Outbound tourists from China

Go west, young man

Outbound tourism is outperforming even the most positive predictions of a decade ago, as Chinese travelers head to the farthest reaches with wanderlust in their hearts and full wallets in their pockets.

“To be wise, a man must read ten thousand books and travel ten thousand miles.” Li Bai (Tang dynasty poet)

“After hearing so much about the beauty of Europe on TV and in magazines, we saved up for three years to pay for our vacation there in June this year. When we arrived in Paris, we expected something really grand, but the hotel rooms were small, the food was of poor quality, the people we met seemed a bit cold and in some areas of the city we did not feel very safe”. Mr. Liu Feng from Shanghai, who traveled to Europe for the first time in 2005.

This reaction to Europe is not uncommon among Chinese tourists who are accustomed, in their own country, to high-end hotel accommodation at low prices, clean and modern transportation systems, and very low crime rates.

A few years ago, the number of Chinese tourists traveling abroad was so small that the industry in Europe did not take much into account their views and experiences.

Now, however, the numbers are beginning to look impressive, and pioneers in Europe’s travel industry are driving efforts to discover what can be done to improve the experiences of Mr. Liu and others like him.

China is now the fastest growing market for the European travel industry and, with the right approach, hotels, B&Bs, shops and attractions across Europe can greatly benefit from this newly opened market.

The market

Last year, about 31 million Chinese traveled abroad. They mostly visited other Asian destinations such as Hong Kong, Macau, Singapore, Thailand, Malaysia and South Korea, but two million Chinese also traveled to Europe and that number will increase year on year. By 2020, Europe can expect 13 million Chinese visitors a year.

Travel is particularly in vogue during China’s so-called ‘Golden Weeks’: February, May and October. The working week in China is now officially limited to five days and the minimum annual leave entitlement is 14 days, providing extended vacation time.

In 2005, travel guide publishers Lonely Planet announced that they would begin publishing some editions of their books in Chinese in response to the growing number of Chinese travelers. Three of the destinations for which Chinese versions of the travel book will be published are Britain, Germany and Australia.

However, not everything is simple. The European public relations machine is fighting some unfortunate stereotypes when it comes to Chinese views of Europe and its people. “London is foggy, Paris is expensive, Rome is dirty and Madrid is dangerous”, and these are the opinions of not only those who have not yet visited, but also those who have, as expressed in a number of groups consumer focal points that we carry out. Recently.

Travel agency

The overall picture for the Chinese travel industry is one of strong growth fueled by rising income levels, the relaxation of travel restrictions and the availability of more vacation periods. Only a certain number of licensed travel agencies are allowed to operate outbound international travel services, and in 1997, there were only 67 outbound travel agencies in China; by 2004, that number had risen to 528. Recent years have seen the privatization and restructuring of former state agencies.

However, the agency market remains fragmented and there are few national players. It remains dominated by state agencies, many of them with outdated attitudes toward service. The Chinese government is encouraging private and foreign capital flows into the industry, but many of the tours offered by existing agencies are unimaginative in content and style, and the reality is that the industry has a long way to go before to provide genuine services. the needs of your customers.

Right now, 90 percent of Chinese people traveling abroad do so on group tours, and travel agencies typically take a commission of around 5 to 20 percent on the retail price of the trip.

Independent travel is generally not popular and a key explanation for this is language. The Chinese education system’s emphasis on reading and writing foreign languages ​​leaves even those with good grades in English with poor communication skills. For the majority of the Chinese population, communicating in another language is simply not an option. Since tourist literature and road and airport signage in Europe are not yet produced in Chinese, these countries are even more closed to the average tourist.

Passports and Procedures

Chinese citizens have traditionally not been allowed to travel freely and have not had passports to do so. In the last three years, this situation has changed drastically.

After much negotiation, China has signed ‘Approved Destination State’ (ADS) agreements with more than a hundred partners, including some European countries. ADS simplifies the exit procedure for Chinese tourists, allowing them to travel on ordinary passports and apply for tourist visas.

Without ADS, Chinese residents can only travel on visas for business, study, or to visit relatives. With ADS, individual Chinese passport holders with financial resources are not restricted from traveling abroad, as long as they can obtain the necessary individual visas to enter the countries they are traveling to. The only restriction is that you must travel as part of an official tour group and a chaperone must be present at all times the group is abroad.

For European countries, ADS means that countries can legally promote group leisure travel through distribution and sales channels with wholesalers and travel agencies, as well as advertise the destination and its products to Chinese consumers.*

History:

1983 Mainland Chinese first allowed to visit HK and Macau for private business
2003 Chinese citizens are allowed to apply for private passports using their residence permits, offering the option of international travel to the masses.
2004 Germany becomes the first EU country to receive Chinese tourists

Facts:

· After obtaining a passport, Chinese citizens can apply for visas to travel wherever they want

For ADS countries, they can apply for tourist visas and for non-ADS countries, they must obtain business visas or specific visas to visit friends and family. (In the case of Schengen countries, a visa allows access to all countries that are part of the Schengen agreement)

· Although free travel within destination countries is allowed once a visa has been obtained, if traveling in tour groups, it is standard practice for the tour guide to keep the passports of all members of the group.

· Travel agents in China who ‘lose’ members of their groups while in Europe are quickly blacklisted with the visa issuing operations of Embassies and Consulates in China. The number of ADS-approved tour operators permanently or temporarily blacklisted is steadily increasing.

Shopping

Shopping is another way for European businesses to benefit from China’s growing wealth and new travel freedoms. While the number of tourists may not be high, the level of spending among Chinese tourists to Europe is.

A trip to Europe is often the first time Chinese have traveled abroad, and their spending patterns can be irrational. Some just buy whatever they can’t buy in China. However, spending by Chinese tourists often does not reflect income levels, so looking at household income or even disposable income levels of China’s population can be misleading. Many spend much more than we could have anticipated.

According to French tourist authorities, the average visitor to France from China spends US$3,000 on a visit. By contrast, the average spend of visitors from North America and Europe is just US$1,000.

challenges

China clearly has great potential, but for many European operators it is proving to be a difficult market.

One of the ironies of the European tourism industry is that it is heavily regulated if the consumers are European; but if customers buy their products from outside the EU, few regulations apply.

One factor helping to drive prices down is competition from creative Chinese operators based in Europe. These agents are willing to use informal networks of business contacts that avoid many of the normal requirements of group tourism. It is difficult for an established tour operator to compete on price with a China Town agency providing a minibus driven by a local waiter, and until Chinese tourists themselves demand more, this may not change. The good news is that we believe Chinese tourists will be demanding a lot more very soon.

Other challenges:

-Short term bookings

-Continuous change of programs.

-Unfair competition from small cash payment agents

-From Chinese agents, a lack of understanding about controls on long itineraries regarding driving hours (There is hope that the new EU driving legislation will give all operators a level playing field to implement sensible itineraries).

-Insufficient knowledge of Europe among Chinese sellers

-Different habits and tastes of Chinese tourists (the behavior in hotels and restaurants is different from what is expected in Europe)

-Lack of knowledge of European legislation by Chinese tour operators.