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CHINESE INBOUND IS EXPORT, BIG EXPORT

Publish Date: 
Friday, November 14, 2014
SOURCE: 
Travel Pulse

To the uninitiated there are two confounding counter-intuitive aspects of tourism. The first overarching confusion is that the sight of people enjoying themselves, whether they’re frolicking on a beach or perusing a masterwork in a museum, is an industrial sight.

It’s a business that sustains mortgages, pays tuition and puts food on the table for many people. The second confusion is that the traffic of tourists into our country is an export. It behooves all of us in the American travel industry to make this clear to other Americans at every opportunity.

Earlier this week the United States and the Peoples Republic of China managed to rise above the lingering specters of Cold War suspicion to see the mutual benefit in liberalizing the visa requirements imposed on each other. The deal, which came as part of President Obama’s Beijing APEC summit meeting, will be music to the ears of anyone who travels to China frequently.

Henceforth both countries will grant visas to each other’s travelers that will last for a decade. Now it’s just once every 10 years that you have to waste a day in a joyless waiting room getting a Chinese visa (listening India?). Until now, only one year visas were allowed.

Beyond the alleviation of travel hassle and expense there’s also the business of, well business. The White House predicts the new policy will create as many as 440,000 U.S. jobs by 2021. Additionally, visitors from China are expected to contribute $85 billion a year to the U.S. economy by 2021. Sound too rosy?

According to last December’s ITB World Travel Trends Report, conducted by IPK International, China is now the world’s No. 1 market in travel spending overseas. It ranks second for total trips and fourth for overnights. The China National Tourism Administration (CNTA) has reported that in 2013 some 97 million Chinese travelers went abroad, mostly to Asia and Europe. They spent $102 billion.

It's time to smell the coffee, or the tea, as it were.

U.S. Travel Association President and CEO Roger Dow was among the first to laud the long overdue visa liberalization.

"This policy move will harness the colossal and growing Chinese travel market for the direct benefit of U.S. job creation, exports and economic growth,” he said. “The effects will be both strong and immediate. Kudos to the Obama administration for negotiating this deal that will deliver tangible progress towards meeting his strategic objectives. Overseas visitors spend an average of $4,500 per trip, but for Chinese visitors the figure is $7,200, the largest of any country.”

Attract China, which operates a Mandarin website (Xiao Yao Dao) directed at independent Chinese travelers, is really excited. The site, which has nearly 1 million subscribers to date, provides U.S. DMOs, hotels, restaurants, retailers and attractions a way to drive inbound Chinese business to individual locations across the United States.

According to Attract China, more than 2 million Chinese travelers will visit the United States in 2015, spending more than $14 billion for the year.

“By 2018, it’s estimated that the Chinese traveler will be the number one overseas visitor to the U.S., overtaking Brazil, Germany, Japan and the U.K. due in large part to an ease in visa restrictions.”

eRevMax points out that the Internet is the primary source of Chinese travel planning with 95 percent of Chinese travelers beginning their search at Baidu, the Google of China.

“The amount of money spent on travel in China has been growing at 20 percent compound rate for the last few years, and has made Chinese travelers the big spenders,” said eRevMax.

It can be an inscrutable market to fathom however. Most analysts see the Chinese traveler as the most eager in Asia today. Last year their journeys that included more than four overnights rose by 28 percent. When we look at all of their international travel (long-haul and short-haul), the Chinese spend an average of $1,765 per trip.

There are caveats. As with all markets, most outbound travel is short-haul, within Asia. And though China constitutes a huge market, it’s not as much of a Golconda as some make it out to be. The Department of Commerce (DOC) reports that Chinese visitors who came to the U.S. last year earn an average of $47,688 per year but pay only 7 percent of China’s 1.3 billion population earns more than $15,000 per year.

Still as the White House pointed out some 100 million Chinese traveled last year, domestically and internationally, but only 2 percent visited the U.S., about 2.1 million according to the DOC. Keep in mind that not all that long ago, in 2006, some 320,000 Chinese visited the U.S., last year 1,416,000 came. Of those 32 percent were tourists, 19 percent business travelers, 17 percent students and 21 percent visiting friends and family.

So far their tastes are bi-coastal, they love California where 46 percent visit and they love New York where 32.5 percent visit while they’re here. Sixty-one percent visit just one state on their visit. According to surveys, some 85 percent list shopping as a top priority and 78 percent list sightseeing.

In Europe, especially in Germany, the profound interest that the Chinese have in shopping has led to more involvement in tourism marketing by retailers of luxury goods such as cars, clothing, perfume and other exotic products.

Europe is branding what they make as part of who they are. It might behoove agencies like Brand USA to seek those partnerships as well. After all, the U.S. invented the modern shopping mall, and we know how popular malls are in China.