China Syndrome

Tonga's tourism authorities are concentrating on improving arrivals from Australia. In the Cook Islands, collateral materials are being distributed in Italian, Germany and Spanish this year in order to boost numbers from Europe. The Cook Islands Tourism Corporation reports that arrivals from Asia (China is not segmented out) was just 519 for the year December 2003-November 2004.

In any case, international experts are warning that there is a great deal of work to be done before the benefits of ADS in the region's larger markets can be reaped.

For a start there is the level of competition. Over 80 foreign destinations received ADS status from the Chinese government last year, including a large number of European destinations. PATA Managing Director of Strategic Intelligence Center, John Koldowski, says "The whole world wants a slice of China's huge, growing and increasingly liberal market."

China is the fastest growing outbound market in the world. Since 1995 its annual growth has averaged around 21 percent. Last year, total departures were 28.5 million according to Chinese National Tourism Association figures.

Even in Europe, tour operators have been warned not to get too excited about ADS status. Executive Director of the European Tour Operators Association (ETOA), Tom Jenkins, says "this is not the beginning of a bonanza. Chinese consumers are not affluent and are extremely price sensitive."

For destinations that have entered into ADS agreements with China, a one-trip visa is issued and Chinese nationals must travel as part of an organized tour arranged through approved tour operators both in China and in the destination country.

Chinese travelers want a combination of the new, especially cultural experiences, and the familiar such as good-quality Chinese food. Photo: Samantha Magick

The ADS agreement does not permit independent leisure travel, and a Chinese tour operator could lose its license if one of the parties does not return home at the end of the organized tour.

Competition is also coming from the United States, and in particular, Hawaii, which offers many of the same attractions as Pacific Island nations.

The Director of the Inbound Tourism Center in Australia, Dr. Roger Marsh, says the signing of ADS doesn't mean Chinese can start traveling the next day.

"Tourism operators will need to be accredited, the time between signing and the first planeload is about a year on average," says Dr. Marsh.

"There's a raft of issues to be discussed at government level. China is concerned about overstayers, and host countries are usually a bit concerned about that as well."

Certainly authorities in CNMI have indicated this is a concern. The loss of hard currency is also a worry for the controlling organization, the China National Tourism Administration.

Dr. Marsh says visa applications and issuance becomes an issue and countries need to have presences in the three Chinese source markets for outbound travelers, Beijing, Shanghai and Guangzhou.

Dr. Marsh believes the main challenge for Pacific Islands wanting to tap into the Chinese markets is infrastructure, particularly direct flights.

China has been a strong supporter of the institutions supporting tourism development and promotion in the region. It recently donated US$100,000 to the South Pacific Tourism Organization. China became the first full cosmopolitan member of the SPTO last April.

SPTO Chief Executive, Lisiate A'kolo, says China and other metropolitan countries were invited to join because of the financial support they can lend with the ending of a funding arrangement with the European Union back in 2001. He also believes China's membership will strength ties with the Chinese tourism and travel industry.

And as Pacific Magazine went to press, Fiji Television was reporting that China wanted to set up a FJD$100 million (US$61 million) regional airline, a proposal that has reportedly met with some caution in Fiji.

Vuetasau Buatoka, the chief executive officer for Fiji's transport and civil aviation ministry, said "it's a subtle attempt to impose its influence in the region. And it's a proposal that may not be a viable at least from Fiji's view of point."

This month the Beijing International Tourism and Travel Market (BITTM) will be held in China. Dr. Marsh says while it worth having a presence there, a lot of competitor markets will be throwing money around. "Small countries with a small stand put together on a tight budget will have a hard time getting attention. They might be swamped."

The SPTO hopes Pacific Island nations can ride off the back of the momentum in the Australian and New Zealand tourism industries, which are receiving many more Chinese tourists. A SPTO market intelligence report on the Chinese outbound market of January this year predicts China's outbound travel will continue to grow by 15 percent per annum for the next five years. Citing figures from the Pacific Islands Forum Trade office in China, it says the Chinese outbound market will be around 50 million by 2010.

Meanwhile, China continues to be one of the fastest growing markets for the CNMI. In January this year 2,938 visitors arrived in CNMI from China. While this was a 21 percent decline from 2004, local authorities are optimistic about the market.

There is also movement in terms of accessibility. The U.S. Department of Transportation approved China Southern Airline's application to service the Shanghai-Saipan and Guanghzou-Saipan routes in January. However, the application to approve flights to Tinian has been deferred until security is upgraded at the airport there.

The CNMI government has asked to be excluded from the recent bilateral agreement expanding air services between China and the U.S. Governor Juan Babauta says while CNMI needs to adhere to the bilateral agreement to access the Chinese tourist market, "what concerns us if that, if you give China a choice (where to fly into the U.S.) they would likely choose New York or Los Angeles, so we want to seek exemption from the bilateral agreement."

The agreement more than doubles the number of airlines that can fly between China and the U.S. China Eastern Airlines and China Southern Airlines make four flights to Saipan a week.

The Marianas Visitors Authority (MVA) officially launched it's Chinese website, www.mymarianas.com.cn in January. The MVA says its part of an "aggressive marketing communications campaign entitled "See My Marianas." The site was designed with input from a survey conducted among Chinese travelers in Shanghai, Guangzhou, Beijing and Hong Kong. The SPTO says most Chinese internet users live in these areas, and that "most of the users are young people…78 percent are below 30 years of age."

CNMI has been working on capturing the Chinese market for over three years.

Lynn Knight, President of the Hotel Association of the Northern Marianas told Radio Australia late last year that with the approval of ADS "we think the MVA needs to be there promoting along with the private companies, the wholesalers etc that will be promoting our destination…We're a small destination, we are competing with a lot of other wonderful destinations around the Pacific that have a lot bigger budget"

Photo: Samantha Magick

Despite the enthusiasm of the CNMI visitor industry, there remains concern among some in Saipan's private sector and in the commonwealth's Congress that a large influx of Chinese tourists will actually hurt the islands (see story, Page 20).

It's quite a different story in Fiji. Prime Minister Laisenia Qarase said after the granting of ADS last year, that the tourism industry needs to prepare for an influx of tourists from China in the not too distant future.

"I envisage that we will need to train some of our people in the Chinese language so that when Chinese tourists come into the country we can have people who can look after them."

Qarase says it is time for the tourism industry to study the requirements of Chinese visitors to overseas destinations in terms of "what they want, what kind of food, what they want to see and so on so that when they come to Fiji we are prepared.

"There is a great potential for tourism between the two countries and I see China as a very significant source of tourists in future."

Air Pacific Chief Executive Office John Campbell believes it's a long term proposition, but agrees research is the first step.

"We need to do an inventory of what we have to offer and the gaps need to be closed."

Campbell says Chinese tourists want good quality but attractively priced accommodation, food that suits their palate, reasonably lively nightlife, have a propensity for gambling and casinos, good brand name shopping, and photogenic opportunities often involving buildings and dramatic scenery. Of the later, he says while it is available in Fiji's hinterland, there are challenges in getting visitors to these locations.

Dr. Marsh concurs. "My impression is they have a deep love of history and culture."

And he agrees food is important. "Food is very critical. Chinese need to have a Chinese meal at least once a day and if you don't have good Chinese restaurants it is going to be hard."

The SPTO study says the average age of Chinese tourists is 45 plus, that 80 percent of the outbound market is male, that they prefer group travel and stay for an average of 11 days.

It also examined the way Chinese travelers get information. According to a World Tourism Organization study, Beijing residents are "more inclined to get information from the recommendations of family members or friends and then from TV programs and commercials. Shanghai residents are more likely to be influenced by the advertising media such as TV and magazines as their first source of tourism information."

This has big implications for cash strapped national tourism offices with small promotion budgets, and a traditional reliance on familiarization and media tours, plus conventional advertising in more established markets.

The SPTO recommends a number of strategies for penetrating the Chinese market. They include translation of promotional materials and other information on the Pacific into Mandarin, the creation of more established China-Pacific routes to boost access, review of immigration and visa issues, and use of the Internet. "The South Pacific has little brand identity with this market," the SPTO report says.

For Dr. Marsh the key is also cooperative marketing in China. "I think it is essential small countries band together and come up with your own 'brand' for the Pacific."