China is one of the world’s most coveted markets, and rightly so. It’s home to 20% of the world’s population with 300 million upwardly mobile consumers. It has the largest number of internet and cell phone users and is the number one global market for cars, consumer goods, and soon, luxury goods. It also recently surpassed Japan as the world’s second largest economy.
It is therefore no surprise this burgeoning marketplace has quickly become a prime target of the US travel sector. Inbound Chinese travel is now the fastest growing market segment in the United States. Fred Dixon, senior vice president of tourism and convention development at NYC & Co, describes the Chinese phenomenon as “astonishing.” Says Dixon, “(China is) one of the powerhouse markets.”
US Department of Commerce statistics confirm Dixon’s claim. Chinese visitors to the US have risen at least 36% annually since 2007—the year the Chinese government granted the United States “approved destination” status, enabling US travel and hospitality companies to market in the country. And their spending has outpaced travelers from all other nations. With a 29% increase in 2010, the Chinese have now overtaken the French to rank 7th in global tourist spending. US travel and tourism exports to China have correspondingly increased by at least 30% in six of the last seven years. They now account for 24% of all US services exports to China.
While impressive, current figures are miniscule compared to China’s potential.
BUMPS IN THE ROAD
But challenges remain. Viewed as a difficult country to enter because of its strict visa requirements, the US has lost some of its appeal to Chinese travelers. In order to obtain a visa, Chinese citizens must endure a face-to-face interview with an embassy official. And with only five consuls in the whole of China, would-be travelers from secondary cities must travel overnight, eating into some of the time and disposable income they would prefer to spend abroad.
Despite the difficulty in obtaining a visa and the occasional friction between the US and Chinese governments, the US still ranks as the second most coveted destination for Chinese travelers, after France.
The Chinese travel market’s potential is so huge that major US suppliers such as hotels, airlines, and shopping malls are sending representatives to China. Marriott alone has 20 sales reps deployed throughout China according to Mike Stengel, market vice president for New York City Marriott hotels. The Hilton San Francisco Union Square has its US reps visit China twice a year to meet with corporate travel planners, says Michael Dunne, the hotel’s general manager, and Marriott, Hilton and Starwood have all begun implementing Chinese hospitality services at several of their US and other global properties.
Entire cities are following suit. New York City was one of the first communities to open a regional tourism office in Shanghai in 2007. The investment “had a payoff in a big way,” Dixon reports. The number of visitors to the city grew 44% in 2010. And Chinese visitors are staying longer, too, with the average trip duration rising to 11.3 nights vs. 7.4 nights in 2009.
KNOW YOUR AUDIENCE
The question then becomes, “How does the travel and hospitality sector effectively court this growing market?” Simply sending representatives to China to promote one’s product is hardly sufficient. Since travel and hospitality products are essentially intangible, marketing efforts must inspire, entice, and speak to a potential Chinese buyer’s wants and needs. There is little point in promoting the features and benefits of a particular product, service or destination if they don’t address some type of necessity or desire.
When targeting the Chinese, it is also essential that Mandarin ad copy be more than a stale, word-for-word translation of the original English source content. Ads must be culturally appropriate and engaging for discerning Chinese consumers to take note.
Roy Graff, former director of China-based Octopustravel.com, provides an important glimpse into the Chinese tourists’ psyche. “(While) Chinese people (traveling abroad) are interested in…history, their real focus is on shopping. Many items considered by the Chinese to be luxurious are much cheaper (overseas).” Qiang Wang, a recent Chinese visitor to the US, confirms, “Chinese love good bargains.” Shopping excursions are therefore common in Chinese tour group itineraries.
One might be inclined to chuckle at the irony of Chinese tourists flying half way around the world to buy goods made in and exported from their own country. While there is no shortage of shopping malls in China, outlet malls in the US offer substantially lower prices on name-brand goods viewed as luxuries. Because many luxury items are double the price in China, the purchase of a few big ticket items can easily justify the cost of the trip.
The retail industry has taken note of this phenomenon and has been working with Chinese tour operators to turn their shops into must-see destinations. In New York, San Francisco and Los Angeles, Chinese tour group visits to retail stores rose more than 50% last year. Many retailers have begun offering Chinese size charts, and high-end boutiques like Tiffany & Co. have been increasing their pool of Mandarin-speaking employees.
2) GROUP MENTALITY
According to David Huang of China Host, a Chinese travel agency, 90% of Chinese prefer to travel in large groups. And unlike Europeans who tend to stay longer in one spot, the Chinese bear striking similarities to other Asian tourists, moving quickly from destination to destination while staying at budget hotels.
In part, this is the result of deeply engrained Chinese culture. While the US has long been known for its spirit of adventure and rugged individualism, studies by well-known social scientist Geert Hofstede reveal that the Chinese prefer collectivism.
The language barrier is also partly to blame. While there are currently more Chinese learning English than there are native English speakers in the US, few Chinese read and speak the language well enough to feel comfortable traveling alone.
3) DISCRIMINATING CONSUMERS
The Chinese are also discriminating consumers, preferring to spend their money where they feel welcome. In-room amenities like tea kettles and slippers, and menu items such as rice porridge and noodles are becoming more common as hotels and restaurants continue to court this new and powerful consumer group. Other emerging hotel services include onsite Mandarin interpreters, translated menus, and oranges and tangerines in the lobby—considered symbols of good luck in Chinese culture. Hilton even ensures that the rooms of Chinese guests have at least one Chinese language television station.
Some hotels are even going so far as to assign names instead of numbers to certain guest rooms. Some numbers, such as the number 4, are considered unlucky to the Chinese. Others are relocating their reception areas to the 8th floor. Eight is a symbol of good luck in China. It’s no coincidence, for example, that the Beijing Olympics opened on 08/08/08.
The payoff in chasing Chinese travelers both domestically and abroad is well documented. For any travel or hospitality organization looking to attract Chinese consumers, understanding behavioral and linguistic distinctions across cultures can mean the difference between success and failure. Whether you are an airline, a hotel, a tour operator, a rental car agency, a casino or a tourist attraction, speaking your customer’s language is essential.
The internet is a particularly important tool for reaching Chinese consumers. According to a 2011 study by World Internet Stats, the use of internet languages other than English has increased dramatically over the past decade, with Chinese experiencing a growth rate of 1,277%, compared to the modest 281% growth of English internet usage over the same period of time. As internet usage and disposable incomes continue to rise in China, producing and maintaining content that is both relevant and engaging to the Chinese consumer is a must.
THE EC INNOVATIONS APPROACH
In addition to sending representatives to China, many US-based companies employ China-based consultants to help them better understand this lucrative yet complex marketplace.
For nearly two decades, Beijing-based EC Innovations has provided proven solutions to help its travel and hospitality clients succeed in China’s vibrant, rapidly changing business environment. Our Chinese market specialists possess years of hands-on experience in the travel and hospitality sector. Because we are familiar with the challenges foreign companies face in China, our solutions focus on risk reduction rather than naïve optimism.
Whether your interests lie in learning more about the Chinese market, planning and executing your entry into China, growing your existing China business, or acquiring Chinese companies, EC Innovations offers a wide range of services that cater to all levels of China involvement. If you think the time is right for your organization to grow this emerging market, contact EC Innovations today for a free consultation.
ABOUT THE AUTHOR
Jeff Christensen holds a Master’s degree in Tourism and Hospitality Management from England’s University of Surrey. He has worked in sales for a charter airline and in operations for the world’s largest Visit USA motor coach tour operator. For the past twelve years, he has been employed as a cultural consultant and account executive in the localization industry, helping global travel and hospitality companies like InterContinental Hotels Group and United Airlines maximize their potential in multilingual markets by improving brand recognition, speeding time-to-market, reducing costs, and growing international sales. Jeff is well-traveled, having spent time in 60 countries worldwide. His most recent efforts have enabled clients to succeed in the rapidly expanding Chinese marketplace. A native of New Mexico, he currently resides in Denver, Colorado.