Chinese tourism: An opportunity for Sri Lanka

A visitor to China today will be overwhelmed by China’s domestic tourism. The economic power unleashed by Deng Xiaoping’s reforms, decades ago, has generated an affluent middle class hungry to travel. Within China this has created a massive industry. Tour guides, transport providers, restaurants are thriving. Locations like the Great Wall, Beijing’s Forbidden City, the Terracotta Warriors near Xian, Xian’s Muslim Street, the Huangguoshu Waterfall near Guiyang (Asia’s largest), Shanghai’s Bund, the restaurant district and the night river cruise are all packed with visitors, primarily Chinese but increasingly more and more foreign tourists. Airports and highways operate at full capacity. However one downside is that flights out of China’s airports suffer inordinate delays. The sheer volume of domestic and international airlines and flights is one reason, another is that China’s air space is largely controlled by the military and the space available for non military air traffic is highly restricted. However it is intriguing that China’s flight departures are statistically 90% on time. Any passenger who has had to sit in an aircraft on the tarmac, albeit with the air conditioners working, for an average of 45 minutes to an hour at one of China’s airports, will shake their heads over the reality of that old adage – ‘statistics and damned lies!’ But the secret is in the definition of a scheduled aircraft’s departure. Leaving the gate is considered as departure time. So whatever time the aircraft leaves, if it’s on the tarmac, queuing for clearance to access the runway, if the aircraft has left the gate at the scheduled departure time, it is deemed to have departed on time! International dimension There is an interesting international dimension to this affluent burgeoning Chinese middle class and its urge to travel. The emergence of a newly-rich middle class and an easing on the restrictions on movement of people, imposed by the Communist Party to control migration to the cities, has fuelled this domestic travel and tourism boom. But foreign visitors are also arriving in exponential numbers. China is one of the most watched and hottest inbound and outbound markets for tourism today. The world is about to be engulfed in an irresistible, irreversible and sustained boom in Chinese tourism. China is the third most visited country in the world. In 2010 the number of overseas visitors was 55.98 million. In 2010 the foreign exchange income from inbound tourism was US$ 45.8 billion. Domestic tourism on the other hand totalled 1.61 billion people, which generated an income of 777.1 billion yuan for the industry. Like any other service or manufacturing industry, attracting visitors from foreign markets must be developed, on a sound domestic market. Otherwise the development is unsustainable; in tourism China has this in spades. It is conceded that standards and cleanliness, etc. can be improved (the old joke of locating the toilets using your sensory glands!) but the base is in place. The international hotels are of world class, with expatriate non-Chinese managers at the first and second tier level and expatriate chefs. In 2002, the World Tourism Organisation has forecast that China would be the largest destination for international travellers and the largest source of travellers to other countries. In terms of total outbound travel spending, China is expected to be the fastest growing, in the timeframe 2006 to 2015. It is estimated that China will be number two for total travel spending by 2015. In 2009 China’s total tourism revenue was US$ 185 billion. After the Communists took over in China ii 1949, until 1974, the People’s Republic of China was closed to all but selected visitors. It was that pragmatic visionary Deng Xiaoping who decided to promote tourism vigorously. Analysts have compared the role played by the onetime Minister of State J.R. Jayewardene (later Prime Minister and President) in deciding to promote Sri Lanka’s tourism industry in the 1965 to 1970 Government and in preparing the 1968 Master Plan for Tourism in Sri Lanka, stating that it was similarly groundbreaking. Of course once Deng decided, it was a done deal. Unlike in our ‘five star democracy,’ I recall one Opposition candidate in the Bentota area declaring on an election meeting platform in 1977 that he would convert the renowned architect Geoffrey Bawa designed prize-winning, Bentota Beach Hotel, then under construction, into a hospital, once his political party took power! Like all election promises, after they won, it did not happen! China embarked on a major hotel construction program and invited renowned architects and hotel brands to come and design and manage the hotels. Historic and scenic spots were developed into traveller-friendly locations. Professional guides and other service personnel were trained. Tourism spend The UN World Tourism Organisation has stated that Chinese tourists spend more in total on tourism than any other nationality; in 2012 they spent US$ 102 billion on trips abroad. According to the China Tourist Academy, a national think tank, the number of Chinese tourists going abroad is set to rise from 83 million in 2012 to more than 200 million by 2020. Research also has shown that more and more Chinese tourists are increasingly willing to travel independently. A survey by Hotels.com of 3,000 Chinese travellers and 1,500 hotels shows that foreign travel has stopped being the preserve of only the very rich Chinese. The average annual salary of the Chinese international tourist is about US$ 17,750, which is more than double the average annual salary in China, according to the Hotels.com survey. However, about of quarter of all Chinese tourists of today earn less than US$ 11,300 a year. Nigel Pocklington, the Chief Marketing Officer at Hotels.com, says: “The income group that takes these trips is broadening. Yes, there is elite that the luxury goods retailers are interested in, but the Chinese tourist is now genuinely middle class.” The survey also showed that the majority of Chinese travellers now go abroad on independent trips, rather than in organised groups. Only 30% travels as a part of a group, with a guide with the traditional megaphone and a flag held aloft to indicate his position to his group. The balance 70% travel independently. The impact of Chinese tourism can be measured by how the Maldives, Mauritius and the Seychelles compensated for the drop in European tourists after the 2007-’08 global financial crisis, in 2012, 255,000 Chinese tourists visited these islands in the Indian Ocean, double the number in 2010. In 2013 it is estimated 300,000 Chinese tourists will visit. For the Maldives, already in the first half of 2013, Chinese arrivals are up by 50%. This shows the potential. Visas One factor which features high on a Chinese tourist choosing a destination abroad is the ease of obtaining tourist visas. The main reason why Chinese outbound tourists go disproportionately to Thailand is simply because it is easier to get visas, says Pocklington. The UK travel industry is up in arms on restrictions imposed on the issue of visas to the UK, saying that the difficulty and uncertainty in obtaining a tourist visa has resulted in the British economy losing over Pounds Sterling 1 billion of extra spending by Chinese tourists. This is confirmed by Michael Ward, Managing Director of Harrods of London, the high-end department store in London’s fashionable West End, who says that the Chinese tourists were the most significant and fastest growing set of customer for his store. He further said: “This trend is set to continue, with consistent rises in average transaction values for our Chinese customers. We would still like to see greater access granted for our Chinese visitors, nor just for the benefits to the luxury industry but for the British economy as a whole.” The downside and the reason for the British restricting tourist visas is due to human smuggling, where organises criminal gangs smuggle is Chinese labour in the guise of tourists, who are later put into the labour market, at the bottom end, doing, dirty, dangerous and repetitive jobs for which there are no indigenous takers, controlled by criminal gangs. British hotels are making efforts to improve their offering to Chinese customers, with a variety of steps such as accepting more Chinese credit cards and hiring more Mandarin speaking staff. Reaching the 100 million mark On the outbound tourism side, the China Outbound Tourism Research Institute (COTRI) has predicted that China will surpass the 100 million outbound travel mark in the next 12 months. COTRI predicts 106 million border crossings in the second half of 2013 and the first half of 2014. The total spend by outbound travellers from China is estimated to be US$ 129 billion during this timeframe. However, similar to the definition problem Sri Lanka is having of who a ‘tourist’ is, and the questions being raised regarding the disparity between the official tourist ‘arrivals’ numbers that the occupation statistics of star class resorts, some of the Chinese outbound tourists are just overnighters to Macau and Hong Kong. Notwithstanding this definition conundrum, with which we are very familiar, in 2012 China overtook America and Germany as the source of the world top tourism spenders. Factually any country with the ‘Approved Destination Status,’ a bilateral tourism arrangement with the Government of China, has large numbers of Chinese tourists arriving. Even countries like South Korea have reported that the Chinese have overtaken the Japanese as the largest number of inbound arrivals. Groundbreaking steps Countries have to adapt to this welcome invasion of big spending Chinese tourists. Other than the standard things of promotional material and brochures, Mandarin speakers as interpreters, sign boarding and guide books in Mandarin, etc., lots of unconventional groundbreaking steps are being taken. For example, The Ritz in Paris has a Mandarin speaking Chinese national as a concierge. Both the Shangri-La and the Peninsular in Paris have separate restaurants serving Chinese style buffet breakfasts. In New York, the renowned Waldorf Astoria, once they know that the client is from China, provides a complimentary green tea kettle and a pair of Chinese ‘comfort’ slippers. The Four Seasons in Jakarta Indonesia has Chinese menus, guides and guest ambassadors. However COTRI’s surveys have shown that Chinese tourists are not satisfied with the level of service they receive. This is said to be especially true outside East and South East Asia, in areas where there are not many Chinese. COTRI says: “Chinese tourists often say they feel treated like second class people, even when they spend a lot of money.” There are also issues of the compatibility with tourists from other locations like Europe and America, mixing up with Chinese tourists. Indeed, reports coming out of the Maldives, speak of separate Atoll resorts being demarcated for Chinese tourists, because they are far from being good mixers. A new phenomenon in Chinese tourism, already referred to, is that all Chinese tourists do not travel in groups. The leisure industry refers to a category called ‘new Chinese tourists,’ people who are better educated, with more travel experience. Most have been students abroad, (many Chinese have got post graduate qualifications from Sri Lanka universities – including a onetime Ambassador) so they know their way around. They are self organised. It’s these new categories who are interested in trying out the local cuisine and resent being stereotyped as an ignorant traveller from the country side that can’t live without his instant noodles. Opportunities for Sri Lanka Chinese tourism provides many opportunities to Sri Lanka’s leisure industry. Government to Government relations between Sri Lanka and the People’s Republic of China are currently on a good footing. We have a user friendly online visa system operating. China is making huge investments in Sri Lanka’s infrastructure through, grants, concessional and commercial loans. Large numbers of Chinese construction workers are employed on projects n Sri Lanka. But a great deal of work has to be done to develop the potential. Tour guides with knowledge of Mandarin are essential. There should be training programs launched for this. Already there is a shortage, the bazaar talk is that Sri Lankan doctors of medicine who have qualified on Chinese Government scholarships in China and know Mandarin are moonlighting as Mandarin speaking tour guides; so also former garment industry executives, who worked with Hong Kong investors during the 200 garment factory boom. Chefs must be trained and specialty restaurants set up to provide Chinese food. There is no one type of Chinese food, each province has its own sociality and these varied palates must be catered for. Sign boarding in tourist resorts and preparation of Chinese language documentation, brochures and such must be done. Most importantly you must have a promotion campaign for Sri Lanka as a leisure destination in China. Air connectivity is already in place. SriLankan Airlines flies to China, but it is said that the vast number of Chinese travelling on SriLankan are on their way to the Maldives. A Chinese carrier also flies to Colombo. Connectivity through hubs such as Hong Kong and Singapore are also good, but have to be improved. Chinese credit cards must be accepted in Sri Lanka. The pricing issue also must be addressed. It is said that Sri Lankan charges are higher than the competition in Thailand, Malaysia and Indonesia without a comparative competitive quality of service. There seems to be some activity going on in this respect. A China mega promotion campaign was held from 29 August to 1 September, this year, at a leading shopping mall in Beijing –‘The Place’. This was organised by the Marketing Division of Sri Lanka Tourism. More action needed But much more is needed. A Dedicated Task Force of committed people from a cross section of the leisure industry and related fields including independent thinkers must be established, including ‘out of the box’ creative thinkers, who will put in place the building blocks of attracting more and more Chinese tourists who are travelling out of China, to Sri Lanka. People like A.C.H. De Soyza, H.W. Jayewardena Q.C., Dr. P.R. Thiagaraja and such, who were involved in the 1968 Master Plan for Tourism. The marketing and promotion strategies, the financial services, the interpreters, the dietary requirements, the chefs and the sign boarding in Mandarin, etc. – this should be on lines of Minister of State J.R. Jayewardene’s Tourism Master Plan of 1968, which laid a solid foundation for the leisure industry in Sri Lanka. There are ancient historical connections to build on. Admiral Cheng Ho and his visit to Galle in 1410 and the plaque he left behind (presently at the Galle Maritime Museum), for example. The Chinese type lions (guardian stones) at Yapahuwa are another. The Buddhist culture is one more. Many Buddhist scholars, like Fa Hsien from China, visited ancient Anuradhapura as students of Buddhism. Ancient Anuradhapura was a trading hub for Chinese merchants who came in from the East, in their sea going Sampans, riding the North East monsoon winds to Gokanna (Trincomalee) and returning home with the South West monsoon winds. The economic benefit and job creation advantages will be huge. All projections indicate that more and more Chinese will opt to travel abroad as tourists, both in groups and individually. Sri Lanka has to make use of this economic opportunity. (The writer is a lawyer, who has over 30 years of experience as a CEO in both government and private sectors. He retired from the office of Secretary, Ministry of Finance and currently is the Managing Director of the Sri Lanka Business Development Centre.)