What the Chinese Acquisition of a Local Pub Tells Us About Chinese Investments in Tourism

A saga that began with Chinese President Xi Jinping having fish and chips and a glass of beer with then UK Prime Minister David Cameron led to exploding beer sales in China and a Chinese acquisition of an unpretentious local pub. How did we get here, and what does it tell us about Chinese tourism? It was in the fall of 2015, in pre-Brexit referendum Britain, that Xi made a state visit to the United Kingdom. The visit was hailed by both sides as a huge success, with red carpets rolled out, a meeting with Queen Elizabeth, and selfies with Manchester City soccer stars. The UK showed itself at its best for the visiting Chinese president, and Chinese media was pleased to report how well received its president was in the United Kingdom. To round it off, Cameron took Xi to a local pub, The Plough at Cadsden, where they had a local beer, Greene King, and enjoyed the—typically English—fish and chips. Since then, the Brexit referendum happened, David Cameron was replaced by Theresa May, The Plough at Cadsden became a Chinese tourist attraction, and the Greene King beer that Cameron and Xi enjoyed has become a hot commodity in China—with sales up 1,600 percent. The latest twist to the story is the Chinese acquisition of The Plough at Cadsden, with state-backed SinoFortone Investment fully acquiring the humble pub for an undisclosed sum rumored to be in the region of £2 million (US$2.5 million). While easy to brush off as a curious acquisition by a Xi fan’s company, SinoFortone is a real player in the market, and has invested in UK resorts, biomass power stations, and was bidding to take over the Liverpool soccer club. In 2015 alone, SinoFortone invested £5.2 billion (US$6.5 billion) in UK projects, with some of the investments brokered during Xi’s 2015 state visit. While the pub acquisition certainly comes out as one of SinoFortone’s smaller overseas investments, it tells the story of a bigger trend: Chinese companies acquiring the ecosystem of global Chinese travel. The typical Chinese tourist visiting The Plough at Cadsden would buy their tickets through Ctrip, fly to the UK with a Chinese airline, hop on a chartered bus operated by a Chinese tour operator, and eventually reach the pub to have what is now called the Plough President’s IPA together with some fish and chips, before going to bed at a hotel that is increasingly likely to be Chinese-owned. If the trip included duty-free shopping at the airport or perhaps some luxury shopping at Harrods and Selfridges, these payments were likely processed by Chinese payment giants such as UnionPay or Alipay. After the Chinese acquisition of The Plough at Cadsden, it would almost seem as if there are few parts of the Chinese tourist experience in the United Kingdom left to acquire—and this is a country that “only” received 270,000 Chinese visitors in 2015. In Thailand, where 7.9 million Chinese visits were recorded in 2015, Chinese investments have been pouring in, and the allegedly illegal Chinese underground “ecosystem” that kept Chinese visitors on so-called zero-dollar tours from spending money at non-Chinese establishments prompted a government crackdown. While mass capital flight from China has become the target for Chinese government restrictions, overseas investments in organizations that serve Chinese tourists has shown no signs of slowing down. Even though such investments are definitely considered capital outflows, they will certainly help bring more of the US$215 billion that Chinese tourist spent abroad in 2015 back to Chinese companies. Chinese people might be venturing further abroad than ever before, but serious efforts are made to keep as much of the international travel revenue within Chinese companies as possible.

What the Chinese Acquisition of a Local Pub Tells Us About Chinese Investments in Tourism

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Published December 09, 2016

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What the Chinese Acquisition of a Local Pub Tells Us About Chinese Investments in Tourism