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Monday, March 22, 2010

Sri Lanka : A destination for Chinese travellers

President Mahinda Rajapaksa has declared 2011 as the” Year for visiting Sri Lanka”.

China's Spring Festival
The Sri Lanka Embassy in Beijing together with the Consulates in Shanghai and Chengdu have enlisted the support of the Tourism Promotion Bureau in Colombo and the in/outbound tour operators to launch promotion campaigns to attract even a small percentage of the vast outbound tourism market in China.
China National Tourism Agency expects 51 million Chinese travellers to go overseas during the year 2011. With the defeat of LTTE terrorism in May 2009, Chinese travellers to the island have increased by 20 percent.
A survey conducted by the tourism arm of the Sri Lanka Embassy has discovered that a sizeable number of the Chinese outbound tourism market could easily be attracted to Sri Lanka with a correct combination of sufficient airline seats and targeted promotional campaigns to provide an insight into the Chinese tourism market.

Global tourism has been growing steadily at almost five percent per year in the past decade amidst political turmoil and natural disasters in various parts of the world, recording a figure of 930 million international arrivals in 2008. The significant factor is that always around the corner lies the next potential tourism goldmine.
In the 1950s and 1960s, it was America, as the US tourists surged into Europe, Asia and elsewhere. In the 1980s, the Japanese first began to travel in large numbers, and in the late 1980s and early 1990s, travellers from Korea and Taiwan likewise began to travel en masse, lifting the profit margins of hotels and airlines throughout Asia and the world.

And now, the latest - and perhaps the greatest - potential tourism gold- mine has been identified: mainland China. The optimism is fuelled by some remarkable numbers: In 2000, just 10 million Chinese travelled abroad, but in 2008, more than 45 million travelled overseas. And that is only the beginning according to analysts. With its huge population, rising wealth and a government that has been slowly but steadily liberalising outbound travel, China clearly has enormous tourism potential.

The Chinese outbound market is growing at a phenomenal rate and is expected to exceed 51 million tourists in 2010; a rise of seven percent from 2009. As the Chinese economy continues to grow (up nine percent in 2009) and private incomes increase, travelling abroad is now becoming a regular part of Chinese life.
The World Tourism Organization (WTO) predicts that China will be the fourth largest source of outbound tourists by 2020 with a predicted 100 million travellers per year. Latest statistics show that up to now, China has become one of the world’s top international tourism destinations as well as a source country. Since the late 1990s, China has ranked No. 1 in the Asia and the Pacific, and No. 4 or 5 in the world in terms of both international arrivals and income. It is amongst the world’s top ten in terms of international departures according to the WTO.

Chinese travelers aboard
This confirms that China remains the world’s fastest growing outbound travel market despite the global economic downturn. Indeed, during the Spring Festival, the Chinese New Year holidays in recent years, over a million Chinese went abroad.

In macro terms, China’s outbound travel market is driven by powerful demographics. Its 1.3 billion people are becoming steadily wealthier, and they are increasingly free to travel outside the country. Three factors are driving outbound tourism from China. One is income growth. With a per capita GDP of around US $ 3,000 and having a growing middle class, for these people, leisure touring and travels abroad have become a part of their consumption. This has increased the purchasing power of the Chinese, which in turn helps tourism. Thirdly, the steady relaxation on travel restrictions by the Government has also contributed positively to this growth.

Although the per capita spending on tourism in China is still relatively low, at just US $ 30 per year, compared with a global average of US $ 100 an average in the US and Europe which is many times higher, it is also interesting to note that Chinese travellers continue to be the top spenders with an average of US $ 6,000 per trip per person in the USA ‘according to the National Tourism Authority.

A number of surveys show that Chinese visitors spent on average Euro 1,359 per person on shopping for luxury goods alone in Europe. It is also revealed that the monthly expenditure by Chinese outbound tourists has amounted to US$ 235 million on average.

The interest lies not only among the experienced travellers, but also among novice travellers. Surveys reflect the strength of the industry and should be a confidence boost to the travel industry in Sri Lanka as well. Short-haul outbound trips are the most popular, with more than six in 10 Chinese travellers intending to take outbound trips in Asia.

Tourism remerged in China in the early 1950s after the founding of the People’s Republic. As an industry, it is just an outcome of the recent economic reforms and open policy formulated in the late 1970s, and its rapid growth is an indication of overall social and economic development of the country. In the past two decades, China’s tourism has undergone three main stages, namely, inbound tourism, inbound and domestic tourism, and comprehensive tourism including domestic, inbound and outbound tourism sectors.

The industry is now regarded as one of the growth points of the Chinese economy, and is playing an increasingly vital role in China’s development.

The rapid growth of outbound tourism is a sign of the further opening of the country, and its tourism development has begun to follow the normal track, and the industry has become more mature. However, studies show that outbound tourism is still in its early years, and it has much room to develop and it is gaining momentum. It is this scenario that Sri Lanka should take into account in trying to attract more and more Chinese Tourists to the Island.

China’s outbound tourism

Outbound leisure tourism by the Chinese began in the early 1980s, and as stated above has been growing very rapidly since the late 1990s. This occurrence has drawn wide attention from home and abroad. Meanwhile, business travel increased progressively due to the thriving international cooperation in economy, culture and other fields.

To better understand the facts of China’s outbound tourism, it is important to look at the following characteristic:

Outbound departures vs. outbound tourist departures

The term of outbound departure stands for border-crossing departures made by all Chinese passport holders, including group tourists, business travellers, and day-trippers to Hong Kong, Macau and other bordering countries. Generally speaking, only those who go overseas in tour groups and some independent travellers to certain regions are considered as real leisure tourists or holidaymakers.
Although the number of group tourists are increasing, their share of all departures is still rather small. Compared with the population of 1.3 billion people, the share of outbound tourists in the real sense is still rather small among all Chinese, much smaller than that in developed countries, even smaller than some of the developing countries.

It is also important to see the characteristic of Chinese overseas travel spending vs. overseas tourist spending.
Overseas travel spending should include spending on both business and leisure travels. However, so far, spending by business travellers may have the lion’s share, more than that of general sightseeing tourists. The present higher spending of the Chinese outbound tourists reflects the income gap among the Chinese residents, not the real income level of all Chinese residents.

The present outbound tourists represent a higher income social group. Besides, the higher spending is a result of irrational consumption, a special behaviour in the early days after being open to the outside world. Once outbound travel becomes a frequent activity for the majority, the spending behaviour may be rational. According to the WTO, the overall Chinese outbound tourism expenditure in 2004 accounted for 3.1 percent of the world, and average outbound tourism expenditure per capita was less than US$ 15, one sixth of the world’s average. There is much room for further growth.

Some outstanding features of Chinese outbound tourists

Some of the features of the Chinese outbound tourists can be explained in the following aspects:

When selecting where to go and which region to travel, owing to the related policies and economic and cultural reasons, major destinations for the Chinese outbound tourists are in the Asia Pacific region, particularly North East and South East Asian countries. Especially with the ASEAN - China Free Trade Agreement coming into force from this year, we will be able to see a marked increas in future to the ASEAN region. In all outbound departures, those for Asia, accounts for 90 percent, and for Hong Kong and Macau _ over 70 percent. The number of long-haul international tourists is increasing; however, its share is still rather small.

From which part of China

China as a large country both in area and population, economic and social development remains rather imbalanced. As a result, most outbound tourists, especially leisure travellers, generate from the more affluent areas like Beijing, Shanghai and Guangzhou, and from strong areas such as the eastern or coastal regions. Like elsewhere, young people are the majority.

What for

Chinese like to shop, they tend to stay in budget hotels and they often pack as many sights into their itineraries as possible. First-generation travellers usually come with a group, and when they come to any country, they try to cover as many sites as possible. “There is a Chinese saying, zou ma kan hua” - you are riding on a horse looking at flowers, and you want to go through the garden at the fastest speed, since many of them are first-timers to go abroad. Apart from the business travellers in various kinds still making up the lion’s share in overseas stays and spending, the number of people who go abroad for education and training is increasing too.

How to go

Because the Chinese are in the early stages of outbound travel, and also because in many cases they are required to do so, owing to the language barriers and inexperience of overseas travel, Chinese tourists tend to travel in tour groups. Chinese visitors prefer more tour groups with their relatives and friends, especially for the long-haul destinations. Language is a major stumbling block for Chinese in any country. While most major hotels and shops in big tourist centres can manage a smattering of English, French, Italian or other languages, virtually nobody speaks Mandarin.

What to do when travelling abroad

Owing to the limited knowledge about the overseas destinations, the Chinese outbound visitors like to see the most famous monuments and tourist attractions. Except for some special destinations like the Maldives, Chinese like more to visit many cities in one trip rather than to stay longer in one place as holidaymakers. Shopping is one of the important activities during the overseas visits although more complaints might be related to these activities.

They like to spend money on jewellery and electronics, which are heavily taxed in China, and they like to buy souvenirs. Chinese travellers are extremely price sensitive, they spend a lot of money, but they don’t spend a lot on hotels. They’ll spend more money on good food, and on things to buy and bring back to China. A trip abroad is an investment in forwarding status and advancement. That money has to be invested wisely, and spending too much on hotels is considered not wise, so people are going to be price sensitive.

Factors influencing Chinese outbound tourism

Among others, factors which influence the growth of the Chinese Outbound tourism may include the following:

Constant economic growth and increasing income

China’s national economy has maintained a sound growth in the past two decades or so, and the country’s annual GDP growth has kept a momentum of around 8-10 percent or more. As a result, the country’s GDP per capita is over US $ 3000 as a whole, over $ 5000 in some large cities and developed areas.
China’s foreign exchange reserves, the world’s largest, grew 23 percent in 2009 and surged beyond two trillion US dollars. Besides, residents have more sources of foreign exchange, and private foreign exchange savings increase rapidly. The bottleneck of foreign exchange shortage in the country is no more the case. And the strong Chinese currency may encourage the Chinese people to consume more abroad.

Further relaxation of government control

For the past decade or so, the Chinese government has further relaxed the traditional controls over outbound travel. In most areas of the country, private passport application have been made much easier without complicated examinations and approvals. More operators are allowed to do outbound tourism business, from a few dozens to a few hundreds, negotiations over destination for the Chinese residents have been an issue on the agenda of diplomatic relations, even on State visits by the top leaders.

Meanwhile, the limit of foreign currency brought by residents out of the country has been lifted for a few times, and various credit cards (dual-currency credit cards in particular) have made such limits nominal. The China National Tourism Administration has piloted a project in 2008 to select joint venture tour operators to handle some outbound business. It was the first time that the administration has decided to open its outbound business to joint ventures and foreign investors.

Increased leisure time

As the Chinese holiday system is improving, China will develop into an enormous tourist market. The outbound and domestic travel markets will both develop fast as people have more free time to enjoy, and what is more, these policy adjustments are considered as an encouragement for residents to travel and holiday. With the introduction of the paid holiday system, leisure tourism and holidays may gradually become a part of life for more and more people in China.

Change of consumption

The dynamic economic reforms and the policy of being open to the outside world have changed the country’s economic system as well as operating mechanism, and at the same time, they have also imposed strong impacts on people’s lives and the traditional way of thinking. At least, three outstanding changes can be well noticed, namely, from “money saving” to “money spending”, from “save for others” to “enjoy themselves”; from “purchase of goods” to “seeking for personal experience and well-being”.

Improved international relationships

China’s relationship with the majority of countries has been improved, and strategic partnerships have been established. Since the beginning of this century, a good many bilateral Year of Friendship activities have been launched one after another. While China remains the most attractive and a safe tourism destination, more Chinese residents are able to go overseas for leisure and holiday thanks to the convenience and facility provided by the host destinations.

Aggressive external promotions

It has been noted that the world attention to China’s tourism has been shifted from “China visit” to “Chinese Visitors”. Driving promotion campaigns from overseas, governments and the industry has aroused desire and enthusiasm of the Chinese residents for outbound travel. In recent years, aiming at the Chinese market, overseas destinations have arranged a host of promotional campaigns such as Year of Visit, Cultural Weeks or Road Shows.
Tourism commercials and advertisements have flooded in on various media to introduce their tourist attractions and products. It seems that China’s annual Tourism Expo has become a marketplace for selling overseas destinations to the Chinese operators rather than selling China’s products to the world market. In summary, there are two distinctive factors worth noticing.

One is that the increase of income of the Chinese residents in general and the gap of income among residents in particular support the constant growth of outbound trips, while another is that the non-self-paid visits including various business travels are still playing the leading role.

For sure, continuous growth of China’s outbound tourism may change the world map of international tourism, and further promote world tourism development as a whole.
The adage goes that: For when China wakes,
It will shake the world’.
It already did!”
According to a recent survey, the most desired closer destination for the mainland, with 21.7 percent saying they wanted to visit was Hong Kong, Macao and Taiwan in the next three months. Another 4.3 percent look to foreign destinations, topped by Bali in Indonesia, the Maldives and Singapore. The challenge for Sri Lanka is how to lure Chinese tourists to the “Pearl of the Indian Ocean” or “the emerging wonder of Asia”.
Chinese travellers often feel that he or she is not getting the same treatment as a tourist from another destination. To promote Chinese tourists: Sri Lanka should provide the quality of service that others do. These are advertising vigorously in Chinese luxury lifestyle magazines, with a coherent media planning over a few years covering particularly the provinces of Shanghai, Guangzhou, and Beijing.

With a limited budget, it will not be possible to prepare a large scale advertising campaign. Therefore it is needed to build a tailor-made e-newsletter in Chinese, targeting the affluent Chinese traveller with specific discounts for Chinese guests, and a VIP welcome at the hotel (with Chinese staff).

How can we develop the image of Sri Lanka unknown for most of the Chinese tourists?
Focusing on the communication on the historic patrimony of Sri Lanka, a full advertising campaign in travel magazines and organizing a public relations event for leading travel agencies in leading cities in China and especially targeting the Shanghai Expo 2010 will bring many positive results.

How many hotels in Sri Lanka are really ready to welcome Chinese tourists? How many hotels keep instant noodles inside the room? Make the electric kettle available to them? Next to shopping, golfing is the second most interesting thing for the affluent Chinese.

An in-depth analysis of the needs of their Chinese guests, and a communication strategy implemented through leading lifestyle magazines in Beijing and Shanghai and Guangzhou and other selected leading provinces will help to a greater extent.

First conduct an analysis of the image of the country “Sri Lanka” in China. At least, a six-month campaign should be launched to build the image of Sri Lanka as an attractive destination (on-line and off-line). Then, launch the campaign for clients, promoting their services in several Chinese travel magazines.

Sri Lanka should keep in mind that China is the least affected by the global financial crisis and it has become the common source country for countries around the globe. We should have new travel packages especially tailor-made for Chinese tourists. The affluent Chinese has a strong affinity towards the Western hemisphere. Our strategy should be to lure them to Sri Lanka.

Be competitive

As mentioned earlier, the majority of Chinese travellers visit countries nearby or South East Asian destinations. These countries give similar products that we offer in Sri Lanka with their attractive packages. Many South East Asian destinations had ties to their tour packages ranging from RMB 3500 to 8000.
These destinations also have additional frequencies or links between main cities of China and the end destination.Although Sri Lanka is linked to China through three SriLankan Airlines flights from Beijing to Colombo and through a number of other airlines such as Singapore, Thai, Malaysia and Cathy Pacific via respective capitals, the travellers prefer to take direct flights as much as possible. Hence, Sri Lanka should also focus on initiating more direct flights from Chinese cities to Colombo. Similarly, Colombo should also focus on popularising Sri Lanka through attractive packages.
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