China Outbound Travel Handbook 2008 (ChinaContact)

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The China Outbound Travel Handbook 2008 中国出境旅游行业

2008年手册

written by:

Roy Graff Hu Huaming

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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.

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Table of Contents ForewordForeword ................................................................................................................4

The Chinese Travel IndustryThe Chinese Travel Industry ...........................................................................6 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 Chinese MediaThe Chinese Media ...........................................................................................15 Media characteristics________________________________________________________15 Television ________________________________________________________________15 Radio ____________________________________________________________________16 Newspapers_______________________________________________________________17 Magazines ________________________________________________________________17 Trade Magazines___________________________________________________________17 Internet __________________________________________________________________17 Advertising & public relations _________________________________________________19 The Chinese TravellerThe Chinese Traveller......................................................................................20 Who? ____________________________________________________________________20 Where? __________________________________________________________________23 How many? _______________________________________________________________27 When? ___________________________________________________________________28 How much? _______________________________________________________________30 What are their expectations?__________________________________________________31 Cultural differences _________________________________________________________33 Consumer behaviour ________________________________________________________34 Hospital ityHospital ity ...........................................................................................................39 Service and etiquette________________________________________________________39 Language_________________________________________________________________40 Illegal immigration __________________________________________________________41 Sales & Marketing in ChinaSales & Marketing in China ...........................................................................42 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 Looking to tLooking to t he futurehe future .......................................................................................54 Further Information onlineFurther Information online .............................................................................55

Contact detai lsContact detai ls .....................................................................................................55

ForewordForeword

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

overseasi. 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.

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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 [email protected] or +44 20 3239 9688.

The China Outbound Travel Handbook 2008 edition www.ChinaContact.org - all rights reserved)

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The Chinese Travel IndustryThe 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.


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• 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.


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• 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


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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.


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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


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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.


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• 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).


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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.


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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

cards in most 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.


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The Chinese MediaThe 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.


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Travel programs on television include:

CCTV “Travel Compass”

“Travelling the Four Seas” National

Travel Satellite TV “Travel Column”

Beijing Beijing Television “Beautiful Mountains, Beautiful 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. The 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

Broadcasting Station

“Morning News”

Beijing Beijing People’s


“Traffic Station – Relaxed Travel”

and “Music Station”

Shanghai Shanghai People’s


“Travel Bus”

Guangdong Guangdong Radio “Travel Macau and Hong Kong”


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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.


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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.


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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.


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The Chinese TravellerThe 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.


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• 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


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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.


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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

expectation Middle High High

Service expectation

Middle High High

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.


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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.


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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.


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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.


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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


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• 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.


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• 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 (Chinese New Year)

Varies according to lunar calendar (3 days off extended to 1 or 2 weeks)

Tomb Sweeping Festival

5 April (one day off)

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.


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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, although domestic credit cards are

getting popular. most 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.


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• 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


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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


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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.


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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).


35

• 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.


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• 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.


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• 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.


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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.


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HospitalityHospitality 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


40

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.


41

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.


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Sales & Marketing in ChinaSales & 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


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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


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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.


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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


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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


47

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


48

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.


49

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.


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Sample Geographic split of buyers for one exhibitor: Australia – 5 Canada – 1 Usa – 1 Bahrain – 1 Dubai – 1 India – 4

Bangladesh – 1 Russia – 2 Thailand – 2 Korea – 2 Malaysia – 2 Japan – 6

Singapore – 9 Taiwan – 2 HKG – 6 China Beijing – 10 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


51

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.


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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


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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.


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Looking to the futureLooking 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.


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Further Information onlineFurther 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 detailsContact 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: [email protected] 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

Documents

China Outbound Travel Handbook 2008 (ChinaContact)