Chinese ADS policy and its impact on Chinese outbound market: A case study of Hong Kong
I. Identification
1. The Issue
In 2002, 16.6 million Chinese tourists traveled abroad, a 36.8% increase over 2001. Despite the impact of SARS, in 2003, the outbound figure increased nearly 21.7%, reaching 20.2 million; of which, 14.8 million were private tours, an increase of 47%. 2004 was the year truly witnessing the soar of Chinese outbound travel. The first 10 months of 2004 recorded 23.8 million outbound tourists, a phenomenal 49.8% increase compared to the same period of 2003. As estimated by the World Tourism Organization, in 2020, Chinese tourists heading abroad will reach 100 million, which will make China the fourth largest tourist generating country in the world.
It is such a rapidly emerging market, yet, still a small portion of a huge iceberg backed up by a 1.5 billion population. How to target the Chinese outbound market has become the hot topic for most destination countries.China has adopted a special policy for its outbound tourism: Approved Destination Status (ADS). ADS agreement is a bilateral tourism agreement whereby Chinese government allows Chinese tour operators to organize tours to the counterpart country while the counterpart government allows Chinese tourists to travel into its territory with a special group ADS visa. Only countries with ADS can be listed as group travel destinations for Chinese tourists and promote their destinations in China. This policy has created great impacts on the Chinese outbound tourism market. Because of this policy, Chinese outbound market displays some special characteristics. A close study of the policy is essential to understand those special characteristics. The study of the policy is also necessary in order to forecast the trend of Chinese outbound market.
This case study analyzes the Chinese outbound market to Hong Kong. From the analysis of the tourism statistics between 2001 and 2003, a new trend of the market is discovered, relating to the change of the policy.
2. Description
Approved Destination Status (ADS)
Approved Destination Status (ADS) is a unique policy adopted by the Chinese government to control its outbound tourism. Only countries with ADS can be listed as group travel destinations and promote their tourism market in China. Through the control of outbound destinations, and of the Chinese outbound industry that promotes it, the Chinese government can manage and monitor the outbound tourism market growth to avoid a hard currency drain from its state coffers and thus maintain a positive travel account. Another purpose for this control is to protect China’s emerging national tourism sector. Several procedures are used for these purposes:
• Chinese tour operators are not allowed to organize or promote tourism groups to overseas destinations, unless they have been granted Approved Destination Status (ADS).
• Foreign tour operators are not allowed to promote and market their services in China, unless their respective country has been granted Approved Destination Status (ADS). At present, they are not even allowed to establish a representative office in China to provide said services.
• Foreign airlines are limited in their frequencies and capacities by means of restrictive air agreements.It is worth to mention that the ADS agreement only applies to Chinese tourists who travel to foreign countries in a format of groups. Chinese tourists can apply individual traveling visas freely. However, the process is complicated and time consuming, with a high rejection rate.
History of Chinese Outbound Tourism Market
Chinese outbound tourism started in the early 1980’s when residents of Guangdong province could visit Hong Kong and Macau, provided their relatives in those two cities could cover their expenses. During that period, the application for obtaining a passport was complicated and cumbersome. An applicant needed to show invitation letters from overseas relatives indicating the expense source, a company letter indicating the permission of the trip, and purchase several official stamps from different government agencies before submitting it to the official corresponding passport office, which was a sub-department of the Police Bureau.In 1988, Thailand joined Hong Kong and Macau to share the privileges to obtain Chinese visitors, followed by Singapore and Malaysia in 1990, and later Philippines in 1992. However, the visits were limited to business travel and visiting friends and relatives.
It was not until 1997, that the “Provisional measures concerning the administration of outbound travel of Chinese citizens at their own expenses” was promulgated and approved by the Chinese Government State Council, thus announcing the official start of the outbound travel by Chinese citizens Since 1999, citizens can apply for passports with their personal identifications, which is a significant step to ease the outbound traveling restriction. As can be noted, China is gradually relaxing its controls on the outbound market.
Australia and New Zealand obtained ADS status in 1999; Japan in 2000, and 26 EU countries in 2004. In January 2005, United Kingdom and Canada were approved. (Click here for The ADS Country List).
With the ease of the passport restriction policy and the expansion of more destination choices, Chinese outbound tourism has skyrocketed since 1998, after steadily been increasing for the past ten years. This growth has drawn worldwide attention. Countries are now making great efforts to attract Chinese visitors, an enormous potential market with almost one fifth of the world population.
China’s Outbound Travel Market, 1993-2003
Compiled from data provided by China National Tourist OfficeChinese mainland tourists for Hong Kong Tourism
Tourism is one of Hong Kong’s major economic sectors. Since 1994, mainland travelers have become the major market source for Hong Kong. The number increased from 2 million in 1994 to 12 million in 2004, sixfold. The market share increased from 21% to 56%. Although Hong Kong became a part of China in 1997, as a special district, for political reasons mainland visitors still need visas or permits to visit Hong Kong, thus making the ADS policy still valid.
As the first granted destination for mainland travelers, Hong Kong provides valuable insights in understanding the characteristics of the mainland tourists market and to forecast future trends.
Travel patterns of mainland visitors to Hong Kong have structurally changed. In 2001, the main travel arrangement for mainland travelers is all-inclusive packages, accounting for 67% of total travelers. The figure dropped dramatically to 39% in 2003, while independent travelers have risen from 10% in 2001 to 58% in 2003. This partly contributes to Hong Kong’s special status and its attraction as a shopping Mecca to mainland Chinese, where they can purchase all kinds of world famous brands and avoid the high taxes imposed in the mainland.
Travel patterns of mainland visitors to Hong Kong 2001 – 2003
Packages Accommodation + Air tickets Independent First Time Repeat 2001 67% 23% 10% 54.3% 45.7% 2002 42% 10% 48% 36.1% 63.9% 2003 39% 2% 58% 33% 67% Source: Hong Kong Tourism Board
Another feature related to the large independent travelers’ population is the increase of repeat visitors. As mainland visitors are now allowed to visit Hong Kong as individuals, and not necessarily in a tour group, Hong Kong suddenly becomes very much accessible. As the closest and most convenient metropolitan city, Hong Kong offers tremendous entertainment and shopping opportunities, as well as a sense of western charm. Residents in Guangdong province, which is adjacent to Hong Kong, are the main source for shopping tourists. With a permit that grants multiple entries within three years, Guangdong residents can easily take half an hour to three hours drive to Hong Kong during weekends. Furthermore, there is an increasing trend of residents from other areas, especially Shanghai and Beijing where personal incomes are much higher than the average level, visiting Hong Kong mainly for garments, electronics, cosmetics and luxury goods. This leads to the expenditure structure change, which is discussed in detail in Session 15.
It is worth noting the total expenditures of same day mainland visitors. They spent HK$3,578million ($458.7million) in 2003, a 79.3% increase compared to 2002. It accounted for 75.4% of total expenditures of same day visitors in 2003, out of which 81.8% was spent on shopping.
Compared to other markets, Chinese travelers have a high per capita expenditure but relatively low per diem expenditure. Among the top five revenue generating markets, Chinese have spent more per capita but less per diem. United Kingdom has the least per diem expenditure but China has the least expenditure excluding shopping. This is because independent Chinese travelers seldom visit attractions and often stay in moderate hotels.
Comparison of travelers’ expenditure in Hong Kong 2003
China Japan USA Taiwan United Kingdom Per Capita 6018 4529 5621 5176 4892 Per Diem 1252 2057 1790 2108 1230 Shopping expenditure percentage 68.5% 44.2% 31.3% 57.9% 27.8% Source: Hong Kong Tourism Board
3. Related Cases
The following case by Mr. QingBo Bao, discusses illegal immigration of Chinese to US, and the rationale behind the US government’s decision for not applying for ADS. It should be noted that the illegal immigration issue is not the only reason behind the US government’s decision. In January, 2005, the US and China signed a memorandum regarding the opening of the US market to Chinese visitors, thus bypassing ADS
Chinese Illegal Immigrants and US Tourists Visa4. Author and Date:
Jolene Huan Li,
Master of Tourism Administration candidate
Department of Tourism and Hospitality Management
George Washington University
600 21st St., NW
Washington, DC 20007
USA
huanli@gwu.edu
April 2005II. Legal Clusters
5. Discourse and Status:
ADS was first used in 1983 when only Hong Kong and Macau were granted the status as foreign destinations for Chinese visitors (at that time, these two territories were not returned to Chinese governance). However, it was not a truly outbound tourism because the expenses of visitors would be borne by their relatives who reside in Hong Kong and/or Macau.
In 1997, Chinese tourists could visit Hong Kong by joining organized tour groups and covering their own expenses. However, a quota was established by the Chinese government on the annual number of tourists allowed to visit Hong Kong.
In January 2002, Hong Kong government has successfully appealed to lift the quotas on visitors controlled by the Chinese government.In 2003, the Chinese government released the individual travelers’ restriction to Hong Kong for some of its major cities. Previously mainland travelers needed to go with tour groups to Hong Kong in most cases. With the new regulation, mainland travelers in several major cities can now apply for individual permits to Hong Kong with their personal IDs. The permit is easy to obtain. It is valid for 3 months and allows a 7 day visit to Hong Kong. This new regulation is a signal of the new trend towards easing overall restrictions to Chinese tourists.
However, the policy has been amended because of the special status of Hong Kong. It is not only from an economic perspective but also from a political perspective. For other countries, according to the China National Tourism Association, ADS policy will still be valid at least for the near future.
On the other hand, many countries are beginning to find loopholes in the ADS. Thailand, Cambodia and Malaysia offer on-arrival visas for Chinese tourists. Singapore provides a 72 hour visa waiver program for Chinese tourists. These policies practically bypass ADS restrictions, allowing independent travelers to visit freely.
But for many countries who are concerned with illegal immigration, ADS is still the best approach at this moment to accommodate the desire for Chinese inbound tourists and a stable immigration environment.
6. Forum and Scope:
• International: ADS affects all countries willing to attract Chinese tourists. The assessment of this policy and the impacts it introduces offers insights in the Chinese outbound tourism market’s characteristics and future trends.
• National: China and Hong Kong territory. Though Hong Kong is under the governance of China, it still maintains its independent legislation and immigration system. Tourism plays an important role in Hong Kong’s economy. As mainland travelers dominate the Hong Kong market, there is a particular interest to attract more travelers. For political reasons the Chinese government has a vested interest in maintaining the prosperity of Hong Kong. It is one way to show the support for Hong Kong by bolstering tourism sector. Expansion of Hong Kong market also alleviates the internal pressure for outbound travel.
• Regional: Coastline area, particularly Guangdong, Shanghai and Beijing areas. These regions are the main tourist generating areas. Many tourism policy changes towards Hong Kong started from those areas at testing phase and then spread to the rest of the country. Guangdong as the province neighboring Hong Kong provides most visitors. Many visit Hong Kong with a single purpose: shopping.
• Local: Major cities in China: Guangzhou, Shanghai and Beijing are the major generating markets for Hong Kong and overseas. Since the residents of these cities currently have the privilege to visit Hong Kong with a special permit, they are the main target market, given their affluence and education. Having a higher disposable income than the average Chinese citizen, they are willing to travel overseas and spend their income on brand products and luxury goods.7. Decision Breadth/Stakeholders:
The Chinese government is the main decision maker. Hong Kong’s Special Administrative Region (SAR) government can appeal to lift or loose certain regulations. However, the decisions are still made by the Chinese Central government.
The Immigration Department of Hong Kong handles the embarkation and disembarkation of visitors. The Chinese Police issues the permits and visas to Hong Kong.
The China National Tourism Association executes the regulations, controls and monitors the outbound tourism. Hong Kong’s Tourism Board takes the responsibility to promote Hong Kong as a tourist destination and conducts statistics and tourism research.
The Hong Kong Tourism industry and retail industry are the largest beneficiaries of the Chinese booming outbound tourism. They are the initiators and participants of many activities organized by Hong Kong’s Tourism Board to promote Hong Kong’s tourism. Chinese tour operators and travel agencies also benefit from the increasing number of tourists.
Residents of mainland China are the stakeholders directly affected by ADS. The ease of control will make travel planning much easier. Residents of Hong Kong on the other hand benefit from the increase in economic growth and the variety of products brought on by tourism like Disneyland Hong Kong. It should be noted, however, that their quality of life is being greatly affected by the influx of mainland tourists as they compete for local services.
The real estate industry is also benefiting from the influx of affluent Chinese tourists who have the intention to buy real estate as an investment or second home.
Police and other public services face the pressure brought by the large number of Chinese tourists.
8. Legal Standing/Legal Regulatory Framework:
ADS policy is promulgated by the Chinese government’s State Council. The interpretations of the policy and amendment rights belong to the State Council. The application for ADS goes through the China National Tourism Association. But the final decision is still made by the State Council.
One of the risks for opening tourism nation-wide is illegal immigration. However, for Hong Kong, the risk is diminished since it is a part of China and easier to control. But for other countries, especially developed countries, it is the major concern. From current experiences, travel agencies conduct the preliminary assessment of the visas.
Tourists need to hand in their passports to travel agencies when they pass the entry immigration control. These procedures have demonstrated to be effective for tracking the flow of tourists. In practice, many travel agencies require a certain monetary deposit from the travelers before they begin their trip, which is then reimbursed to them upon their return. For example, travel agencies would require RMB50, 000 (around US$6,000) as a deposit for a trip to Australia.
III. Geographic Clusters
9. Geographic Locations
a. Geographic Domain: China. This domain includes generating cities and provinces and destination.
b. Geographic Site: Hong Kong
c. Geographic Impact: Hong Kong neighbors Guangdong province, the major tourist generating region. It is 2 hours flight from Shanghai and 3 hours from Beijing.10. Sub-National Factors:
Hong Kong:
Population: 6,895,500 (end of 2004)
GDP: 1,220,023 million HK$, (2003)
Total labor force: 3,556,000 (Nov 2004 to Jan 2005)
Seasonally adjusted unemployment rate: 6.4% (Nov 2004 to Jan 2005)
Retail sales: 191,599 million HK$, 10.8% year-on-year change (2004)
Restaurant receipts: 53,038.2 million HK$, 10.1% year-on-year change (2004)
Total Tourists Arrivals: 21.8 million; Chinese visitors: 12.2 million (2004)
Hotel Occupancy rate: 88% (2004)
(Source: Census and Statistics Department, Hong Kong and Hong Kong Tourism Board)11. Type of Habitat:
• Chinese tourists show high percentage of group tours, low repeat visitor rate, and low per diem expenditure. Though the situation is changing in Hong Kong because of the policy change, it still applies to other ADS countries.
• Price war and kickbacks are popular. Because ADS designates limited number of tour operators to handle the outbound travel, these tour operators have a monopoly and certain privileges. In order to bring tourists, the travel agencies of the destination offer tour operators in China low budget or even “zero” rate packages to make the price attractive. However, tourists are led to numerous shops during the trip as a kickback method to compensate the loss in the package prices.
• Multi-countries trips. Chinese outbound travelers prefer to visit many countries during one trip if possible.
First, from an economic and time perspective for both the travelers and the tour operators, it is more efficient to go to quite a few countries in one trip rather than in several trips given the many requirements and delays in the processing of visas. For example, many travel agencies would require monetary deposit for certain countries as a procedure to avoid overstaying. Cash deposit of RMB50, 000 (US$6045) is usually asked for a trip to Europe, no matter visiting one country or ten countries. In this case, trips which include many countries are certainly more attractive than those of only one country.
Second, China is still an emerging market with limited travel products available, mostly constrained by the travel agencies’ knowledge, experience and budgets. Lack of background knowledge of cultures and attractions makes many destinations just names to Chinese tourists. This also leads to the absence of in-depth requirements regarding itineraries.
Furthermore, traveling abroad is much more driven by desire of status than by personal fulfillment. To most travelers, the number of countries visited is more rewarding than the in-depth knowledge of one country. Besides, from the Chinese culture perspective, tourists would like to be occupied during the trip, either sightseeing or shopping. It is considered strange to spend money and time just for being somewhere to relax. They prefer a stretching schedule, believing the more programs arranged in the trip, the more satisfaction experienced.
• Outbound travel occurs intensively during Chinese golden holidays. The main travel seasons are Chinese Spring Festival (generally in February), May Labor Day and October National Day. Recognized as “golden holidays”, these major holidays offer a one week holiday. Currently paid leaves are still unpopular in China, though the government is actively introducing paid leaves to state-owned companies
IV. Trade Clusters
12. Type of Measure:
Visitor arrivals, visitor expenditures, length of stay, overnight visitor numbers, day visitor numbers, and repeat visitor numbers are the figures used to analyze trends and other changes of the Chinese mainland market.
Tourism satellite account provides detail economic impact of tourism to the economy. It includes the direct tourism value added and indirect tourism value added, the employment directly engaged in tourism and indirectly engaged in tourism, as well as the tourism sector’s contribution to Hong Kong’s GDP.
Hong Kong does an excellent job in tourism statistics. The figures recorded in the last twenty years are very useful to understand the market features and analyze its trends.
13. Relation of Trade Measure to Environmental/Tourism Impact
a. Directly Related to Product:
Yes, the visitor arrivals and expenditure is part of tourism measurement. Tourism satellite account itself serves as the measurement of tourism impact.
b. Indirectly Related to Product:
Yes, the visitor arrivals will indirectly press the environment. Though Hong Kong is a metropolis, too many travelers can still cause negative impacts. The congestion of roads, long queues in restaurants and store cashiers, noise and littering, and safety issue etc. These problems are especially poignant during Chinese spring festival, May and National Day Holidays.
c. Not Related to Product:
No. Overall the measurement is for tourism.
d. Related to Process:
Yes. The methods to receive the data are important as the data are used to determine the trends and predicate the potentials.14. Trade Product Identification/Trade and Services:
The main type of product is service, including accommodation, food, transportation, entertainments and retail services. Other products include all kind of exported goods, like electronics, fashions, jewelry, cosmetics and souvenir.
15. Economic Data
Total tourism expenditure in 2003 was 74,930 million HK dollars. Among which, mainland tourists spent 34,257.54 million HK dollars, 64.4% of total tourist expenditure. The growth rate was 27.9%.
The “mainland overnight travelers’ expenditure in Hong Kong” table shows the increase of expenditure per capita from 1998 to 2003 and the break down of expenditures. With 59.5% in 2002 and 68.5% in 2003, the percentage of mainland travelers’ expenditure on shopping is extremely high. As mentioned earlier, to many mainland travelers, the main purpose of a Hong Kong trip is shopping. It generates great opportunities for Hong Kong’s retail industry. As a matter of fact, retail industry benefits more from mainland travelers than hotels industry.
Garments, watches, jewelries, electronics, cosmetics and luxury goods are the popular shopping items for mainland visitors. Many shops now absorb the difference between currencies (1HK dollar = 1.06 RMB) by allowing mainland customers to pay the same absolute price using RMB to encourage mainland visitors shopping.
Mainland Overnight Travelers expenditure in Hong Kong 1998-2003
1998 1999 2000 2001 2002 2003 Expenditure Per Capita (HK$) 5,484 4,425 4,868 5,169 5,639 6,018 Shopping 64.6% 63.0% 64.6% 63.7% 59.5% 68.5% Hotel Bills 15.5% 15.1% 16.3% 15.4% 13.6% 12.3% Meals Outside Hotels 9.8% 12.1% 11.8% 12.8% 14.5% 11.8% Entertainment 1.4% 1.4% 1.0% 1.5% 2.9% 1.7% Tours 5.6% 4.2% 2.6% 2.8% 2.7% 0.9% Others 3.1% 4.2% 3.6% 3.7% 6.7% 4.8% Source: Hong Kong Tourism Board
16. Impact of Trade Restriction:
In 2003, Chinese government released the individual travelers’ restriction to Hong Kong. Previously mainland travelers need to travel within tour groups to Hong Kong in most cases. With the new regulation, mainland travelers in several major cities can apply individual permit to Hong Kong with their personal IDs. The permit is easy to obtain, 3 months valid and allows 7 days visit in Hong Kong. However, only limited cities in mainland can enjoy this privilege. Residents of other areas still need to go with tour groups or obtain a personal travel visa.
Though in 2002, the Chinese government lifted the quota on mainland travelers with tour groups, the number of mainland visitors is still restricted by the capabilities of tour operators, while only limited number tour operators are allowed to provide such services.
17. Industry Sector:
Tourism related: hotels; restaurants and entertainment; tours; transportation; sight seeing and theme park; and retail industry.
18. Exporters and Importers:
The exporters are hotels, shops, restaurants, tour operators, and attractions etc, in Hong Kong that generate revenue from mainland Chinese tourists The importers are the basically raw food and travel souvenir importers and mainland labor importers etc who either import goods or services from mainland.
Hong Kong is known as shopping Mecca with 0% import tax and shopping tax. It is also one of the largest trading centers in the world. As more and more Chinese tourists show high purchase power, especially relating to luxury goods, many retail businesses start to target Chinese tourists.
V. Macro/Environment Clusters/Tourism Policy Clusters
19. Environmental Problem Type/ Environmental Aspects:
Because of China’s large population base, a small portion of the Chinese population would generate a big absolute number of tourists. The rapid increase of Chinese outbound tourism will bring economic benefits to destinations. Nevertheless, it will bring negative impacts on culture and environment if there are no effective control methods in destinations with fragile and sensitive environments, thus becoming overwhelmed by the huge influx of Chinese tourists.
Hong Kong as a metropolis is less vulnerable by the number of visitors. However, during the “golden holidays” it faces various problems such as: traffic congestions on already congested roads, long queues for eating at restaurants and paying at store cashiers, reduced service quality due to too many customers, huge crowds in the public transportation and parks, noise and littering. As a 6 million population city, it needs to accommodate 22 million visitors annually.
On the other hand, though “crowded” is one aspect of Hong Kong and some people do consider it attractive; many others are seriously concerned with the effects on service qualities.
Targeting the huge Chinese market, Disney opened the Disneyland Hong Kong. It obviously intensified the land shortage in that city. Real estate market is recovering after 1997’s Asia Financial Crisis mainly contributed to the influx of mainland investors’ money. This stimulates the already skyrocketed house price and the competition for lands.
20. Resource Impact and Effect:
The impact of Chinese tourists on Hong Kong tourism market is high. Mainland travelers are currently the majority of Hong Kong’s tourism market, leading to the changes of hotels, retail shops, and restaurants in order to attract more mainland customers.
As the main policy controls Chinese outbound tourism, ADS has direct control on the possible visitor numbers, the categories of visitors, and the destinations visitors can choose. The understanding of ADS directly leads to the understanding of the Chinese outbound market.
21. Urgency and Lifetime/Urgency and Policy Review:
Destination countries need to design special policies (emergency plan) in case the influx of Chinese tourists gets out of control or if illegal immigration takes place beyond current expectations.
22. Substitutes/Alternative Policies:
ADS only affect group travelers. Countries have the rights to accept or reject independent travelers’ tourism visa applications. Countries can loose their tourist visa policy toward Chinese visitors to attract independent travelers, which is believed to be a more lucrative segment. Currently, some countries offer visa on arrival and/or visa waiver program towards independent Chinese travelers, for example, Thailand, Cambodia, Nepal and Singapore. These policies efficiently encourage Chinese travelers to visit those destinations.
VI. Conclusions
23. Policy Implications:
ADS is a unique policy adopted by the Chinese government to control Chinese outbound tourism. It provides destination countries a method to receive tourism from China and simultaneously control illegal Chinese immigration. Many countries have obtained ADS. Until the end of January 2005, almost all developed countries except USA have set up ADS agreements with the Chinese government. Literally speaking, Chinese tourists can now travel freely to most of the major travel destinations.
ADS policy has great impacts on Chinese outbound market, which needs to be further studied to understand the Chinese market and provide proper strategies to target this market.
24. Recommendations:
A Chinese officer implied that ADS would not be abandoned in the near future. Yet, some countries and territories are loosening their visa formalities towards Chinese travelers, bypassing the restriction of ADS. Many offer visa on arrival or even visa waiver program to attract more Chinese tourists.
Following the expanded list of ADS countries, the competition between destination countries has intensified. Marketing thus becomes extremely important in order to gain the market share. The characteristics of Chinese outbound market introduced by ADS make the marketing more specific and challenging. A close study of ADS and its future trend would help destination countries to understand the market better.Some recommendations based on the analysis of the Chinese outbound tourism market and its future trend is given here:
First, increase the awareness of the destination and its attractions among the outbound Chinese travelers. It is found by many destination countries that Chinese travelers’ knowledge of the destination is limited. They usually passively follow tour operator’s itineraries. Education of what the destination can offer relating to attractions, activities, culture events and lifestyle, etc., can trigger the travelers’ desire to visit a particular destination and the in-depth understanding of that destination, instead of “somewhere I haven’t been”.
Second, as group travel still dominates the market, attractive and affordable routes are crucial. Most Chinese people love to go to several countries in one trip. Trips like 15 days in 7 European countries are selling well. Adjacent countries can work together to provide a panoramic trip to attract first-time visitors. Transit countries can also work with destination countries to provide a combined package. On the other hand, in-depth or specialty packages gradually attract younger generations, who treat travel as a life style instead of status symbol. Countries gradually realize that the Chinese outbound market is segmenting and diversifying. Which segments to attract and how to attract become critical issues.
Third, Free and Independent Travelers (FIT) are another trend. Since visa regulations have been slacken off in some countries, independent Chinese travelers can easily obtain visas. These travelers are young, highly educated, experienced and willing to spend money for leisure and comfort. Trips taken by this segment are more lucrative than those of packaged tourists from an economic perspective. Internet is a big tool to reach these travelers. They are usually familiar with Internet search engine and online booking system. They are keen to searching destination information online before they start their journeys. It is worth noticing that they are usually members of Internet travel forums, which provide information and share experiences among travelers. Some of those forums are connected to commercial travel companies like www.ctrip.com. Some are pure forums rejecting any commercials, like travel forum in www.sina.com.cn. For both categories, word of mouth shows great power.
Fourth, for countries with abundant tourism resources, the quality of services is essential. Many tourists would join multi-countries tours for the first time visiting a region. If the resources are attractive and service quality is high, they may take an in-depth one country tour for the next trip. For small countries, the marketing positioning is especially important. Whether to coordinate with other neighbor countries to form a multi-country line or focus on own strengths and attract FIT or niche markets, and most importantly which market segments to attract, are strategic decisions.
VII. Other Factors
25. Culture:
Chinese tourists are relatively conservative in exploring foreign countries, they prefer to travel in groups. They usually focus on famous attractions and are keen in taking pictures as a way to show off their trips when they return home. They love shopping, from souvenirs to luxury goods. As long as there is a possibility to get Chinese food, they are reluctant to try other alternatives.
However, the younger generation with higher education is more extroverted. More knowledgeable of foreign languages and cultures, they treat travel as a way of relaxation and personal enhancement. Many of them like travel independently to enjoy the varieties of cultures and natures
26. Trans-Boundary Issues:
Illegal immigration of Chinese to Hong Kong and bordering countries is the issue. Nevertheless, with the development of Chinese economy and growth of Chinese living standard, the illegal immigration to bordering countries has decreased tremendously these years.
27. Rights:
Some mainland tourists were cheated by retail shops buying fake branded watches or jewelries with high price. The monitoring system doesn’t work efficiently enough to protect tourists’ rights.
28. ADS Countries List:
ADS countries, Staring Date and Affected Area, as to December 31 2004
Country/Territory Starting Date Scope 1 Hong Kong 1983 All 2 Macau 1983 All 3 Thailand 1988 All 4 Singapore 1990 All 5 Malaysia 1990 All 6 Philippines 1992 All 7 Australia
1999
Beijing, Shanghai and Guangzhou July 2004 Tianjing, Hebei, Shangdong,Jiangsu, Zhejiang, Chongqing 8 New Zealand 1999
Beijing, Shanghai and Guangzhou July 2004 Tianjing, Hebei, Shangdong,Jiangsu, Zhejiang, Chongqing 9 Korea 1998 All 10 Japan 2000 Beijing, Shanghai and Guangzhou Sep 15, 2004 Liaoning, Tianjing, Shangdong, Jiangshu, Zhejiang 11 Vietnam 2000 All 12 Cambodia 2000 All 13 Myanmar 2000 All 14 Brunei 2000 All 15 Nepal 2002 All 16 Indonesia 2002 All 17 Malta 2002 All 18 Turkey 2002 All 19 Egypt 2002 All 20 Germany 2003 All 21 India 2003 All 22 Maldives 2003 All 23 Sri Lanka 2003 All 24 South Africa 2003 All 25 Croatia 2003 All 26 Hungary 2003 All 27 Pakistan 2003 All 28 Cuba 2003 All 29 Greece Sept. 2004 All 30 France Sept. 2004 All 31 Holland Sept. 2004 All 32 Belgium Sept. 2004 All 33 Luxemburg Sept. 2004 All 34 Portugal Sept. 2004 All 35 Spain Sept. 2004 All 36 Italy Sept. 2004 All 37 Austria Sept. 2004 All 38 Finland Sept. 2004 All 39 Sweden Sept. 2004 All 40 Czech Sept. 2004 All 41 Esthonia Sept. 2004 All 42 Latvia Sept. 2004 All 43 Lithunia
Sept. 2004 All 44 Poland Sept. 2004 All 45 Slovenia Sept. 2004 All 46 Slovak Sept. 2004 All 47 Cyprus Sept. 2004 All 48 Denmark Sept. 2004 All 49 Iceland Sept. 2004 All 50 Ireland Sept. 2004 All 51 Norway Sept. 2004 All 52 Romania Sept. 2004 All 53 Switzerland Sept. 2004 All 54 Liechtenstein Sept. 2004 All 55 Ethiopia Dec 15, 2004 All 56 Zimbabwe Dec 15, 2004 All 57 Tanzania Dec 15, 2004 All 58 Mauritius Dec 15, 2004 All 59 Tunis Dec 15, 2004 All 60 Seychelles Dec 15, 2004 All 61 Kenya Dec 15, 2004 All 62 Zambia Dec 15, 2004 All 63 Jordan Dec 15, 2004 All Source: China National Tourism Administration (Back)
29. Relevant Literature
1. Cai, L. A. Boger, C., and O'Leary, J. T.(1999), “The Chinese travelers to Singapore, Malaysia, and Thailand: a unique Chinese outbound market”, Asia Pacific Journal of Tourism Research, Vol 3, Iss 2, pp. 2-13.
2. Hong Kong Tourism Board, 2002, “A Statistical Review of Hong Kong Tourism 2001”.
3. Hong Kong Tourism Board, 2003, “A Statistical Review of Hong Kong Tourism 2002”.
4. Hong Kong Tourism Board, 2004, “A Statistical Review of Hong Kong Tourism 2003”.
5. Hong Kong Tourism Board, 2003, “Tourism Expenditure Associated with Inbound Tourism, January – December 2002”.
6. Hong Kong Tourism Board, 2004, “Tourism Expenditure Associated with Inbound Tourism, January – December 2003”.
7. Pan Grace W. and Laws, Eric (2001), “Tourism marketing opportunities for Australia in China”, Journal of Vacation Marketing, Vol 8 Num 1, pp. 39-48.
8. Pan Grace W. and Laws Eric (2003), “Tourism Development of Australia as a Sustained Preferred Destination for Chinese Tourists”, Asia Pacific Journal of Tourism Research, Vol 8, Iss 1, pp. 37-47
9. Qian Wei (2001), “Travel Agencies in China at the Turn of the Millennium”, Tourism in China, pp.143-164
10. Ryan, Chris; Mo, Xiaoyan (2001), “Chinese visitors to New Zealand: Demographics and Perceptions”, Journal of Vacation Marketing, Vol 8, Iss 1, pp. 13-27.
11. Wenbin Guo and Lindsay W. Turner (2001), “Entry strategies into China for foreign travel companies” Journal of Vacation Marketing, Vol 8 Iss 1, pp. 49 - 63.
12. World Tourism Organization, 2003, “China Outbound Tourism”
13. China National Tourism Association http://www.cnta.com
14. Hong Kong Census and Statistics Department, http://www.info.gov.hk/censtatd/eng/hkstat/fas/nat_account/gdp/gdp1_index.html
15. Hong Kong Tourism Board, http://www.hktourismboard.com/login.html
16. Hong Kong Tourism Commission, http://www.tourism.gov.hk/english/about/abt_rel.html
17. World Tourism Organization, http://www.world-tourism.org
