Is your business China ready?
WRITER: Dr Sam Huang
ILLUSTRATOR: Tang Yau Hoong
Never in human history have we seen so many Chinese people travelling outside their country. While historians report Genghis Khan’s destruction as the first unprecedented large-scale East-West contact in the 13th century, our age witnesses an even larger-scale migration brought by outbound Chinese tourists. This movement represents significant and unprecedented business opportunities not only for Australia, but also for economies around the world.
Thanks to China’s admirable economic growth and favourable government policies, more Chinese citizens are able to travel beyond China’s borders. In 2012, over 84 million Chinese tourists travelled abroad—equivalent to nearly four times Australia’s population. Boosted by a strong currency exchange rate, Chinese outbound travellers spent a record US$102 billion in 2012, up 40% from 2011, to overpass the US and Germany as the top-spending country in the international tourism market. According to the United Nations World Tourism Organisation, by 2015, the number of Chinese travellers abroad will reach 100 million, a benchmark originally forecast for 2020.
For Australia, China represents our fastest growing and most valuable inbound tourist market. Since becoming the first western destination to be granted Approved Destination Status for group leisure travel in 1999, over 897,000 Chinese tourists have undertaken leisure travel in tour groups to Australia. In 2012 alone, Chinese visitor arrivals to Australia numbered 626,400 with each tourist spending an average of A$7000. And, from 2011-12, direct tourism GDP increased to A$41 billion generating a total tourism consumption of A$106.6 billion, and directly employing over half a million Australians.
Australia’s tourism industry consists of around 280,000 enterprises covering a wide range of subsectors including hotels, cafés, casinos, tour companies, travel agents, museums, zoos, airlines, transport companies, and part of the retail and education sectors.
Tourism Australia is forecasting a 226% growth in Chinese tourist arrivals in the next decade.
The significance of the tourism industry to Australia’s economy prompted the Australian Government’s China 2020 Strategic Plan, which identifies five strategic areas on which to build Australia’s competitiveness for Chinese tourists. These include: knowing the customer; developing a multi-stage geographic marketing coverage strategy; enhancing quality tourist experiences; increasing aviation capacity; and strengthening partnerships between government and industry. Many of these initiatives are already underway.
China’s tourist market also offers benefits beyond the immediate tourism industry. For example, earlier this year a Chinese business person touring South Australia's Kangaroo Island surprised local honey farmers by making a large business deal to import honey products to China. Multiple deals followed, representing over A$70,000 of business—a significant achievement for the local farmer. Similarly, it’s not unreasonable to speculate that Australian wineries might encounter comparable opportunities, as more Chinese tourists encounter Australian wines on tour.
So the opportunities are there—but what does this mean for Australian business? Clearly there is potential to benefit from inbound Chinese dollars, but in order for this to happen, a great deal of homework needs to be done. First of all, Australian businesses must develop their China-wise knowledge in order to understand Chinese tourists as customers. Chinese tourists are different—they have a different culture, they speak a different language, and they may not request things the way we expect them to do.
Australian businesses need to step out of their comfort zone of servicing culturally similar tourist markets, like the UK and New Zealand, and learn how to understand and service the Chinese market.
The economic multiplier effect of tourism is stronger than that in mining, agriculture and financial services.
Bear in mind, Chinese tourists are also different among themselves. China is a big country with an area that is on par with the whole of Europe. And much like the different cultures across Europe, there are different subcultures throughout China—a tourist from Beijing will behave differently to a tourist from Guangdong—and both will speak distinctive different dialects.
The key to understanding Chinese tourists is to understand their cultural values. With the ubiquitous influence of globalisation, contemporary Chinese culture appears to be a product of both domestic and international discursive forces. The dynamism of the Chinese economy and societal development also defines the ever-changing nature of Chinese culture. And while Confucianism and Taoism are still at the traditional core of Chinese culture, the modern elements of consumerism, Chinese pragmatism and capitalism should never be taken for granted in contemporary Chinese culture.
China today is still a hierarchical, collectivist society, so to maximise the opportunities presented by Chinese tourism, Australian businesses must learn culturally appropriate ways to offer services. For example, how a service provider differentiates their interaction with a Chinese superior, compared with subordinates in the same group, should not be underestimated.
For Australian businesses, there are many ways to learn about the prevailing Chinese cultural values. As a multicultural society with an ever-increasing Chinese migrant population, Australia should be more informed about China than other countries; Australian businesses should consider tapping into existing talents from new Chinese migrants to develop their Chinese knowledge and capabilities.
Managing Chinese tourists’ expectations more effectively, is another key learning area for Australian businesses. And the best way to do this is to try to put ourselves into their shoes and see the world as they do. Additionally, Chinese tourists may have formed expectations of the Australian tourism experience before visiting Australia, on the basis of their life and travel experiences in China. Therefore, it’s critically important for Australian businesses to do both their homework in Australia and their field work in China. As a Chinese proverb says, “It is better to travel ten thousand miles than to read ten thousand books”—if one business trip to China brings more tourists to Australia, then it’s worth doing. But paying attention to what’s happening locally and domestically is not enough; an international perspective, or more specifically, a Chinese perspective on Australian business practices is a must.
China is Australia’s most valuable inbound tourist market.
Recently, China has been more innovative and entrepreneurial than most developed countries, and successful business models have been developed in China to serve the Chinese tourist market. For example, the fast-growing economy hotel sector in China has been innovative in meeting the needs of the mass domestic tourist market. In a short period of less than one decade, China’s economy hotel sector has seen three hotel chain companies (Home Inn, 7 Days Inn, and China Lodging) rise from being small start-ups to a NASDAQ/NYSE listed billion-dollar asset conglomerate. Understandably, Chinese tourists will base their travel and accommodation expectations on what they experienced at home, which means that if Australian businesses cannot offer similar standards of quality, they will lose their share of the market.
Chinese consumers are more technologically savvy than ever before. Among all types of information and communication technologies, the fast development of social media applications via mobile devices in China seems to be generating more challenges and implications for businesses with Chinese outbound tourists. Australian businesses capturing the Chinese tourist market should know that through mobile social media platforms such as WeChat (Weixin in Chinese), Chinese tourists can constantly engage in a virtual social network that can either enhance their experience in Australia, or reduce their perceived value of the experience. More often, instant social media collation of information gathered on-site at the destination can lead to either congruence or dissonance in tourists’ evaluation of their experiences, which would in turn affect the tourism service provider’s business. So far, tourism researchers have started to examine how social media will influence tourists’ destination experience. Tourism business practitioners should also adapt themselves readily to this technological trend.
Indeed, China’s fast-growing outbound tourism market means many new business opportunities—both for Australia and for other countries that choose to educate themselves about the Chinese market. Certainly, Australian businesses still have a lot to learn about the Chinese tourist market, but with Tourism Australia’s China 2020 Strategic Plan, along with good government policies, action and support, Australia is well on its way. Whether your business is prepared and rearing to go is up to you.
Dr Sam Huang is a researcher with UniSA's Centre for Tourism and Leisure Management. With prior industry experience in China, he has a special interest in China tourism and hotel studies.
> For more information, visit the Centre for Tourism and Leisure Management