OAG - China Outbound: Are We Nearly There Yet?
January 2024
Our resident experts Deirdre Fulton and John Grant will be joined by Simon Westaway and Michael Jones this week to find out whether this will be the year in which we can really say China's outbound travel market returned.
Download the OAG presentation here:
View the OAG webinar recording here:
Read the related media article here:
Chinese Recovery Slow, but There’s Promise - by Bianca Capazorio for Daily Tourism Update (Southern & East African)
A year after reopening its borders following the pandemic, the predicted rapid recovery of the Chinese outbound market has yet to materialise. And while recovery has been slow, there have been key markets and segments showing promise.
Speaking during a webinar titled ‘China Outbound: Are We Nearly There Yet?’ hosted by travel data specialist OAG, Deirdre Fulton, Managing Partner at Midas Aviation, said Chinese international airline seat capacity for the first quarter of 2024 was expected to be 30% below that recorded in 2019.
“When the shock, but much longed-for announcement came that China was indeed reopening last year, I think those destinations right across the world that had previously welcomed great volumes of Chinese travellers hoped for a surge, but we didn’t see a surge. We saw a very gradual build-up of capacity and we are still waiting for that market to recover,” she said.
OAG Chief Data Analyst John Grant said it was “extremely optimistic to hope that everything will return to normal in three or four months”.
He said during China’s three year closure, supply chains had broken down, airlines reallocated capacity and China became a tough market for inbound airlines to service.
This has been further exacerbated by a slowing of the Chinese economy and increasing unemployment.
Michael Jones, Co-Founder of Create Consulting, a firm working in the Chinese travel market, said among the reasons that people couldn’t “jump immediately when the green light came” was that air capacity just wasn’t there. It was also very difficult for Chinese people to get visas to many destinations. Also many people’s passports had expired during the COVID-19 and they couldn’t renew them.
Fulton added that data showed that only about 10% of Chinese people have passports.
Jones said the return of Chinese tourists would depend on the markets. South East Asia and the Middle East could see recovery quicker than long-haul destinations such as Europe and the US, which would take two to three more years to reach pre-pandemic levels.
China is not among South Africa’s top ten source markets. South African Tourism data shows that the country received about 93 000 Chinese tourists in 2019, while data for the first 11 months of 2023 released by Tourism Minister Patricia de Lille in December, indicates that the country received just over 34 000 visitors from China.
Market is ‘lucrative’
The market is, however, lucrative. Prior to the pandemic, Chinese travellers were the highest spending globally, outspending other tourists by up to three times in certain markets.
Jones said one sector that still remained attractive was the pensioner market as they have the time, they have the money and they can travel.
He said GenZs and, to some extent, millennials had been affected by youth unemployment, but he was seeing trends starting to emerge of older people looking at more budget, nature-based activities. As an example, he said he had seen a tour group of Chinese travellers into their eighties booking cheaper, less luxurious safaris to Africa.
“If you are offering something more adventurous, a bit more nature based that can be for older clientele, I think you’re in a good place right now for the Chinese market.”
To tap into this market, Jones said some destinations were investing in TikTok-style videos for the Chinese social media platform, Douyin, which specifically targeted older travellers.
“Everyone is going to want Chinese tourists, but it’s down to that destination marketing, creating the right product at the right price point and positioning yourself,” said Grant.
Visa regimes, however, will be important, as China has put visa agreements and visa-free travel in place with a number of countries, making it easier for Chinese people to travel, and for tourists to enter China.
“You can’t afford, if you want your tourism sector to recover, to put barriers in the way of travel,” said Grant.
A small but bitter conflict has broken out on Xiaohongshu in the aftermath of the Rugby World Cup finals. “Congratulations to South Africa for getting Wayne Barnes to hand them the trophy,” writes Xiaohongshu user Yuanyuan, born in Hunan, New Zealand resident for 8 years. “I guess jealousy makes you nasty, buddy!” counters Feizhou Wo Zui Bai from Cape Town, South Africa. Another poster, whose username translates to “A Raging Kiwi”, writes that 29 October was “the most emo day” since they started watching rugby in 2014. Where recent Chinese public opinion on South Africa has often been tainted by news around corruption and crime, the South African brand scored a few points in China’s imagination over the weekend under Xiaohongshu’s rugby (橄榄球) tag, which has racked up 160 million views to date.
In China, rugby is still a niche sport, like most team sports excepting soccer in the country. The Chinese Rugby Football Association has around 76,000 registered players compared to South Africa’s 651,000. In terms of viewership, however, World Rugby data shows that China and the United States both take the top spot as countries with the most people (30 million each) who show strong interest in the game. This puts them well ahead of highly-engaged viewerships in countries like India (25 million) and Japan (15 million). China’s long and abiding enthusiasm around the Olympics has also plugged the country’s viewers into sevens rugby, with a reported 44 million Chinese viewers watching sevens at the Rio Olympics.
The Chinese diaspora in rugby-dominant nations, numbering close to 3 million people between Australia, France, New Zealand, South Africa, the UK and Italy, are another major constituent of Chinese rugby interest. Particularly more recent, wealthier migrants who relocated from Mainland China under skilled visa or investment programmes are likely the demographic where South Africa has scored the most branding points. Wealthier immigrants, as research on the topic has shown, cite securing a better education for their children as one of their main motivations to emigrate, alongside considerations like personal wealth security. Their children’s integration into their country of choice, school sports and cultural participation arguably sits top-of-mind for these parents. At least in Australia and New Zealand, this ties these new citizens in closely with a budding rugby awareness.
The Chinese sport market is a dynamic space for national brands to promote unique experiences in the world’s largest tourism market. As Eileen Gu’s freestyle skiing success has had a knock-on effect on Chinese domestic interest in snowsports and related destinations, similar dynamics are playing out with surfing, scuba diving, hiking and other adventure sports in China. Looking at Xiaohongshu’s platform analytics, the 冲浪 (surfing) tag has gauged over 926 million views to date, with China’s southern island province of Hainan dominating the content feed alongside destinations such as Tahiti and Hawaii. The snowsports (滑雪) tag has racked up over 1.7 billion views to date, with British Columbia’s Whistler ranked first among related tags. Also well over the 1 billion views mark, diving (潜水) gives priority to Bali, the shores of Thailand and the Maldives.
Key to success in China outbound tourism marketing is taking effective, niche approaches to reaching wealthy, internationally mobile demographics. Four per cent of Xiaohongshu users earn in excess of RMB 20,000 a month (US$2,730), which puts most Chinese diaspora users squarely in the platform's top income bracket, together with their far greater awareness of Rugby World Cup victories than the average Mainland Chinese consumer. Destinations such as South Africa, which offer world-class adventure experiences in surfing, hiking and diving, can capitalise off growing awareness and interest in sports and adventure among China’s wealthier consumers with Xiaohongshu strategy that places these experiences front and centre. With appetites for long-haul adventure tourism returning, and with sports and fitness recapturing popular imaginations in China, platforms like Xiaohongshu will offer destinations across Africa and Latin America an invaluable channel to build China market share.
A highlight of feedback from leading China outbound tour operators (wholesale, retail and tailor made) and online travel agencies (OTA) following meetings with their leadership in Shanghai, October 2023.
Safety + Ease of Visa = Chinese Tourists
While this has always been the basic formula for Chinese outbound tourism, recent global volatility have strengthened this formula. Leading TO’s and OTA’s point to the fact that currently the most popular destinations for Chinese tourists this season include 1) South East Asia; 2) United Arab Emirates; and, 3) New Zealand.
Despite Russia being the biggest country on earth (double the size of the USA or China, 70 times the size of the UK) and despite having a “no limits” relationship with China, because of the war with Ukraine (limited to the far South Western border area) Chinese tourists are simply not traveling to Russia for leisure purposes due to safety concerns.
The war in Israel has also obviously put a halt to all Chinese outbound tourism to their destination. Growing in popularity destination Iran has also been affected by the war in Israel due to the geopolitical connection in the conflict. Egypt, one of the biggest winners of Chinese tourism since the pandemic ended has also been affected by the war, and even super popular destination UAE is being negatively impacted by the war, albeit at lower levels.
European destinations have not been selling well at all due to the difficulty of obtaining Schengen Visa’s. When Schengen Visa’s become easier to obtain, the Chinese tourists will be back.
Africa Rising
East African destinations Kenya and Tanzania are very popular for Chinese tourism at the moment. Pre-pandemic times Africa was viewed as “expensive” but since incredible inflation across the globe African products are now viewed as reasonably priced. But that’s not all, with super convenient visa arrangements for Chinese tourists Kenya and Tanzania are raking in the Chinese tourist dollars. Compared with South Africa where visa applications remain cumbersome, timely, or simply impossible at times, despite having world class tourism products, it is losing sorely out. Botswana and Namibia visa's are easier to obtain, while Zimbabwe and Zambia have the easiest with visa on arrival / visa free.
South America on Track
Chinese tourism to South America is recovering and on track to normalisation. Chinese leisure travelers are already the leading source of Asian tourists (including India, Japan, Korea etc) to several South American destinations and the trend is clear. The most popular trips to South America currently are four (4) country packages ranging from 16-25 days including destinations Peru, Brazil, Chile and Argentina (in January - February period Bolivia is sometimes added on). The greatest challenge remains air connectivity and air tickets prices, pre-pandemic Chinese TO’s would rely on cheaper US airlines, now all using UAE based airlines. FIT independent Chinese tourism travel to South America is negligible at the moment.
Polar Opposites
Chinese outbound tourism to Antartica remains popular, and will increase with popularity into 2024. Expeditions to the North Pole are also growing in popularity with one TO highlighting a 60%/40% split between Antartica and North Pole sales. The Chinese tourists age profiles range between 50-75 years old.
Cool Grandma & Grandpa
With Chinese pensioners making up the vast majority of long haul Chinese outbound tourists (especially Africa & South America) it remains important to know how leading TO’s target this segment. Well, grandma and grandpa, not to different from their grandchildren, love short videos as well. Douyin (China’s Tik-Tok) is the marketing platform of choice. Naturally Wechat and Xiaohongshu also remain important.
Middle East Tourism Market
China Outbound Group Tour Operator Survey
May 2023
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The number of Middle Eastern destinations permitted to receive Chinese tourist groups remains limited until the 3rd batch of countries is announced
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UAE tops Middles Eastern Chinese tourism sales, followed by Egypt and Iran Chinese tourist groups, which are dominated by retired consumers, and especially by women
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Price competitiveness remains key for group travel product sales
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Tour operator sales staff work under enormous pressure resulting in aggressive sales tactics and strategies
Create Consulting & Trove Tourism Development Advisors Release New Report for Destinations on Chinese Digital Nomads
Trove Tourism Development Advisors and Create Consulting have announced the release of their new report, "CHINA’S DIGITAL NOMADS: Understanding an emerging market of high-value global travelers” to help destinations target and attract Chinese digital nomads.
Trove Tourism Development Advisors (www.trovetourism.com) and Create Consulting (https://www.cconsulting.com.cn/) have announced the release of their new report, "CHINA’S DIGITAL NOMADS: Understanding an emerging market of high-value global travelers." The report highlights the growing trend of digital nomadism among highly-skilled, well-compensated Chinese workers, who are seeking freedom and flexibility in their careers, and also includes tangible steps for how destinations (DMOs, tourism authorities, and travel companies) can attract these individuals.
With over 98.8 million Chinese citizens holding valid passports and around 50 million highly-skilled workers, the potential market for digital nomads rivals the populations of countries like Spain and Germany. The report outlines the most popular destinations for pursuing a digital nomad lifestyle and the deciding factors, such as safety, interesting culture, affordability, and convenient living.
The report provides a comprehensive overview of the development of digital nomadism in China, including a preliminary description of the scale of the Chinese digital nomad market and the drivers of the movement. It also outlines the top platforms that digital nomads in China interact with and provides actionable strategy points for destinations to engage with and attract Chinese digital nomads.
This report is a valuable resource for destinations looking to capitalize on the growing trend of digital nomadism in China, providing insights into the desires and preferences of Chinese digital nomads, and actionable strategies for attracting them.