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welcomingchinesevisitors.com
This is an Australian Government funded initiative under T-QUAL Grants
The Rise of China
A report on why Australian tourism operators shouldconsider becoming “China Ready”
Prepared by
2Rise of China Report Prepared by AVANA
Table of ContentsUrbanisation in China 4
GDP 4
Europe and China: A Comparison 5
Europe and China Geographical Comparison 6
Urbanisation in China and Europe 7
Wealth & Consumption in China 8
Rapidly Rising Incomes 8
High Net Worth Individuals 8
China’s Tiered City System 9
References 10
This brief report will provide an introduction to the expansion of China’s growing economy. Compared to traditional markets such as Europe, China is experiencing a higher rate of economic growth leading to rapid urbanisation and a rising middle class who are becoming increasingly interested in overseas travel. It is also important to be aware of China’s tiered city system. Many international travellers currently reside in Tier 1 cities, however, many other cities are experiencing growth which means there is great potential for future travel.
After reading this report, you will be aware of China’s rapid economic growth and the opportunity this presents for the Australian tourism industry.
““ Many international travellers currently reside in Tier 1 cities, however, many other cities are experiencing growth which means there is great potential for future travel.
3Rise of China Report Prepared by AVANA
Recent Economic Indicators
GDP (US$bn) 3494.2 4520.0 4990.5 5930.4 7298.1 7991.7
GDP PPP (US$bn) 7329.9 8214.4 9065.9 10128.3 11300.0 123870
GDP Per capital (US$) 2645 3404 3739 4421 5414 5899
GDP Per Capita PPP (US$) 5548 6185 5792 75550 8382 9143
Real GDP Growth (% Change yoy) 14.2 9.6 9.2 10.4 9.2 8.0
Current Account balance (US$m) 353900 412400 261000 305300 201000 181719
Current account balance (%GDP) 10.1 9.1 5.2 5.1 2.8 2.3
Goods & Services Exports (%GDP) 38.4 35.0 26.7 29.6 29.4 27.7
Inflation (% Change yoy) 4.8 5.9 -0.7 3.3 5.4 3.3
07 08 09 10 11(a) 12(b)
$570
1957 1962 1970 1975 1980 1985 1990 1995 2000 2005 2010
$613 $698 $781 $951
$1,362$1,677
$2,567$3,066
$5,171
$8,569
Real GDP Per Capita (PPP) in US Dollars by the end of each FYP, 1953-2010
The Rise of ChinaChina has experienced rapid economic growth over the past two decades, and forecasts suggest that the purchasing power of Chinese consumers will continue to surge.
� China’s GDP has risen at unprecedented levels
� Higher middle class incomes mean more discretionary spending leading to increased capacity to travel, which is also stimulated by more scheduled holiday periods throughout the year
� China has over 500,000 high net worth individuals and Australia is a top luxury travel destination
Source: Department of Foreign Affairs and Trade
Source: The Conference Board Total Economy Database.
(a) All recent data subject to revision (b) IMF/EIU estimate
4Rise of China Report Prepared by AVANA
With this rise in GDP comes a growing middle class that has a huge appetite for products and services that were previously out of reach. Twenty years ago, this middle class strived for ownership of push bikes, televisions and washing machines, these days the middle class is striving for a new big three - cars, houses and travel.
Urbanisation in China
GDP
According to the Department of Foreign Affairs and Trade, China experienced a sustained period of rapid economic expansion until a recent slowdown in 2009. Until this point, the last two decades had averaged around 10 per cent GDP growth. McKinsey China Insights reports in its 2012 Annual Chinese Consumer Report that consumer spending power will soar, even in a slower-growing China.
China will have an estimated 163 cities
with a population of a million or more by 2025.
China became the world’s largest
construction market in 2010. By 2020, China is
predicted to account for one-fifth of the global construction industry
163 1/5
Between 2010 and 2025, it is estimated that 300
million Chinese now living in rural areas will
move into cities
China will have an estimated 23 cities with a population of 5 million
or more by 2025.
300 million 23
Over the next two decades China will build
20,000 to 50,000 new skyscrapers, or the
equivalent of TEN New York-sized cities.
20-50k
Source: McKinsey & Co. report “Preparing for China’s urban billion” March 2009
5Rise of China Report Prepared by AVANA
Europe and China: A Comparison
To put the exceptional economic growth of China in perspective, the figures above compare China with a more traditional tourism trade partner, the European Union. China’s GDP in 2012 is forecast to grow at a rate of 8%, while the European Union is forecast at 0% growth.
Recent Economic Indicators
Real GDP Growth (% Change yoy) 14.2 9.6 9.2 10.4 9.2 8.0
Current Account balance (US$m) 353900 412400 261000 305300 201000 181719
Current account balance (%GDP) 10.1 9.1 5.2 5.1 2.8 2.3
07 08 09 10 11(a) 12(b)
Recent Economic Indicators
Real GDP Growth (% Change yoy) 3.4 0.5 -4.2 2.0 1.6 0.0
Current Account balance (US$m) -66860 -183797 -15877 -24591 17133 51,082
Current account balance (%GDP) -0.4 -1.0 -0.1 -0.2 0.1 0.3
07 08 09 10 11(a) 12(b)
China
European Union
(a) All recent data subject to revision (b) IMF forecast
(a) All recent data subject to revision (b) IMF/EIU estimate
Source: Department of Foreign Affairs and Trade
6Rise of China Report Prepared by AVANA
China
9561 sq km 4,331 sq km
European Union
1348.1 1,348.1 million
population
500.6 500.6 million population
Source: Department of Foreign Affairs and Trade
Europe and China Geographical Comparison
7Rise of China Report Prepared by AVANA
It is projected that by 2030, the urban population of China will reach one billion and by 2025, China will have 163 cities of over one million residents, compared with 63 cities of that size in Europe.
Urbanisation in China, 1978–2010
50
40
30
20
10
1978 1982% 1986 1990 1994 1998 2002 2006 2010
68% 73%68% by 2040, equivalent to the urbanisation rate
projected for Japan in 2015
by 2050 the rate of urbanisation for Europe
will be 73%
Source: China statistical yearbook 2011.
Whilst traditional markets still offer the Australia strong trade opportunities, this quick comparison of China and Europe highlights China’s growing importance for our country.
Urbanisation in China and Europe
Based on United Nations (UN) projections, the rate of urbanisation in China is expected to be:
China Europe
8Rise of China Report Prepared by AVANA
Rapidly Rising Incomes
China’s strong economic growth has resulted in rising incomes meaning that the Chinese consumer population has more discretionary funds available for purchases such as travel. On 13 August 2012, the New York Times reported that affluence is arriving faster than many economists anticipated, and based on annual surveys carried out since 2005, a giant leap is forecast by 2020, according to consulting firm McKinsey analysts.
By 2020, there will be 167 million “mainstream” consumer households in China with annual disposable income of between $16,000 and $34,000. This is over 10 times the 14 million, or 6 percent, who currently fit that definition. McKinsey also predicts that there will be 120 million households with $6,000 to $15,999 of spending power.
High Net Worth Individuals
According to the 2011 China Private Wealth Report by China Merchants Bank with Bain & Company, there are over 500,000 people with disposable assets of US$1.6 million (termed high net worth individuals or HNWIs). The report also states that in 2010, 15 provinces/municipalities each had more than 10,000 HNWIs, increasing by four since 2008 with the inclusion of Tianjin, Hunan, Hubei and Anhui. More than 50 per cent of China’s wealthy remain clustered in five provinces: Guangdong, Shanghai, Beijing, Zhejiang and Jiangsu, which are all located on the east coast and are generally more developed then other provinces in China.
Wealth & Consumption in China
Source: en.wikipedia.org/wiki/Chinawww.china-mike.com/facts-about-china/
271
22% 850million
450 million 20%
1 Million 1/4 500%There are now 271
billionaires in China ($US), up from 130 in
2009.
China consumes around 22% of the worlds energy
China has the world’s largest mobile phone
population with over 850 million active accounts
in 2011
China has the world’s largest Internet
population with over 450 million Chinese internet
users as of 2010
China is the world’s second largest consumer of luxury goods following Japan, and will account
for about 20 percent ($27 billion) of global luxury
sales in 2015
China now has 1 million millionaires
¼ of the world’s cars are sold in China
The average income has risen 500% since 2001
9Rise of China Report Prepared by AVANA
China’s Tiered City System
China can be categorised into three tiers of development, with the East coast cities being the most developed and the Western cities being the least. This is important for the Australian tourism industry to understand as the vast majority of Chinese visitors are coming from Tier 1 cities, followed by the Tier 2 cities.
Tier 1 Cities
Tier 2 Cities
Tier 1 Tier 2Tier 1 Cities - Beijing,
Shanghai and GuangzhouTier 2 Cities - Chengdu, Chongqing, Hangzhou,
Nanjing, Qingdao, Tianjin, Shenyang, Shenzhen,
Suzhou, Wuhan, Xiamen
10Rise of China Report Prepared by AVANA
References
Department of Foreign Affairs and Trade 2012, China Factsheet, viewed 15 September 2012,
<www.dfat.gov.au/geo/fs/chin.pdf>
Department of Foreign Affairs and Trade 2012, People’s Republic of China country brief, viewed 15 September 2012,
<www.dfat.gov.au/geo/china/china_brief.html>
Department of Foreign Affairs and Trade 2012, European Union Factsheet, viewed 21 September 2012,
<www.dfat.gov.au/geo/fs/eu.pdf>
McKinsey & Company, 2009, Preparing for China’s urban billion, McKinsey Global Institute, viewed September 2012,
<www.mckinsey.com/insights/mgi/research/urbanization/preparing_for_urban_billion_in_china>
The New York Times, Consumer Growth Could Buoy China’s Slowed Economy, August 13, 2012, viewed 26 September 2012,
<www.nytimes.com/2012/08/14/business/global/consumer-growth-could-buoy-chinas-slowed-economy.html?pagewanted=all&_r=0>
Tourism Australia 2012, China Market Profile 2012, viewed 13 September 2012,
<www.tourism.australia.com/en-au/downloads/MarketProfiles2012_China.pdf>
Tourism Australia 2012, 2020 China Strategic Plan – Progress Report, viewed 13 September 2012,
<www.tourism.australia.com/en-au/downloads/China2020_1YearOn.pdf>
Tourism Western Australia 2012, Our Direction in China 2012-2015, viewed on 20 September 2012,
<www.tourism.wa.gov.au/Publications%20Library/Marketing/Tourism_WA_Our_Direction_in_China_2012-2015.pdf>
Products & Services Chinese Consumers Can Trust
Program partners
This is an Australian Government funded initiative under T-QUAL Grants
Interested in Learning More About China?A consortium consisting of AVANA, China Ready & Accredited, ATEC, and TAFE NSW - WSI has collaborated to bring you the Welcoming Chinese Visitors Program which is funded by the Department of Resources, Energy and Tourism
This is a training program delivered via face to face workshops and a highly interactive eLearning course and includes the following modules:
Product Ready - this will step you through the process of ensuring that your product is, first and foremost, export ready
Sales Ready - once you know your product is ready, getting Sales Ready is the next important step in working through the process to engage with China
Service Ready - this step ensures that you will have the understanding and awareness to deliver the service and standards that Chinese consumers will expect when they visit Australia
To register your interest and find out more about the program, visit welcomingchinesevisitors.com.
welcomingchinesevisitors.com
[email protected]+61 2 8908 7300@ChinaReadyNews