China prepares to see the world
By Alexandra Harney
Financial Times
Published: September 1 2004 21:31 | Last updated: September 1 2004 21:31
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Ms Zhang, who works as an assistant computer engineer in Beijing, has been reading up on Paris, the first stop in a three-country tour arranged by her travel agent.
“It's a pity that we have to stop there first,” she says. Her friends have inundated her with orders for French perfume and chocolate, and she has bought an extra suitcase in anticipation. “We'll have so much stuff to bring with us for the rest of our trip that we'll be exhausted just carrying it around.”
Ms Zhang will not be alone on her honeymoon. Starting this week, mainland Chinese tour groups will be allowed to visit 27 European countries that were previously off-limits to all but business travellers. Overnight, countries such as France, Italy,Switzerland, Spain, Belgium, Sweden, and Greece will gain Beijing's imprimatur as “approved destinations”.
The opening of Europe is the most dramatic since China began loosening restrictions on international travel in the early 1980s. Industry analysts believe it could set the stage for further liberalisation, whetting the popular appetite for overseas travel and widening the door to the outside world for hundreds of millions of Chinese.
“They have never opened more than 20 countries at one time,” says Zhang Wenjia, chief representative for Switzerland Tourism in China. “It is a big milestone.”
And this is just the beginning. The World Tourism Organisation forecasts that, by 2020, China will send 100m tourists overseas, making it the world's fourth largest source of tourists after Germany, Japan and the US. Last year, the number of mainland Chinese travelling outside the country rose 21 per cent to 20.2m, surpassing the number of Japanese tourists - previously Asia's most avid travellers - for the first time. This year 24m Chinese will travel abroad, according to DPS Consulting, a Beijing-based group. An explosion in Chinese tourism has big implications for the world's hotel, airline, retail and travel industries. Anecdotal evidence already suggests that Chinese tourists are not shy about opening their wallets. Mainland Chinese spend more in Hong Kong than visitors from any other country.China's relaxation of rules on travel to the territory, which started last summer, has helped lift per capita spending for overnight visitors to HK$6,018 (US$772, €634 or £428) in 2003. Americans, by comparison, spent HK$5,477. Even though the UK is not an approved destination, mainland Chinese tourists spent £127m ($227m, €188m) there last year, according to Visit Britain, the UK's tourism body.
Globe-trotting tourists from Asia are not new. Camera-toting Japanese took the world by storm starting in the 1980s, forcing hotels around the world to stock yukata robes and green tea and encouraging retailers and restaurants to hire Japanese-speaking staff.
“It's exactly the same thing we experienced with the Japanese 20years ago and we experienced with the Russians since 1999, but with a big difference: the size of the market,” says Serge Ragozin, executive senior vice-president for international support at Accor, the Paris-based hotel chain.
The other difference is the speed at which the Chinese market has grown. Chinese companies have started to give their workers paid holidays only in the last decade. “The first headlong rush is very dramatic and occurring over a relatively short period of time compared with the Japanese,” says John Koldowski, managing director at the Pacific Asia Travel Association's strategic intelligence centre in Bangkok.
Until recently, because of Chinese government controls on the sector,the number of destinations open to Chinese tour groups was limited. In the early 1980s, Beijing began permitting groups from the southern province of Guangdong to visit relatives in Hong Kong and Macau, then British and Portuguese colonies, respectively. China gradually expanded the number of destinations to include several south-east Asian countries, Australia and Japan.
Today, Chinese travel agents can organise group tours only to countries that have signed an “approved destination status” (ADS) agreement with Beijing. These pacts control the flow of Chinese tour groups: only authorised travel agents, which have agreed to bear responsibility for scanning visa applications, can arrange trips to ADS countries. But loopholes in the system have enabled Chinese groups to visit Europe and other non-ADS countries for years on business visas. And because ADS agreements apply only to group tours, individuals have been able to apply for tourist visas to non-ADS countries.
Countries must apply to the Chinese government for approved destination status. Their application is reviewed by several government bodies and, if it is approved, Beijing and the host country negotiate an agreement. This process can be time-consuming: the UK, for example, is still waiting to sign an ADS pact. The US, widely acknowledged to be the largest potential destination for Chinese tourists, has not signed an ADS pact, although it does issue visas to Chinese tourists.
Nevertheless, the Chinese tourist is already changing the way hotels, airlines and travel agents around the world do business. Germany's Lufthansa, the leading European airline in China, has increased the number of its flights in and out of China from 26 to 41 this year, adding frequencies connecting Munich with Beijing and the wealthy southern city of Guangzhou. Chinese passengers arriving in Frankfurt and Munich are greeted by the Chinese Welcome Service, a Chinese-speaking team in dark blue uniforms that directs them to hotels, rental car services or a connecting flight.
“Chinese travellers have become an important part of the momentum driving our business, and we anticipate the demand for air travel from China will continue to grow,” Lufthansa says. China accounted for 15 per cent of the carrier's revenue in Asia last year.
In June, Nevada, home to Las Vegas, the gambling mecca, became the first US state to open a tourism office in China. Chen Hongxia, who runs the office, says more Chinese visit Las Vegas than any other city in the US.
The hospitality industry has been similarly moved. The Sheraton Park Tower in London, a five-star hotel, said last week that it now offers China Central Television, the state-owned national network, in all its 280 rooms. Accor, which owns the Ibis, Sofitel and Novotel hotel brands, is also trying to ensure its Chinese guests feel more at home: some of its three- and four-star hotels in Paris now offer Chinese tea sets and TV channels and serve white rice and soup at breakfast. When the mayors of Chinese cities visit France, Accor executives make it a point to see them. “We ask them, ‘What do you need, what do you want?'” says Mr Ragozin.
“Assign your Chinese guests rooms with twin beds,” reads a brochure entitled “Hello China” that has been distributed to hotels and tour operators in Switzerland hoping to attract Chinese customers. “The members of the group travelling together will, in general, not have known each other before starting the trip.”
China's own travel industry is gearing up for the boom. Travel agents have launched intensive advertising campaigns to promote tours to Europe, and are beefing up their overseas departments. CYTS, a leading agency, spent nothing on promoting tours to Europe last year; this year, it has earmarked Rmb1m (£67,000, $121,000 or €99,000) for these advertisements. “We have expanded our European section,” says Sun Changwei, general manager of the outbound department at CYTS. “Before, we had five staff there, now we have 12.”
Agents are focusing their efforts on France, Italy and Switzerland, which they expect will be the most popular destinations. But many of the packages on offer will take Chinese tourists to nearly a dozen countries in about as many days, shuttling them around the continent on coaches. Chinese travel industry officials are keen to ensure that tourists are not defrauded in Europe as they have been in Thailand. Tour operators there have been collaborating with agencies on the mainland to offer deeply discounted packages known as “zero-dollar tours”, in which Chinese tourists were forced to shop for goods at inflated prices instead of sightseeing.
Chinese tourists may not spend as much on hotels and restaurants as the travel industry is hoping: many prefer to sleep and eat cheaply to leave money for shopping, often for luxury goods. In 2003, mainlanders visiting Hong Kong spent 12.3 per cent of their budget in hotels and 68.5 per cent of their budget on shopping, according to the territory's tourism board.
Some observers argue that the growth in Chinese outbound tourism will be constrained for other reasons. For one, despite the fact that the number of flights connecting China with the rest of the world has increased dramatically, there are still not enough seats to meet demand during peak travel seasons.
Another obstacle is the cumbersome procedure for getting a visa to go abroad as part of a tour group. Although the process will be streamlined after September 1, cutting down on the paperwork that prospective tourists must provide, travellers will still need to show evidence of financial stability such as certificates of car or home ownership. As part of China's efforts to prevent illegal immigrants to other countries, Beijing residents must also deposit Rmb30,000 with a travel agent or provide proof that they have the equivalent in a bank account to cover the cost of retrieving them if they overstay their visas, according to CYTS.
Gao Zhong, a Beijing executive who is planning a trip as part of a package tour to the UK, Switzerland and Italy, says: “They asked for certificates from my company, signed by my boss. They are too sensitive.”
A further concern is how quickly Beijing will loosen restrictions on where Chinese tour groups can go and how much they can spend. China is concerned about controlling capital flows out of the country: officially, Chinese can only take the equivalent of US$5,000 (€4,100, £2,775) outside the country. While there are easy ways around these rules - many wealthy Chinese now have overseas bank accounts and credit cards, for example - some wonder how much leakage Beijing will tolerate as the number of tourists leaving the country increases.
“[They] never want to get into the position where [they've] got a net outflow of funds due to travel,” says Mr Koldowski.
For now, however, travel agents are worried about managing the cultural differences between Chinese and Europeans. Chinese tourists are known to be boisterous, and practices considered rude elsewhere are common in China. “It is not appropriate to speak loudly, spit or throw rubbish everywhere,” says a brochure from CYTS. “It is impolite to clean [your] teeth, touch [your] belt, lift up [your] trousers and take off [your] shoes in public,” the brochure adds.
Ms Zhang of Switzerland Tourism has been coaching Swiss hotels on Chinese tourists' preferences while trying to correct misunderstandings about Europe in China. Some Chinese visitors to Europe “complain that the rooms are too small [for the price they are paying], that European lifts are too small, that they don't have a huge lobby in the hotel,” she says.
Continental-style meals with several courses have also not proved popular with some Chinese tourists, Ms Zhang adds. “In China, if you order something, in 10 minutes the table is full [of dishes]. If you order a French meal, it's three hours, with three courses. For Chinese, it's so difficult to convince them to sit there.”
Mr Koldowski, for his part, has been warning airlines, tour operators and hotels not to lose sight of the need to provide good service to their growing ranks of Chinese customers. He says: “If you are doing everything right, and this year you have 40 tour groups [from China], next year you could have 400. Are you ready for that?”
Taken for a ride in Thailand
By Amy Kazmin
Published: September 1 2004 21:31 | Last updated: September 1 2004 21:31
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But the store owners are not interested in attracting casual passers-by. They cater almost exclusively to mainland Chinese tourists travelling on “zero-dollar” package tours.
Zero-dollar tour organisers prey on the Chinese lured by prospects of a foreign holiday at rock-bottom prices. The holidaymakers buy cheap package tours of Thailand - mostly paying less than the cost of an airline ticket - for what they expect to be an all-inclusive trip.
But once in Thailand, the tourists, most of whom speak only Chinese and have never been abroad before, are pressed into paying for expensive activities and excursions and buying products at inflated prices from shops closely linked to the tour operators. Visitors who leave the stores empty-handed or who resist paying for extra activities - such as sex shows and parasailing excursions - can be subjected to strong-arm tactics. Chinese tourists have been threatened with abandonment on highways and denied hotel room keys at night, according to Suwat Jutakorn, director of the Beijing office of the Tourism Authority of Thailand. In February, tourists from China's Yunnan province protested by refusing to board their return flight for nearly 24 hours.
Of the nearly 5m Chinese who have travelled to Thailand since 1997, the overwhelming majority went on zero-dollar tours, Mr Suwat says. China's outward-bound travel agencies are believed to be well aware of what awaits those who buy cheap Thai tours. Chinese agencies even collect fees from Thai tour operators to place visitors on such trips, according to people in Thailand's tourism industry.
The Chinese central government has pledged to crack down on zero-dollar tours but officials in the provinces - who license and regulate the outward-bound tour companies - have been slow to act, Mr Suwat says. The Thai authorities have also failed to crack down on unscrupulous local players, who have structured the operations so that they fall into grey areas of the law. The driving force behind the zero-dollar tours is a handful of big Thai gem companies that sell jewellery and gemstones. They also own the coaches that carry the tourists, the shops to which the visitors are taken and even some of the hotels where they stay, according to Wirot Sitaprasertnand, president of Thailand's Professional Tourist Guide Association.
Suparerk Soorangura, president of the Association of Thai Travel Agents, estimates that at least half the Chinese visitors to Thailand in recent years have travelled with Thai tour operators fronting for the gem companies. The schemes have put pressure on more professional tour operators to lower prices, driving down standards for the inward-bound Chinese tourist market.
Thailand's image has taken a beating recently in the Chinese media. Chinese arrivals to Thailand fell to around 600,000 in 2003 from around 800,000 in 2001, and dropped another 14 per cent in the first quarter of this year.
To reverse the decline, Thailand's tourism industry has launched promotions and advertising campaigns aimed at educating Chinese tourists and pointing them towards more reputable, but expensive, tour operators. Prospects for massive growth in the number of Chinese visitors, Thai authorities insist, remain bright.
“We see the Chinese not just as friends but as relatives,” says Juthamas Siriwan, head of the Tourism Authority of Thailand. “It seems that when they come, they come to visit us as their cousins.”
'Approved' Europeans expect Chinese tourist groups
By Alexandra Harney in Hong Kong
Published: August 30 2004 03:00 | Last updated: August 30 2004 03:00
A wave of Chinese tourists is expected to hit European cities this week as Beijing lifts its restrictions on group travel to nearly 30 countries.
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China's designation of most of Europe as an "approved destination", taking effect on Wednesday, is expected to trigger a flood of tour groups to the region. Until now, only business travellers and individuals who were able to obtain visas were able to travel there.
The number of Chinese travelling overseas is expected to swell in coming years as Beijing relaxes rules on foreign visits, creating a substantial new source of business for the world's hotel, airline and travel industries.
The World Tourism Organisation estimates that by 2020 the number of Chinese tourists will reach 100m. Last year, there were 20.2m tourists. "International travel is no longer something that's once in a lifetime," says John Koldowski, managing director of the Pacific Asia Travel Association's strategic intelligence centre. "Travel is a part of [Chinese people's] lives."
China and 27 European countries have agreed to set up a system for handling Chinese tourists, allowing the European countries "approved destination status". The countries include Belgium, Denmark, France, Greece, Italy, the Netherlands, Ireland, Spain and Switzerland. The UK has negotiated but not signed an approved destination pact.
The first flight to Europe carrying Chinese tour groups will leave Beijing for Paris at noon on Wednesday. Travel agents expect the most popular destinations to be France, Italy and Switzerland.
Chinese tour groups are currently allowed to visit 26 countries, including much of south-east Asia, Australia, New Zealand and South Korea and Japan.
Hong Kong, which returned to Chinese sovereignty in 1997 but is still considered an overseas destination, the former Portugese colony of Macao and Thailand have historically attracted the largest number of Chinese tourists.
Travel agents say Europe's different culture will prove attractive. Vivian Li, a bank treasurer from Shanghai who is planning a trip to France and Italy in September, said: "I have always wanted to realise my dream of relaxing in a sidewalk coffee shop on the Champs Elysées and watching the handsome men walk by."
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