2) General Market Conditions www.visitbritain.com/ukindustry Population / Languages The US Census Bureau puts the population of China at approximately 1.3 billion. www.china.com.cn offers population forecasts as: 2004: 1.315bn 2005: 1.324bn 2006: 1.333bn 2007: 1.342bn It is estimated that China's population will reach its peak between 2034- 2037 at around 1.486bn and then start to level down gradually. 65% of the Chinese population is aged under 40 at present, but by 2044 it is forecast that the under-40s will represent 44% of the population as the age-structure of the population becomes older. Indeed, it is forecast that by 2044 there will be over 3 million Chinese aged 95 or older. Languages: - Standard Chinese or Mandarin (Putonghua, based on the Beijing dialect) is the official spoken language. Local dialects include: Yue (Cantonese), Wu (Shanghaniese), Minbei (Fuzhou), Minnan (Hokkien-Taiwanese), Xiang, Gan, Hakka Economics / Politics The Peoples Republic of China is still a Communist state, but communism comes with a small “c” these days. According to the China Brand Strategy Association, about 175 million Chinese people, 13% of the population, can now afford high-end luxury goods. By 2010, that number is estimated to reach 250 million, based on a 20% year-on-year growth rate expected for the coming five years. This ties in with the World Tourism Organisation forecast that outbound travel will grow as wealth increases, possibly reaching 100 million outbound visits by 2020. Figures from the IMF reveal that Chinese GPD has increased by more than 7% per annum each year since 1991, and by 2006 will account for 14% of global GDP measured in terms of purchasing power parity (PPP) – this adjusts the figure to take account of different costs and prices from one country to another. Per capita GDP is expected to be around $6,700 in PPP terms in 2006, however in absolute terms this equates to $1,650. China is now a member of the World Trade Organisation and further economic liberalisation is expected in the coming years, but the Chinese authorities have stated that they want the benefits of further reform to be targeted at the rural poor. Economics / Politics continued Global Insight estimate that on current growth projections China will be the world’s largest single economy by 2050. China is already the world’s largest consumer of grain, meat, coal and steel. In the near-term, the IMF forecast that in 2006 China’s economy will expand by 8.2% and inflation will remain relatively subdued at 3.8%. China now allows the Yuan to float within a limited range against a basket of currencies, rather than having a fixed peg against the US$. However, there is still considerable pressure on China to allow a further appreciation in the value of the Yuan. As at October 2005 there were 14.2 Yuan to the Pound. China has, at best, cool relations with Japan, despite growing trade between the two nations. The legal status of Taiwan is a further, as yet unresolved, political difficulty. Holidays / Annual Leave The peak times to travel are during the three golden weeks: Lunar New Year (late January or early February), Labour Day (1st May) and National Day (1st October). General Emerging Consumer Trends The Dragon is awake The attitudinal prerequisites for a travel boom in China seem to be firmly in place – and recent qualitative research amongst consumers from this new, quietly confident middle class confirms it. They are very proud of China’s progress and prosperity, believe their own PR (the fastest train in the world, an F1 race track) and are seeing tourists coming to their own country to admire it. Now it’s their turn. Curiosity, money and leisure time, a lifting of the exit barriers and more personal and national confidence are all contributing as catalysts for international travel. As overseas travel is also seen as a “badge of sophistication”, it is anticipated that status anxiety will further push the travel bug to more and more Chinese. Will China demonstrate a quicker progression through travel styles? Some have commented that although China is looking similar to Japan and South Korea in its early stages – i.e. heavy emphasis on group travel and reliance on the travel trade, it may actually develop more quickly as a market for travel as it has done in so many other areas of development. Some of the key developments are: Short Haul to Long Haul 1st time traveller to repeat visitor Group tour to DIY to independent travel Golden Weeks to off-peak / individual Trophy tourism to experiential tourism Only time will tell, and a lot will depend on the levels of restrictions capping the development of these trends. Currently ADS visas are only permissible for group tours of 5 or more people – groups, which are highly bound to rules, and regulations that inhibit the development of independence in travel. Little Emperors China’s “one child” policy has led to the term “little emperor” to describe the often spoiled and indulged consequences of a situation where family life revolves around the needs and future ambition for the single youngster. The majority of “little emperors” are boys. It is not hard to imagine how this need to pamper, educate and expand the mind of the cherished sole future generation could cross over into international travel as a key means of development.
3) Access Overview Political Situation Chinese tourists are officially allowed to travel to countries that have been granted Approved Destination Status (ADS). Britain was granted ADS on 21st of January 2005. It was implemented with effect from 1st of July 2005 at which time Chinese nationals were first allowed to enter Britain for group leisure travel (minimum group size of 5), rather than simply for visiting friends/relatives or studying and business. Passport and Visa Issues Chinese visitors must apply for a 6-month multiple entry visa. The UK visa can be difficult to get, expensive with a high refusal rate and long decision time. Obtaining a visa is the single biggest deterrent to UK tourism promotion in China due to complex procedures, extra time, risk and cost. Recent qualitative research (September 2005) in China amongst consumers, trade, government and airlines confirms this hypothesis and indicates that ACCESSIBILITY rather than COST of visa is the key problem. For consumers, a rejected visa application can be worse than having not applied in the first place as successful stamps in the passport are a door to further international travel. As a consequence, perceived “easier” visas may be sought first (e.g. Australia, South East Asia) before trading up to Schengen, then UK or USA. For trade, approval is the number one problem and the need for a separate UK visa seriously undermines the country’s attractiveness. Narrow travel windows (Golden Weeks) plus length of time to approve a Schengen visa can be erratic. The addition of a UK visa can add 1-2 weeks to planning – and with demand going strong for European tours regardless of country inclusions, the temptation is to take the path of least resistance. The key issues are: UK is not a Schengen country. A separate visa to enter Britain is required. This involves extra effort, time and cost - a significant competitive disadvantage for Britain. The UK visa is the most expensive visa in Europe. The new ADS visa, single or dual entry valid for one month costs £51. Applicants have to pay an extra £14 as a processing fee charged by the Visa Application Centre. In comparison, a tourist visa to the 15 Schengen countries costs less than £30. The only advantage is that the visa application is now available in 12 cities as opposed to the 4 covered by the FCO. There is no evidence that this will make obtaining a UK tourist visa easier or quicker. This is mainly due to communication problems between UK visa service, VFS and travel agents created by the new system. Schengen countries, especially Germany, Italy, Netherlands and France, are reviewing their ADS policy because of the increasing number of abuses and absconders. Many previously accredited Chinese travel agents are being suspended by the Schengen countries. The UK visa service in China follows suit even though we are not part of the Schengen agreement. In some markets, one of which is China, the FCO has outsourced the visa process to commercial companies. Whilst the obvious advantage of this is that visas can be applied for in a wider range of cities, there is nonetheless a more negative aspect. Main Gateways Servicing China Gateways / Access to Britain In 2004 (IPS), 87% of Chinese visitors travelled to UK by air and a further 13% via the Channel Tunnel or Sea (in all likelihood as part of a wider European tour). All flights between China and UK fly into London Heathrow. Air China: Beijing-London Guangzhou-London British Airways: Shanghai-London Beijing-London Virgin Atlantic Airways: Shanghai-London China Eastern: LHR: Flights from Beijing and Shanghai: British Airways Shanghai: 5 flights per week Beijing: 6 flights per week Virgin Atlantic Shanghai: 5 flights per week China Eastern Airlines Shanghai: 4 flights per week Air China Beijing: 6 flights per week Shanghai-London Also checked through connections from Chengdu, Shenyang, Shenzhen and Harbin via Shanghai Alternative carriers offer indirect services such as Cathay Pacific via Hong Kong. CHINA