Is your business ready for Chinese consumers?

DEP: China ARR: The World

A new generation of Chinese travellers is discovering the joys of exploring the world. Now the world is discovering the importance of being “China ready”.

By: Mathew Scott

Yang Di freely admits that she is making the most of freedoms that her parents could only dream of. China’s rapid economic development over the past 20 years – lifting about one billion people out of poverty – and the gradual easing of restrictions on where its citizens can travel have given 34-year-old Yang’s generation a ticket to see the world.

“I’m travelling almost every two months, and the trip can be long or short depending on the schedule,” says Yang, who covers the fashion and lifestyle beat for the English-language Shanghai Daily newspaper.

“My parents never really got to travel a lot due to the responsibility required in the family to take care of the grandparents. But so many older-generation people are travelling now – especially during national holidays – with their children or friends. Travelling was seen as a luxury in China 10 or 15 years ago; now it has become a common thing in our daily lives.”

Spending time – and money

The figures being bandied around would suggest the same and make for startling reading. By numbers and by spending, China is now the biggest outbound tourism market in the world, with the China National Tourism Administration estimating that Chinese tourists made 120 million overseas trips in 2015.

The Asia-based brokerage and investment group CLSA, meanwhile, believes that number will reach 200 million annually by 2020, by which time the amount they spend will triple. Given that travel industry estimates put this group’s global spending in 2015 at about US$229 billion, the potential is staggering. 

"Travelling was seen as a luxury in China 10 or 15 years ago; now it has become a common thing in our daily lives."

Chinese tourists already spend more than any other visitors to the US (US$6000 each, on average), are the second biggest spenders of all tourists who come to Australia (A$6789 per person per trip, a figure increasing yearly) and spend four times the average of other foreign visitors to the UK (£2688 each). 

Little wonder tourist industry shareholders the world over are listening intently to the needs of modern Chinese travellers such as Yang.

That wish list, as far as Yang is concerned, revolves around destinations with a strong sense of culture and history, as well as those offering unique culinary fare.

“The very genuine local experience is what I’m looking for … a destination that welcomes people without too many tourists,” she explains. 

In the US, a 10-year multi-visit visa is an added enticement for Yang’s generation, while Europe’s array of famous historic sights and Japan’s favourable exchange rate make these destinations attractive for Chinese tourists. 

Benefits in the Asian region

A young Chinese traveller captures an "I was here" moment.Countries across Asia have continued to benefit from the expansion of the outbound Chinese market, and the region remains – in terms of pure numbers – the top choice for Chinese travellers. Australia is getting its fair share, too, with more than one million Chinese visitors arriving in the months leading up to November 2015 – a year-on-year rise of more than 20 per cent.

Those Chinese visitors to Australia spent an estimated A$7.7 billion on their jaunts around the country, which is more than the combined spending of visiting Britons, Americans and Canadians, according to Tourism Research Australia.

Australia is yet to follow the likes of regional tourism rivals Singapore and Malaysia in offering multiple-visit or even visa-free entry options for Chinese tourists, but its tourism industry has placed increasing importance over the past decade on their specific needs, many of which are very different to the needs of visitors from Western countries. 

Further evidence of the recognition of this importance came last December when Australian tourism minister Richard Colbeck suggested that road signs in Mandarin should be introduced across the country, given that 40 per cent of Chinese visitors chose to “self-drive” during their stays.

Catering for a surging market

Shanghai-based Grace Pan is the international director (China, Hong Kong and Taiwan) for Tourism Queensland and cites her organisation’s work over the past decade as an example of the sort of reach that tourism industry players must establish to fully develop the Chinese market.

“We have put in dedicated resources to cater for this growth market,” says Pan.

Tourism Queensland has opened offices in Guangzhou and Beijing to cover the southern and northern Chinese markets respectively, while also hiring someone to handle China’s second- and third-tier markets.

A digital marketing specialist was brought in to cater for the rise of the free, independent traveller (FIT) market, and online promotions have targeted social media platforms Weibo and WeChat, as well as online travel agencies (OTAs).

The effort is paying dividends. China is now Queensland’s biggest overseas market – last financial year, Chinese tourists spent about A$833 million when they visited the state. An increase in direct flights between China and destinations such as the Gold Coast reflects this growing tourism trend.

Similarly, organisations across the globe have sprung up to assist tourism operators who want to adapt and advance their services to meet the daily needs of the Chinese tourist.

One such initiative is the China Ready program, which offers “cultural insights and understanding that are essential for successfully engaging with Chinese people”.

The idea is that tourism operators take the training and advice on board, make the necessary changes to their operations and then receive accreditation, which the China Ready organisation claims is increasingly being sought by Chinese tourists when they are deciding where to stay.

The InterContinental Hotels Group (IHG) has signed on, with more than 10,000 of its staff worldwide – including at 11 properties in Australia – receiving China Ready training in Chinese etiquette, culture and hospitality. IHG has named this its Zhou Dao program – a combination of IHG’s Chinese name Zhou with the Chinese philosophical concept of Dao (or “the way”).

IHG’s Karin Sheppard points to one of the group’s Sydney operations as an illustration of how the program has changed the way the organisation does business.

The Sydney Opera House is a must-see“InterContinental Sydney, as with our other China Ready accredited properties, has a variety of offerings aimed to create a homelike environment for Chinese travellers,” she explains.

“From a translated welcome pack on arrival and slippers and Chinese tea in all rooms, to trained Chinese chefs and preferred food and beverage offerings available in our bars and restaurants, our staff are experts in catering to Chinese guests.”

The special training and research have showed IHG exactly what specifics are needed, says Sheppard, adding that other initiatives include Chinese-speaking staff either at the front desk or via 24/7 phone support and the acceptance of China UnionPay cards.

Professor Wolfgang Arit has been watching the outbound travel industry grow since he first visited China in 1978. For the past 12 years, he has run the Hamburg-based China Outbound Tourism Research Institute and brushes off any suggestions that China’s recent economic hiccups might have a negative effect on the Chinese population’s desire to travel abroad.

“Long-distance Chinese outbound tourism grew faster in 2015 than in 2014,” says Arit.

“The top 5 per cent of Chinese society, rich enough to travel long distances beyond Hong Kong, Malaysia or Thailand, is still getting richer.”

The trick, he says, is to think outside the box and offer Chinese tourists experiences they might not have come across before.

“Analyse carefully which segment of the Chinese market you are aiming at,” advises Arit. “Do not believe in averages.”

Special offerings might include anything from tango dancing to birdwatching or learning to cook regional food.

“If that niche product offer only interests 0.01 per cent of Chinese travellers, that’s 140,000 potential customers,” says Arit.

“If the niche offer interests 0.1 per cent, that’s already 1.4 million potential customers.” 

The possibilities seem as limitless as China’s lust for travel. 

Meeting the growing demand

The tourism industry across Asia is fast learning how to directly target – and cater for – the increasing influx of Chinese tourists into the market.

Figures, including those supplied by German market researcher GfK, confirm the wisdom of this approach. GfK recently claimed that – including air and overnight visits – the number of Chinese travellers arriving in Thailand had increased by a staggering 263 per cent since 2011.

While final figures are yet to be released, Thailand was expecting about seven million Chinese visitors for 2015, up from 2014’s 4.63 million.

For some time now, the Thai island of Phuket has been on the radar for Chinese tourists, lured by its tropical waters, cuisine and unique cultural experiences. Manager of the island’s luxury 43-villa Kata Rocks resort, Scot Toon, says that 33 per cent of the resort’s total business is now coming from China.

“The top 5 per cent of Chinese society, rich enough to travel long distances beyond Hong Kong, Malaysia or Thailand, is still getting richer.”

While Toon is predicting a rise in tourism across the whole region as the traditionally strong economies of Europe and the US recover from their respective woes, he believes the growing number of Chinese visitors with money to spend will continue to account for a significant percentage of business.

What that means, says Toon, is that tourism operators have had to adapt – and quickly.

Bilingual signs in Shanghai point to the future of tourismAfter conducting research on the ground in China, talking with agents and gathering information from visitor studies, the Kata Rocks resort identified some key needs and desires of wealthier Chinese travellers.

“They wanted unique experiences, to be able to communicate and to feel safe and secure, as well as experience luxury,” says Toon.

“Key initiatives were to employ a Chinese guest relations manager, who was able to assist with communication and reservations.”

Adapting in-room information and resort options simply made good business sense, he adds.

“We translated all in-villa collateral and resort menus into Chinese, which has helped make our guests from this market more comfortable when they stay and has helped them to utilise the resort outlets and spa,” he says.

“We have added preferred items to our breakfast menu and little touches like hot milk, which they prefer with their breakfast cereal over cold milk.

“We continue to evolve and liaise with our Chinese market agents and our own Chinese guest relations to meet their needs.”

200 million

Overseas trips Chinese tourists will make in 2020

US$229 billion 

Amount spent by Chinese tourists globally in 2015

How to extend a warm welcome

Visit the iconic Eiffel TowerWhile Asia is cashing in on the ever-growing spending power – and curiosity – of outbound Chinese tourists, Europe remains their next most popular destination. According to tourism industry estimates, about 11 million Chinese visitors headed for Europe in 2015, a rise of 30 per cent from 2014.

Jennifer Iduhis, research project manager for the European Travel Commission, has been tracking the trend and says that destinations and individual tourism operators in the region have benefitted greatly by attending trade shows in China to showcase what they have to offer, aligned with campaigns across traditional and social media.

“It is essential to link destination tourism promotion activities with trade missions in China and create partnerships with local Chinese tourism agencies,” says Iduhis.

“From a destination perspective, we’ve learned that we need to adapt and improve our tourism product without losing authenticity.”

Iduhis offers the following advice:

  • Foster interaction: some Chinese independent travellers, in particular backpackers, are interested in immersing in the local culture and interacting with locals.
  • Shopping is one of Chinese tourists' favourite travel activities. Make it easier for them by accepting Chinese credit and debit cards and offer Chinese language maps of name brand shops.
  • Provide personalised products for the Chinese traveller and make them available through traditional media channels (newspapers, magazines, television or radio) and locations (e.g. airport lounges). Digital options are a must.
  • There are many different “tribes” among Chinese travellers, and understanding those differences can improve marketing strategies. Each “tribe” requires a different approach; treating the Chinese traveller as a single unit doesn’t work.
  • Process travel visas efficiently.
  • Fostering collaborations with Chinese service providers, such as tour operators and airlines, is essential.
This article is from the March issue of INTHEBLACK.

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