Chinese Tourist Markets: Research Insights

Dr Sam HuangCentre for Tourism and Leisure Management

University of South Australia Business School

29 May, 2014

Check out the following:

1. An overview of China outbound tourism development

2. The Australian Story3. Research insights4. Emerging issues5. A researcher’s recommendations

to the industry

• Happening in the great context of China’s opening-up and reform

• Heavily regulated but government gradually lessening control

• Powered by the Chinese economy and the emerging Chinese middle class

• Dynamic, fast-changing market, as driven by the fast changing Chinese (consumer) society

Characteristics of China Outbound Tourism Development

The Development of the Market Scale

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 201212133.1 16602.3 20221.9 28852.9 31000 34000 40954 45844 47656 57390 70250 83180

16% 37% 22% 43% 7% 10% 20% 12% 4% 20% 22% 18%

1 2 3 4 5 6 7 8 9 10 11 120

10000

20000

30000

40000

50000

60000

70000

Series1

Series2

Current outlook

• In 2012, China’s outbound tourism recorded 83.2 million trips, comparing to 70.25 million in 2011

• In 2012, Chinese outbound tourists spent a record of US$102 billion, up 37% from 2011, making China the top spending country on the UNWOT list

• CNTA Chairman: expecting 90 million in 2013 and a breakthrough of 100 million in 2014

• UNWTO (2007) forecast 100 million in 2020; then revised to 100 million in 2015.

• Boston Consulting forecast that China will be the second international tourist market by 2013, accounting for 8% of the global market.

Current outlook

• According to China Tourism Academy (CTA) (2012), in 2011, China’s outbound market was 1.2 times larger than that of the US in terms of the scale of the outbound market, and 3.5 times bigger than that of Japan

• CTA figures suggest China is emerging as the world No. 1 outbound travel market.

China in World Tourism

• Among international tourism’ top spenders, China continues to rise up in the ranking; in 2010, China overtook the UK to be the 3rd biggest international tourism spender; now it is the top (no.1) international tourism spender in the world

• China has shown the fastest growth with regard to expenditure on international tourism in the past 10 years, multiplying expenditure four times since 2000

• Since 2005, China has overtaken Italy, Japan, France, and the UK respectively in the top 10 spenders ranking.

• China is expected to be the world’s no. 1 tourist destination and fourth largest tourist generating country by 2020

General Market Characteristics

• The majority (Approx. 70%) travelling within Asia; trips outside Asia are still significant (24 million)

• Only a very small percentage (3%) of the Chinese population travelled cross borders

• Middle age (26-45); Well educated

• Package tour as preferred consumption mode while individual travel arrangement preferred by young, affluent and experienced travelers

• Motivation: knowledge, relaxation, novelty (probably culture-bound but we don’t really know much)

• First timer and big spender for long haul destinations

• China is Australia’s most valuable inbound tourism market, as perceived by Tourism Australia

• In 2012, visitor arrivals from China amounted to 626,000, 15.6% higher than 2011;

• In 2012, China inbound market contributed $4.2 billion to the Australian economy, up 10.5% on 2011

• China is expected to contribute $7.4-$9 billion to Australian economy by 2020

The Australian Story

Quick Fact: The US gained ADS in 2008 and received 1.5 million Chinese tourist arrivals in 2012.

China Outbound Tourism to Australia

• Australia’s market share of total outbound tourism market from China has decreased from 1 per cent in 2002 to 0.7 per cent in 2012

• In 2012, Australia ranked 16th among all outbound destinations to China, slipping one position from 2011; Australia ranked 11th among out-of-region destinations, slipping one position from 2011

• In 2012, the top five outbound Destinations for Chinese travellers were Hong Kong, Macau, South Korea, Taiwan, Thailand; the top five out-of-region (North Asia) destinations for Chinese travellers were: Thailand, USA, France, Malaysia, and Vietnam

China Outbound Tourism

to Australia

• Tourism Australia’s China 2020 strategic plan (forecast figures): • Total spend: $7-9billion• Visitor arrivals: 860,000

• Tourism Forecasting expert Prof. Haiyan Song from Hong Kong Polytechnic University forecasted:

By 2020: China outbound tourists will reach 350 million (vs. WTO: 100million)By 2020: China outbound tourist arrivals to Australia will reach 880,000

China Outbound Tourism

to Australia: Air Connections

Source: Tourism Australia, 2013

China Outbound Tourism

To Australia

Australia’s Market Share in China Outbound Tourism

Regional Comparison

Regional Comparison

General market profile

General (TRA: IVS): • 47% repeat visitors; 68% total

arrival for leisure; $7,036 average spend

Holiday (leisure) market:• Spend per trip: $4,124; stay 9.3

nights; spend per night $442

Source:Tourism Australia, 2013

Top 5 considerations of outbound Chinese travelers

Regional Dispersal of Chinese tourists in Australia

• Chinese tourist flows mostly concentrated in the eastern states (NSW, VIC, QLD), SA, NT, WA, and TAS less developed

• Imbalanced regional development may lead to overexploitation of tourism resources in some states and underdevelopment of tourism potential in other states.

• There may not be a quick solution but both the industry and the government should pick up the issue.

Imbalanced regional development toward the Chinese tourist market

Unethical practices- commission-driven shopping

• It’s been there for a long time; a common industry problem

• Somehow represents a type of market failure in the tourism industry

• Complicated and still no cure at the moment

• But we can’t let it go forever as we cannot “kill the hen for eggs”

• More regulation is needed to deal with this

Commission-driven shopping: the underlying mechanism

Source: King, Dwyer, Prideaux, 2006

• Acknowledging we know little is the beginning of the journey we start to know

• The Chinese outbound tourist market is:

Lucrative

Rapidly growing

Dynamic and constantly changing

Culturally different

Research insights

• Chinese tourists are:

Modern (but also Chinese)

Westernized but not Western

Heterogeneous in consumer market nature

From a huge country that is undergoing unprecedented societal transition

• Challenge to the industry: we need constant knowledge updating toward this market!!

Research insights

• How much do we know about it? There may not be a one size fits all solution

• Food

• Attraction and interpretation

• Accommodation

Preferred Chinese tourist experience

• Influenced by Chinese food culture

• Would like to try local destination food; but definitely not for every meal

• Seeing local food as in the cultural exploration

• Home food attachment may vary by sub-culture region and age

• Younger generations more used to Western fast food

• Generally seeking familiar flavour

Food experiences

We know very little about how they see our tourist attraction and expect our interpretation service to be…however, we know:

• They may be heavily influenced by their domestic tourist culture and experience

• “When Western tourists look at the Yantze, they see a river; the Chinese see a poem replete with philosophical ideals” (Sofield & Li, 1998, p. 367)

• While Western style attraction management and interpretation usually take a scientific approach, Chinese tourists inherit from their culture a more humanistic (historical and artistic) approach in their appreciation of attraction

• Famous mountains in China are granted both natural and cultural world heritage status

Attractions and interpretation preference

• Chinese philosophy (way of thinking) does not see man separated from nature

• Chinese tourists seek to be enlightened and enjoy being in nature in their tourist experience, rather than seeking scientific knowledge of the landscape

• My own research shows relevant interpretation is key to winning Chinese tourists

Attractions and interpretation preference

• What they experienced in China will form their expectations in Australia and affect their satisfaction with Australian hotel services

• Free Internet in hotels, especially economy hotels is almost an industry standard in China

• Australian hotels should look to the Asian standards to compete for Chinese tourists

• Both facilities and service quality need to be considered

Accommodation preference

• The emerging Chinese FIT/self-organised travellers/backpackers market

• The growing and untapped power of Chinese social media (Weibo, WeChat) in tourism marketing (for a secondary destination like SA)

• How wineries can be combined into Chinese tourist experience?

Emerging Issues

Chinese FIT/self-organised traveler market

The Xiang (2013) study:

• Socio-demographic characteristics

• Motivations

• Decision making process

Chinese FIT/self-organised traveler market

Socio-demographic characteristics:

• Gender: Male 56.8%; Female 43.2%

• 74.4% in between 25-44 yrs

• Well educated; 82.9% having bachelor degree or above

• Above average income level but not self perceived as “rich and free person”

• Shanghai, Beijing and GZ as most important generating regions (53%); Hangzhou, Shenzhen, Suzhou contributing to the sample significantly

(Source: Yixian Xiang, 2013)

Chinese FIT/self-organised traveler market

Travel motivations:

• Sightseeing (71.8%) vs. 51% • Business (15%) vs. 3%• Leisure/holiday (11%) vs. 38%

Note:• Religious and health motivations barely exist;• Shopping (1.1%) not a significant motivation

among FIT.

(source: Yixian Xiang, 2013)

Chinese FIT/self-organised traveler market

Decision making process:

• Characterised as “doing homework”• Choice of destination influenced by WOM and

financial budget• Prearranged transportation/accommodation in

developed destinations but decision making on route with developing destinations

• Long period of information searching (10 days – several months)

• Internet as No. 1 information source• Capability of in-depth tour and exploration

(Source: Yixian Xiang, 2013)

Social Media

• Opportunities for secondary destinations and SME businesses?

• Chinese social media platforms: Weibo; WeChat (Weixin); QQ groups

• CNNIC: by 2013, 618 million (500 million mobile phone) internet users in China

• The potential of using Chinese social media platforms yet to be discovered

• Further research is needed

The South Australia realities

• How can we optimise the winery experience to Chinese tourists? (wine + tourism)

• How can we use tourism to leverage wine export to China?

• Government initiative (SA + Shandong sister state relationship)

• Direct air links and capacity

• Aiming at moving target so be prepared now??

My recommendations

• Do your homework; and do your field work… Go to China and see what happened!!

• Use local Chinese migrants talent (and students)

• Understand Chinese tourist experience in your product development

• Embrace the social media (ICT) opportunities

My recommendations

• China is more innovative these days, you have to be innovative not to leave behind!!

• Engage in research: immediate, short-term problem-resolving

• Develop China partners

• Develop China-relevant business knowledge

Thank you!

I can be contacted by:

Email: sam.huang@unisa.edu.auPhone: 08 8302 9308Skype: songshan2004WeChat ID: samhuangunisa