China has developed into the number one producer of many things – gold, TV sets, mobile phones, solar panels, beer, apples, cars, steel, electricity, patents and much more.
In cases where China is still only number two, this is going to change soon and, in regard to international tourism, China has come from nowhere to ranking third worldwide for the number of outbound travellers within a decade, with over 70 million mainland citizens travelling abroad in 2011 and spending close to $70 billion, again the third-highest number in the industry.
With growth rates currently at 20%, we may see China in 2013, or even in 2012, overtaking Germany and the US to claim yet another top position, as the top international tourism source market in the world. The total number of outbound trips in 2012 could clear the 80 million-trip hurdle.
It is important to note that, as impressive as these figures are, they translate into an average spending of significantly less than $100 on outbound travel per year per head.
Assuming that the average number of border crossings per traveller is two, a conservative estimate, (keeping the commuters between Guangdong and Hong Kong and Macao in mind) suggests that even 100 million border crossings by 2014 will represent just 4% of the mainland Chinese population travelling internationally.
The second wave
The growing number of Chinese outbound tourists has received increased attention in recent years. However, the majority of mainland Chinese travellers have stayed within Asia and even those who travelled further concentrated mainly on the most famous sights in the most famous cities in major destinations, spending as little as possible on accommodation and food.
Good news is afoot though – the second wave of China’s outbound tourism has started, with increasing numbers of self-organised travellers slowing down and spreading further afield. Increasingly travel-savvy and globally connected, below 45 years and green, the ‘New Chinese Tourist’ (NCT) is arriving in exotic locations and is staying for more than just a snapshot.
The Chinese outbound tourism market has quickly segmented in the last few years. To keep things simple, two main branches of travellers, of which most are not travelling for business, can be distinguished:
Group travellers: There is still a queue of at least 150 million Chinese people waiting for their turn to join travel groups for shopping in Seoul and photo opportunities in front of the Eiffel Tower, according to COTRI estimates. The “four nights in Phuket” and the “Europe from a coach window” mass-market package tour products, based on low price and bad quality, will still serve the majority of tourists. The opportunities to break into this market for secondary airports and air routes are slim.
Self-organised travellers: From small beginnings, Chinese tourism outside package tours is growing fast. A number of developments have positively influenced the start of the second wave of China’s outbound tourism:
• Rampant consumerism and the growing affluence of the top 5% of Chinese.
• Simplified bureaucracy, making it easier to obtain passports and hard currency in China and tourist visas at the destination.
• Increased offline and online tourism marketing by national and regional tourism organisations.
• Better information about travelling and quality of products (from a Chinese point of view) through social media.
• The experiences of repeat-travellers in shaping new interests and increasing the confidence of the NCT.
• Stronger support for outbound tourism by the Chinese government, which manifested itself in the State Council Document No. 41, 2009, which declared tourism as a pillar industry and, for the first time, clearly supported the development of inbound and outbound travel.
• Tourism used to show off the “soft power” of China’s development model, especially in less developed countries.
New Chinese Tourists
International travel experience is a major indicator of belonging to the in-crowd in China, even more so for the latte-drinking, avant-garde New Chinese Tourists.
Since the beginning of 2012, some non-Chinese tour operators, including TUI China and JTB, have been allowed to offer outbound travel packages, changing the rules of the game, especially in the luxury and business group-travel market.
Therefore, even the foreseeable slowdown of the Chinese economy will not influence the growth rate of outbound travel significantly, especially the self-organised travel market.
‘Self-organised’ travellers should not be confused with ‘individual’ travellers. In reality, many are ‘half-organised’, with tour operators providing visas, flights and maybe some hotel bookings. ‘Self-drive’ tours allow groups of friends to leave the official convoy if they so desire – experience shows that this opportunity is welcomed, but almost never utilised.
NCTs are more often than not able to speak some English or other foreign languages, many having studied abroad. However, that does not mean that they are not happy to see signage in Chinese, as a sign of respect for their country.
Like Western backpackers, they will insist on being different from mass-tourists; however, a recent investigation by CTA and the online booking agency CTRIP confirmed that, in regard to favoured destinations for shorter trips, the same four destinations – Hong Kong, Seoul, Phuket and Maldives – showed up among the top five for both group and self-organised travellers. Other studies show that during intercontinental trips, self-organised travellers prefer slower travel forms and are more likely to add smaller destinations and special-interest sights and activities to their itinerary, or change travel plans at short notice.
The travel experience of the NCT’s can be traced back to the simple fact that 15 years have now passed since the first ADS leisure tourists could visit Western countries such as Australia, and so there are many tourists who have travelled before. Since the beginning of the Reform and Opening Policy in 1978, more than 1.6 million students have studied abroad, almost two thirds of them returning to China. These persons are more likely to have a deeper understanding of foreign cultures and less anxiety about travelling away from home without a tour guide. In many cases they have also picked up the habit of flying rather than using other transportation while staying in Europe or the USA.
New Chinese Tourists are not under the dictatorship of a commission-driven tour guide when choosing where to shop and what to buy. Most of them will purchase more goods for themselves and less for their friends and relatives at home, as their peers are more likely to travel internationally as well.
Brands are still important, as New Chinese Tourists still travel to gain prestige and self-esteem, albeit on a more sophisticated level than their poorer antecedents. For instance, during the Chinese New Year (Spring Festival) Golden Week 2012, Chinese tourists shopping in South Korea were reported as shunning Gucci and Louis Vuitton products, opting for trendy Alexander McQueen, Stefano Ricci and Emilio Pucci brands instead. Beside famous and ‘cool’ brands, items considered as authentic, health-related products and art are more likely to open the purses of NCTs.
New Chinese Tourists offer an increased chance for destinations and tourism service providers in off the beaten track destinations to get a piece of the Chinese outbound market.
However, they will have to make sure that their product is adapted to the special needs and expectations of this new kind of Chinese guest and that their staff are prepared to welcome the global yet patriotic travellers.
They also need to ensure that they make their product attractive and prestigious to the NCTs, through social media and other forms of “WOM squared” (Word of Mouth and Word of Mouse) peer-group communication.
Airlines and airports will have to increase the use of Chinese signage and language, providing spaces based on the needs of groups rather than individual travellers and intensify their online and offline communication to signal their special efforts to make the soon-to-be number one tourism source market customers feel welcome.
This article features in Routes News 2012 Issue 2