BC Business
With a great leap forward, In the next 10 years more than 400 million Chinese tourists will travel abroad, many for the first time. If Canada and B.C. tourism can attract even a fraction of them, we’ll double our number of overseas visitors.
The 2010 Olympics will be great for tourism. But China, that’s the real deal. When Paul Martin stepped up to the podium in Beijing earlier this year and announced Canada had won the right to woo a wave of Chinese tourists, everything changed for B.C.’s tourism industry. Maybe we’re lagging a bit. It was tough to sink money and energy into the Chinese market when nothing could happen until the two governments reached a deal. Martin’s announcement – after six years of creeping progress – caught much of the industry a little flat-footed. Now the leaders are doing the math and running hard, making up for lost time. We can learn from them. The trickle of tourists has already begun: Last year, 80,000 Chinese travellers visited B.C (compared with 400,000 from Europe). But that’s nothing compared to the coming tsunami. Tourists from China’s emerging middle class, with their cutting-edge cameras and slightly wary look at the strange and expensive world of North America, could be the perfect tourism storm. A study last year put the Chinese middle class at 19 per cent of the population, some 250 million people. By 2020, that number is expected to more than double. Remember, it was that not-insignificant wave of Japanese travellers who helped fuel a B.C. tourism boom in the 1990s. China has 10 times the population of Japan. A decade ago, 1.3 million Chinese went abroad on vacations. This year, it will be more than 20 million. By 2020, more than 110 million Chinese will be setting off to see the world each year. If B.C. gets barely one per cent of that market (and market research in 2002 found 1.9 million newly affluent Chinese interested in visiting Canada – a potential $1-billion annual market), we will double our number of overseas visitors. The prospective feast has the industry licking its chops. Money has been only part of the problem in getting China travelling. For all the lurching toward modernization, China is still a controlled society. Citizens can only travel to countries the government approves of, ostensibly to prevent Chinese travellers from being taken advantage of.
But it’s also a handy way to ensure those citizens return home when the holiday ends. If a country wins that approval and stays on good terms with the Chinese government, the result is Approved Destination Status. It’s a big deal. Chinese travellers face a long road littered with mandatory forms and routine refusals to visit non-ADS countries. And group tours – the foundation of any country’s burgeoning outbound tourism industry – simply don’t happen without ADS. After too many years on the wrong side of that designation, Canada is almost in the club. Martin used his trip to Beijing this year to announce that Canada would be winning the coveted ADS. Hurdles remain (see The Case Against Canada, page 61), but the Canadian travel industry will soon have what it has lusted after for almost a decade. Canadian Tourism Commission officials hope the agreements will all be in place in 2005, with the first wave of tourists arriving early in 2006.
Now the race is on to figure out who these tourists are, what they want and how we’re going to convince them to pick Canada over Australia or Thailand, or the 27 European countries given ADS last fall. Picture you and your family living in downtown Guangzhou, a city of eight million people, and you’re planning a dream vacation that wasn’t even imaginable five years earlier. The world is yours to choose from (well, the 30 or so countries OK’d for Chinese travel, at any rate). What’s it going to take to get you to come to B.C.? “What we don’t know is tremendous at the moment,” acknowledges Cindy Gobin, tourism BC’s market development manager for Asia. It’s not exactly that China has been ignored by the Canadian industry. But when it was time to carve up research and market development budgets, China – a market of tomorrow, still bound in travel restrictions – had a hard time competing with the need to do more in the markets of the moment. The prospect of sinking money into research that might be outdated within a year in fast-changing China was also daunting. Trying to figure out what’s happening in the country is like watching a videotape on fast forward. “It’s just changing so fast,” says Gobin. “The country is huge, and the cities are strikingly different. We’re finding what’s on our plate are five different Japans.” Most tourists – at least for the next decade – are going to come from Beijing, Shanghai and Guangzhou, large cities with an affluent population already exposed to business travel. That is part of the problem for Canadian operators. Most of us couldn’t find Guangzhou on a map, but the city is almost four times the size of Greater Vancouver and has an exploding economy. Unless we figure out what those people want – and how to reach them – it’s a blown opportunity. Everybody is madly doing their homework, but we’re still working at an elementary level when it comes to knowing China. The Canadian Tourism Commission opened a Beijing office earlier this year; Tourism BC hopes to open an office in Shanghai within the next 18 months. Tourism Vancouver has sponsored two seminars looking at China’s potential. Right now, everyone is searching for the keys to unlock the market. How are we perceived by the Chinese? In unusual ways, it turns out. Who, for instance, would guess that a big winner in a Chinese tourism boom will likely be the Ontario town of Gravenhurst, in cottage country north of Toronto. It’s not the lakes or the cottages that are calling the Chinese, but history. Gravenhurst is the birthplace of Norman Bethune, a national hero in China. Bethune’s work as a medical doctor with Chinese forces in the late 1930s – and his death in the field – prompted an admiring essay by Mao and led to ongoing icon status. Bethune’s legacy is an unexpected benefit for the Canadian tourism industry overall. “We’re seen as a friendship country,” says Gobin. Canada offered China early diplomatic recognition, and Pierre Trudeau was barely outpaced by Richard Nixon as the first Western head of state to visit Beijing. Chinese travellers sometimes have relatives here, or at least know that Vancouver boasts a vibrant Chinese community. That’s an assurance that they can get a decent meal, much as an American tourist might be grateful to find a good cheeseburger in Singapore.
Canadians’ reputation for being nice at least lets us get started with the new breed of traveller from China. But it will take more than that to expand tourism beyond Bethune’s hometown, Niagara Falls and Ottawa, which the Chinese deem to be a place of interest simply because it’s a national capital. The kind of things we tend to boast about in the West have yet to make much of a dent on the Chinese collective psyche. “They don’t have a real clear picture of the Rocky Mountains,” notes Gobin. [pagebreak] And the usual outdoor pursuits we pitch to tourists – kayaking, skiing and the like – are seen as just a little weird by the Chinese. Their interests may change with travel and time, but in China the tradition is not wilderness adventure but appreciating landscapes in more manicured and stylized forms. Like Butchart Gardens. “Apart from the fact that they thing [Canada’s] a big iceberg, they know two things,” says UVic business professor Ralph Huenemann. “They know Niagara Falls and they know Butchart Gardens. It’s entirely word of mouth.” Huenemann has close academic and professional ties to China and is a former consultant on major infrastructure projects there. He regularly travels to China and hosts Chinese business and academic visitors while they’re in Canada. “A Chinese tourist is kind of a pioneer – they must have a capacity to break out of their comfort zone,” says Huenemann. “Maybe they’re only going to make two trips abroad in their lifetime. We need to say, ‘Here’s Canada – here’s a place where you could go and some of the interesting reasons why you might. Here’s a specific thing in Canada that you’ll really enjoy doing.’ ” For Chinese travellers cautiously stepping out of that comfort zone, Canada – especially Vancouver – can offer its strong historical ties to China and provide both a Western experience and familiar restaurant food.
But it will take some work to find the real competitive niche for Canada. If the Chinese want shopping, there’s Hong Kong. Beaches? Thailand. History? Europe. Australia’s a relatively short, cheap flight away and has had ADS since 1999. So why Canada? Partly, that’s something we still have to find out. Gobin says we have to recognize that China is in fact several distinct markets and make an appropriate pitch to each of them. Some lessons are obvious. The sale is Canada, not just Vancouver or Toronto. A Chinese traveller doesn’t plan a once-in-a-lifetime trip solely to Switzerland; he wants to see all of Europe. He doesn’t want to tour the Rockies or the Pacific Coast. He wants to see all of Canada. Agents booking Chinese tour groups “are going to tell us that [travellers] want to see as much as they possibly can,” predicts Gobin. But in a country this size, what exactly does that mean, and which Canada do they want? We’re North American, for one thing, kind of an America Lite. While the top five destinations for Chinese tourists in 2004 were Hong Kong, Macau, Japan, Russia and Vietnam, where they really want to go, the research says, is America. However, the U.S. and China have yet to strike a bargain around approved status – and given political sensibilities around Taiwan, that won’t be happening anytime soon. Visitors who might have chosen the U.S. will view us as something of a “next best thing.” If what a Chinese traveller really longs to see is the land of Wal-Mart, Walt Disney and the Wild West, we are, for the near future, close enough. So, while it may grind a bit on our sense of national pride, our best pitch may be that we are America without the guns and bad attitude. (I asked Huenemann whether the Chinese would be looking for a “no surprises” kind of accommodation, imagining “Paul’s Authentic Chinese Guest Houses” from coast to coast offering familiar sleeping quarters to the new explorers. “The Chinese version of a Holiday Inn is a Holiday Inn,” he explained in a kindly way. “When they take their lunch break in the afternoon, they go to the Holiday Inn restaurant.”) Friendly. Peaceful. Almost America. Good selling points, but not killers. “We have an uphill battle for our share of the marketplace,” says a blunt but hopeful Stephen Pearce, a Tourism Vancouver VP who is on the Canadian Tourism Commission’s China working group. The travellers will be youngish – 25 to 44 – and will spend longer in Canada than the average Japanese group, says Pearce, with an average travel period of 15 days. Most of the experts agree that this group is brand-conscious. Printemps, a high-end Paris department store, has a team of 15 Chinese-speaking greeters who guide purposeful tourists from the Chanel counter to the Gauthier boutique over a 90-minute visit, ushering them back onto the bus laden with shopping bags full of artistically wrapped, excessively priced brand items. It’s the same with travel. The Chinese want a brand, a destination that’s seen as popular already. That’s a very happy thing for B.C. Beijing is the host city for the 2008 Summer Olympics – a big deal in China, where the need for acceptance from the world community remains hugely important. The spotlight will pan seamlessly from Beijing to Vancouver’s Games. “The Olympics is going to give us a huge amount of equity,” says Pearce. In fact, that may be our ace in the hole in terms of creating a brand from scratch. Henry Yau manages TPI Travel Industry in Vancouver, a major Asian tour provider. Yau’s company had a booth at the mammoth China International Travel Mart in Shanghai last November and had a firsthand look at the competition – other countries, outbound tour partners, companies pitching travel within China. Almost 30,000 Chinese crowded into the convention centre to check out the foreign countries’ booths. For Yau, the show was a chance to meet face-to-face with the Chinese buyers who will be looking for tours in Canada. “We just wanted to tell them who we are and what we can do for them,” he says. In the first two days, he accumulated a stack of more than 200 business cards from Chinese operators. The contacts and sense of the market were valuable, says Yau, but what was really important was developing relationships with the three or four leading outbound tour operators in China. Canada is going to have to work hard to sell the experience, the beauty and the friendliness of travel in this country; in short, quality rather than price, says Yau, a vision shared by other Canadian providers looking to China. But that vision runs up against the reality of Chinese buyers looking for a bargain, says Yau. “The market is still a bit different from the other developing countries,” he says. “They’re always looking at the dollar sign. We’re trying to educate them toward quality issues. The problem in China right now is that they still don’t have a solid middle-class population. It’s either very high end or very budget.” Competing on price alone would be tough for Canada, as our country is expensive by Asian standards. The answer, says Yau, is selling the tour buyers on value and making the extra effort to deliver. Instead of shepherding tour groups to one or two stores, provide them with guides to explore Robson Street. Make sure they’re greeted by a Mandarin-speaking staff member. Give them the information that lets them be more independent of the group. Craig Murray, the pioneering owner of Vancouver Island’s deluxe Nimmo Bay Resort, has already set his sights on the high end of the market. “In any economy you’re going to have people who do want to do something different and can afford it,” says Murray, whose lodge provides wilderness experiences at about $1,800 a day. He’s setting up a Chinese language website and working with Chinese friends to learn the best way to reach this new breed of customers. (A good Chinese-language Internet presence is critical. In 1997, about 620,000 Chinese had Internet access; last year 87 million Chinese people reported using the Internet, and 33 million bought goods or services online.) Tourism Vancouver isn’t just aiming at China’s new millionaires. But like Yau and other industry strategists, Pearce is convinced Canada has to avoid being seen as a low-end, discount provider. The country can instead deliver extra support, like Mandarin-speaking staff at hotels, he says. It can concentrate on quality, value and more personalized tours, building a longer, more profitable relationship with Chinese travellers. Pearce and Murray both cite the importance of building relationships with outbound tour operators in China now. “The relationship is very, very important in China,” says Pearce. “If you don’t have that personal relationship, you are not going to have a business relationship.” Murray, who has never worked in the past with wholesalers to book or market Nimmo Bay, says a little regretfully that he’s probably going to have to rethink that position now that he’s interested in China. It’s all just part of doing business there, says Jim Fraser, VP of planning for Brewster, a travel company in Banff. Brewster was a pioneer and has been doing business in China for five years, targeting business groups with special permission to travel. [pagebreak] Canadian companies have to form strong relationships with Chinese travel operators, contends Fraser. And to be sure all operators are serving Chinese customers well, the industry ought to be taking its lead from places like Australia and coming up with handbooks, guidelines and codes of ethics as soon as possible, Fraser says. The Chinese operators – and government – are sensitive about unexpected problems for travellers. It will be worth it, he says. Brewster Tours’ business from China has the potential of doubling every four years, says Fraser. Others say that’s only the beginning. The market is enormous and the rise in incomes astonishing. The pent-up demand and curiosity among Chinese citizens wanting to see the world is almost insatiable. But there’s a world out there and the competition is fierce. If B.C. is going to come out on top – and the experts think we can – businesses have to figure out now how they can cater to this new market and what Chinese travellers are going to want. They have to develop personal relationships with players in China – the market is too vast and too different for a direct assault – and start building a reputation for service and a welcoming atmosphere for nervous new travellers. And businesses and regions are going to have to put aside traditional rivalries. Cracking this market means working together to sell a Canadian experience. That’s what buyers want, and it’s the only way to launch a really effective marketing campaign in such a huge, diverse and often puzzling country as China. Doing it right – building a brand to make Canada a favoured destination – could mean decades of big tourism growth for B.C. It’s time to start learning. Fast. THE CASE AGAINST CANADA Why has it taken so long for Canada to get in China’s good tourism books? Meet Lai Changxing, a one-man crisis in Chinese-Canadian relations. Lai, who lives in Burnaby now, says he’s a simple labourer who got ahead in China, until he ran into problems with some political types. Now he’s claiming refugee status, saying he fears for his life in China. The Chinese government says he’s a criminal kingpin who ran a $12-billion smuggling network with the help of corrupt officials. It wants him back to face charges. The fact that the refugee appeal process has so far taken five years grates on the Chinese, especially since there is no clear end in sight. China is also miffed by the continuing implication that its justice system can’t be trusted. The case is still a problem for the next stage of Approved Destination Status negotiations, which will actually open the doors. China hasn’t abandoned the Lai case; in fact, it has cleverly increased its bargaining position by raising Canadian hopes. The whole refugee issue will be a big bargaining point for both Canadian and Chinese governments. China doesn’t want to lose people from tours who skip out or claim refugee status. It’s embarrassing. And Canada, after its bizarre and expensive over-reaction to the Chinese migrants who showed up in rusty ships off the West Coast in 1999, is just as keen to avoid the problem as the Chinese. Both governments will shift the policing function to tour operators in both countries – the Chinese agents who sign up the passengers and the Canadian service providers. Lose Chinese travellers and both operators could find themselves booted out of the program. “At least in the beginning stages, this is going to be very tightly controlled,” predicts Tourism Vancouver’s Stephen Pearce. GET A GIMMICK For Australia, it was Nemo. The cute clownfish from the Great Barrier Reef was a big hit when the movie was released in China. The Australian Tourist Commission was all over the opportunity like a Great White on a Bondi Beach surfer. They bought the rights from Disney and launched a multi-million-dollar ad campaign in China. Come see Nemo’s place, went the pitch. Bring your movie ticket stub and we’ll give you a discount on the holiday package. In Malaysia, the country is pitching itself as a kind of Cancun for Chinese travellers. A foreign country, sure, but one where 40 per cent of the people are Chinese and things are familiar, safe and comfortable. (And often cheaper.) Bavaria, of all places, came up with enough money to pay for an eight-part Shanghai TV series on the German state’s castles, lederhosen and beer. It attracted up to 100 million viewers and was supported with a book, Chinese-language website and email newsletters for Chinese travel writers, all designed to make Oktoberfest seem like one of the seven wonders of the world. The pitch included shots of Bayern Munich soccer heroes (a reminder that the Chinese are soccer mad) and promises of high-tech factory tours (a reminder that, by our standards, the Chinese are just mad). It is, in short, a fish-eat-fish world out there. “Canada is off the radar screen in terms of Chinese tourists,” says Jim Fraser, Brewster’s VP of planning. The Banff travel company has been doing business in China for five years and expects great things. But that’s going to take excellent marketing, and leadership, he says. “That’s the big challenge for the various federal and provincial organizations, to come together to get some awareness of Canada.” Finding Luna, anyone?