Chinese tourist to the ‘Pearl of the Indian Ocean’ or ‘the emerging wonder of Asia’ The Chinese travellers often feel that he or she is not getting the same treatment as a tourist from another destination. To promote Chinese tourists: Sri Lanka should provide the quality of service that others do.

These are advertising vigorously in Chinese luxury lifestyle magazines, with a coherent media planning over a few years covering particularly the provinces of Shanghai, Guangzhou, and Beijing.

With a limited budget, it will not be possible to prepare a large scale advertising campaign.

Therefore it is needed to build a tailor made e-newsletter in Chinese, targeting the affluent Chinese traveller with specific discounts for Chinese guests, and a VIP welcome at the hotel (with Chinese staff).

Focusing on the communication on the historic patrimony of Sri Lanka, a full advertising campaign in travel magazines and organizing a public relations event for leading travel agencies in leading cities in China and especially targeting the Shanghai Expo 2010 will bring may positive results.

How many hotels in Sri Lanka are really ready to welcome Chinese tourists? How many hotels keep Instant Noodles inside the room? Make the electric kettle available to them. Next to shopping, Golfing is the second most interesting thing for the affluent Chinese.

An in-depth analysis of the needs of their Chinese guests, and a communication strategy implemented through leading lifestyle magazines in Beijing and Shanghai and Guangzhou and other selected leading provinces will help to a greater extent. First conduct an analysis of the image of the country ‘Sri Lanka’ in China. At least, a six month campaign should be launched to build the image of Sri Lanka as an attractive destination (on-line and off-line). Then, launch the campaign for clients, promoting their services in several Chinese travel magazines.

Sri Lanka should keep in mind that China is the least affected by the global financial crisis and it has become the common source country for countries around the globe.

We should have new travel packages especially tailor-made for Chinese Tourists. The affluent Chinese has a strong affinity towards the Western hemisphere. Our strategy should be to lure them to Sri Lanka.