For Stakeholders, China Presence is Crucial, Revenue is Not

Editor’s note : Luxury tourism stakeholders are eager to get into the China market. However, this not always easy – partly due to language barriers, culture shock, and different business environments. Let's see what Jing Travel has to say. Global tourism stakeholders are desperate to get into the China market, and for good reason. In 2018, Chinese outbound tourism is estimated to grow by 10 percent to reach a total of 86 million outbound tourists. Efforts to tap into this new revenue by Western firms have met with mixed results, with stumbles in the China market and substantial capital investments with little to show for it. Fortunately for stakeholders, low revenue in the China market proper isn’t as important as having a visible China presence. Success in the China market can be incredibly elusive for a host of reasons, whether it be a fundamental misunderstanding of Chinese consumer culture or the support different Chinese state bodies give to domestic firms. China simply isn’t always a friendly place for foreign operations. That doesn’t mean that avoiding a direct China presence is wise or that loss-making operations are necessarily a bust. More and more Chinese going abroad and spending more and more, makes foreign prospects for the China market even stronger. There are plenty of foreign business-friendly environments surrounding China and in Europe and North America that are attracting droves of Chinese arrivals. According to the World Bank, China is the world’s 78th most business-friendly country in terms of regulations and restrictions. In contrast, New Zealand, Singapore, South Korea, Hong Kong, Australia, and Thailand are ranked 1st, 2nd, 4th, 5th, 14th, and 26th respectively. All of these nations are already major Chinese tourist destinations or quickly rising. New Zealand and Australia, in particular, are proving fast-rising Chinese tourism powerhouses and Thailand is already the most popular overseas destination for Chinese travelers, not including Hong Kong and Macau of course. But setting up services or operations in these markets isn’t enough to attract these tourists and their spending. Even if you provide the best service possible at reasonable prices, if Chinese consumers haven’t heard of your offerings it won’t matter at all. This is why a presence in the China market is so crucial. Marketing on WeChat or providing Chinese language materials is naturally important. But if this isn’t reinforced in a physical space that reinforces marketing in digital spaces, the impact of marketing and subsequent revenue will ultimately be limited. It’s for this reason that Airbnb considers China so crucial to its long-term success globally. A presence in the China market is great for revenue, but capturing Chinese tourist dollars in Taiwan, Japan, or South Korea is just as, if not more, important. Sebastien Bazin, Chariman and CEO of AccorHotels stated this bluntly, “I have to accept not being the leader in China, the biggest hospitality market in the world. But I just cannot exit China. I have to remain because I need Chinese travelers to visualize Accor’s brands in China. If they don’t know Ibis, Pullman, Mercure hotels, they will not go to these brands outside of China.”

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For Stakeholders, China Presence is Crucial, Revenue is Not