By Blake Ng — 29 Jul 2016
There are several major Online Travel Agents (OTAs) who can help you distribute your products worldwide such as Viator, Expedia and GetYourGuide, but China is such a tricky market that specialized knowledge, expertise and experience is needed.
Hence, this informative webinar will serve as your opportunity to learn how to prepare tours and activities for the Chinese market, from product conception, through to online distribution, all the way to operation.
Given the enormous population of China, it is a huge and very lucrative market. However, it can be a very tricky market to sell to.
The foremost thing to note is that Chinese buyers are very smart buyers – they do a lot of work and a lot of research before they make the purchase. Because of this, sales channels for the Chinese market have higher requirements for content and information about products.
The important numbers in terms of the Chinese Outbound market are these: it has been consistently growing at over 10% per year, and in 2015, there were 120 million departures from China, representing $215 billion in sales on outbound travel.
Having quoted those statistics, it is worth mentioning that approximately half of these departures are travelers visiting places like Hong Kong, Macau and Taiwan. As such, tour and activity operators in other markets should not expect to immediately get huge volumes of Chinese tourists based purely on these numbers.
The Chinese outbound market is a market to invest in for activity operators in the rest of the world, not an overnight success story. For example, the way the market currently stands, it represents only 2% of inbound travelers into France, 1% for Italy and 0.5% for Spain – three of the world’s largest tourist destinations. However, for these destinations, the growth rate of the market averages 20-30% per year, so they are markets for the future.
For more comprehensive data, check out COTRI – the China Outbound Tourism Research Institute.
The surge in Chinese outbound travel is very much a generational phenomenon. 56% of Chinese outbound travelers are born in the 1980s and another 11% in the 1990s. This trend is largely because of the changing perception of travel and leisure activities in China – no longer are they exclusively for the privileged elite, but now they are for everyone.
Within the Chinese outbound market, the biggest group that travels is the middle class – mostly families. This market represents around 250 – 300 million people. Traditionally, the family consisted of two parents and one child, but due to recent changes in regulations, second children are becoming more and more common.
Among those who are not travelling with children, they tend to travel in groups of two or four – with friends or with a partner/spouse.
Aside from breaking down the Chinese outbound market on the basis of who they are, you can also look at it from the perspective of how they travel. Broadly speaking, there are two categories: group travelers and Free Independent Travelers (FIT).
The share of group travelers is still considerably larger than that of the FIT. This is because for most of the Chinese outbound market, it is the first time they have traveled outside of China, and as a result of this they are worried about cultural differences and the language barrier. It is also much easier for the group traveler to organize the process of getting a visa – the agency tends to organize this part. Group travelers are also very price-driven and seek out package deals as much as they can.
The FIT tends to be from a younger generation. They are the more adventurous type of traveler who has likely already traveled before in a group but are seeking greater levels of freedom and choice. This type of traveler tends to be able to speak at least a basic level of English and they are willing to put more money into their travel choices. Companies that specialize in travel options for the Chinese outbound market are paying attention to this trend in the products and options that they offer to this market.
The trends show that FIT travel from China is actually proportionally very high within Asia. This is because the supply chain in places like Japan, Korea and Southeast Asia is much better developed to receive the Chinese traveler – they have Chinese-language capabilities and they provide the higher levels of information preferred by the Chinese market.
This is different in Europe and the Americas, however. These destinations do not have quite the same level of development in the supply chain to receive the Chinese FIT. In these markets, group travel still takes the lion’s share of the market.
It is well-known that the Chinese are big spenders. As we stated earlier, the Chinese outbound market spent a total of $215 billion on travel in 2015. 60% of this money went towards shopping. The Chinese outbound traveler loves shopping. However, they are starting more and more to put their money towards tours and activities. This is as yet only an emerging trend, but at more and more studies are conducted, the statistics will become clearer.
As important as knowing who the Chinese outbound market is and how they spend is knowing how they search – what they want to know, when they search for it, how they search for it and what their main concerns are.
In China, the traditional travel agent is still a very important source of information. A lot of events, activities and destinations are still promoted through tourism boards. For example, the Australian tourism board would still have representatives who meet directly with clients to promote their destination.
A smaller proportion of Chinese travelers use the same foreign Online Travel Agents (OTAs) and user-generated content websites such as TripAdvisor that Western travelers tend to use – about 25% of Chinese travelers use these services. The reason that Chinese travelers use these websites is because, for the moment, they have more content than Chinese OTAs because they have been in the industry for longer and they have more experience.
If the Chinese travelers visit the foreign websites, it is because they are looking for information that they either could not find, or assumed they would not be able to find, on Chinese OTAs. If all the information is available on Chinese OTAs, they tend to stick to those websites.
This sort of information is powerful to people from any culture, but especially so in China. Numbers-wise, it makes up a smaller proportion of the information search among the Chinese market, but it has a very strong impact on where they choose to go and what they choose to do. This makes reviews on websites such as TripAdvisor very important.
Quite possibly the most pertinent question for any tourist market. Of course, as is the case with any tourist market, every individual looks for different things in a holiday. However, generally speaking, the Chinese market is particularly interested in outdoor activities and cultural activities.
The Chinese market is particularly interested in these activities because the bulk of the Chinese outbound market comes from the big cities. This means that they are looking to reconnect with nature, enjoy the fresh air and experience a sort of environment they either cannot enjoy at home, or need to drive a long way to experience.
The other main thing the Chinese market wants to experience when they travel is the architecture, history and the food of the destination. When they are researching destinations on this basis, they tend towards destinations and activities they already know about or have already heard about. For example, if they are researching a trip to Europe, they will likely look at visiting Paris and going up the Eiffel Tower because it is a destination and an activity they have already heard about. This makes it important to know which destinations, activities and cultural aspects of your country such as historical places and food are already known in China because these are the experiences they will look for.
A searching characteristic of the Chinese outbound traveler is that they actually dedicate a great deal of time and effort to evaluating the risk that they will have a bad experience.
The main concern of the Chinese tourist is the language barrier. If the activities in a certain destination are set up to receive Chinese tourists in that the staff can speak the language, it is very important to communicate to them that it will be easy for them to communicate. The cultural difference and the potential for culture clash is also a big concern for Chinese tourists. This makes it important that you reassure them that you will make them feel comfortable in this new environment while they are learning about the new culture.
Safety is another big concern of the Chinese market, even though it is not a unique concern to this market. This concern is particular relevant when they are looking into any activity related to outdoor or adventuring. This makes it important to highlight safety measures that have been put in place, as well as the expertise of you as the operator and your staff.
It is well-known that the Chinese travellers are very price sensitive, but if you can focus on the language barrier, the cultural difference, and the safety, which are more important to them, then they will see a genuine added value to your product and will be willing to pay more for it.
The most common way to reach Chinese consumers online is to partner with a specialized Chinese OTA. Alternatively, larger operators might have a dedicated China team that works directly with AliTrip or C-Trip. There tends to be quite a lot of work to build and maintain these channels, however, Chinese consumers generally book through Chinese platforms, so it is often necessary work.
The main thing to bear in mind when building your brand particularly for the Chinese market is to communicate the points we made above – the assurances about the language and cultural barriers and the safety. This makes them feel comfortable that you are familiar with their requirements.
The other aspect of branding that is particularly relevant to the Chinese market is that you built it across multiple channels. As we said before, Chinese consumers tend to do a great deal of research before buying, which means that when they do eventually actually make the purchase, their mind is already made up.
Some of the channels to look into are:
WeChat is possibly the strongest communication tool in China. It has around 650 million active users and can be used in many different ways. It also integrates with things such as Apple Pay, so products can be sold directly through this platform.
There are about 10 million official company accounts on WeChat as well. These are accounts that brands can use to communicate directly with consumers. Similar to company Facebook pages, only Facebook is blocked in China. These accounts are fully integrated with WeChat so they fit seamlessly into the buying and branding process. If you are to set up a WeChat account, obviously the content needs to be localized to China, but the possibilities are quite lucrative.
In addition to WeChat official accounts, there are WeChat moments. This is the equivalent of the Facebook Newsfeed, where friends, family and accounts post their pictures, articles or other content. This is where you would post the sort of content you would post to Facebook.
Similarly, there are WeChat groups. These are similar to WhatsApp groups, where companies set up groups for certain destinations and customers are able to join the group and have a general discussion about it. Essentially, this can be used as a forum for customer service
Weibo is the second main social media tool in China. For a long time it was the largest, but it has taken second place to WeChat these days. It is useful in that it is easier to manage than WeChat, and if people search and find you on Weibo, it is a good indicator that you are somewhat established in China already.
The most prominent of the User-Generated Content websites is TripAdvisor. There are two main ones in China called Qyer and Mafengwo (heads up – they are both in Chinese!). Mafengwo tends to have a bigger following, but Qyer is more focused on outbound travel. For the FIT market, these websites tend to be the bible. They are the first website that people visit when looking into a particular location or activity. A trend worth being aware of is that Chinese consumers tend to trust reviews on Chinese platform more than on a foreign platform, such as TripAdvisor.
Baidu is like Chinese Google. The main thing to be aware of when working with Baidu is that it is a much less sophisticated verison of Google.When working with Google, you are more likely to employ a Search Engine Optimization (SEO) strategy as opposed to a pay-per-click Search Engine Marketing (SEM) strategy. However, on Baidu, SEO does not work as well as SEM. Quite simply, whoever pays the most money for ad placements will rank the highest. OTAs tend to spend the most money to secure these places, so if you are listed with them they will spend it on your behalf.
On this side of the distribution landscape there are three main players: Alitrip, Ctrip and Dianping. These companies are the real volume drivers, but they can be tricky because they don’t do any localization for their content – it has to be all managed directly in Chinese.
The degree of price competition on these websites is also extremely high and they require a great deal of maintenance. This maintenance work is what Chinese OTAs do if your product is listed with them.
Alitrip is owned by Alibaba, one of the biggest e-commerce platforms in China. They are essentially the Chinese version of Amazon, plus the Chinese equivalent of PayPal rolled into one. They also have a travel company that they own – Alitrip. Anyone can upload a product to this platform, but to do so you need to include the product name, the price and a description.
If Alibaba is Chinese Amazon, Ctrip is Chinese Expedia. Ctrip tends to drive traffic for products that are further afield from China – Europe and the Americas. This is because of the already mentioned behaviour of Chinese buyers who want a lot more information about these products. Ctrip is recognized as the strongest travel brand in China and people trust the information they find on it, so it is more effective in selling these products that require more information.
Dianping is the third big player in this market. They are the equivalent of TripAdvisor in China, even though they are currently somewhat unknown. They are more focused at the moment on food and beverage-related content, but they also have a great deal of content focusing on points of interest. While their volume is more limited at the moment, consider Dianping an investment for the future.
It is not only important to be able to sell online, but to focus on mobile. The reason for this is because mobile usage in China is extremely high. In 2015, 50% of the population used mobile phones. By 2018, that percentage will reach 75%. That means 600 million users.
Payments through mobile payment solutions such as WeChat pay are very common, and word-of-mouth is also transmitted through this platform. People share reviews and opinions on WeChat very quickly and very often.
As discussed earlier, WeChat is a good platform to sell your company’s products because it allows people to search and buy very quickly. If a customer happens across a product and has an impulse to buy it, they can do so very quickly.
The implication of this for you as the seller is that it is important to be price-competitive. Products and prices can be compared very quickly and very easily so it is important to make sure you can compete. Chinese buyers do their research and compare prices for almost everything they buy, so you can rest assured that they will be checking. A good way to be price competitive in China is to create an all-inclusive product – start with a basic, accessible product and then let the customer add options. Anything they add they would see as added value, which makes the price you charge look more worthwhile.
During the activity, it helps to let them stay connected. Chinese people use their phones all the time and they like to be able to share their experiences pretty much instantly. Things like WiFi or internet points available during the activity would help them to do this. This is important because the way that brands rise and fall in China is essentially through word-of-mouth. If your Chinese customers have positive things to say about your product, they become your most effective marketing team.
Pictures are important because they are easy for customers to share, which Chinese customers love to do. They are also important because it lets people visualize how they are going to be during their experience. This goes a long way in the research that the Chinese market likes to do before making a purchase, as the first impression that they receive of your product is from the pictures.
It is also important to allow them the time to take the pictures they want to take during your activity, not just because they can share those pictures with their friends and family at home. It is very much the case that when Chinese travelers visit a destination, they are usually visiting it for the first time. This means that they are looking for the ‘expected’ experience in that destination – the famous cliché. This means that they will want to take the photo that everyone takes and have the experience that everyone has, so while that may seem boring to you, it’s not to them.
As we have said, the Chinese market is very receptive to technology. This means that using technology in things like the booking experience as well as on-site if possible, goes over very well. If it can help save them time, they will use it.
The Chinese market is still learning how to be outbound travelers. This means that they tend to be quite high-maintenance customers. They want to learn about their destination and the local culture, but don’t expect them to arrive with much, if any, background knowledge about it. It is important to re-clarify things sometimes, especially particularly important instructions. It goes a long way with them if you demonstrate that you are trying to make them feel comfortable, especially given the prevalent issue of the language barrier.
Add things like presents and surprises. This works very well for branding because it is something they can easily take and share a picture of during their experience.
As we have mentioned several times, one of the main concerns that the Chinese market has is communication. If you can provide Chinese service at an affordable price, that will make them feel much more comfortable with you. Chinese service means Chinese language capabilities (either you or an interpreter), as well as catering for what they want to do to demonstrate that you are helping them to feel comfortable.
It is worth remembering that when you enter the Chinese market, don’t expect to get large volumes of bookings straight away. In fact, don’t be surprised if you have to operate without a profit or even at a loss initially. Nearly every company that enters the Chinese market has to go through this.
The last part of providing Chinese service is to be flexible. If you are running a day tour, in China it would be your responsibility as the guide to call the client when you get to the hotel to pick them up. This is different to a lot of Western places where, if the client is not in the right place at the right time, the bus will leave without them. For someone who is not used to working with China, this can be an issue because Chinese customers do not expect it to be this way and it can lead to complaints.
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