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Economy

China Tourists: Whether in US or Southeast Asia, Welcome! But Diversify.

Sep 13 , 2019

 

Amidst understandable and growing concerns about the impact of the ongoing US-China trade war, Thailand's tourism industry just received a bit of good news. Bangkok has once again been named the "most visited" city in the world, for the fourth year running.

This repeat top ranking came despite a slowdown in the number of tourist arrivals from China last year. This followed a tragic tour boat accident in Phuket in July 2018 involving Chinese tourists, as well as already emerging worries that a slowing Chinese economy would lead to more and more Chinese travelers switching to domestic Chinese travel.

According to Mastercard's 2019 Global Destination Cities Index, Bangkok attracted some 22.7 million international visitors, making the city the top destination for global travelers. Paris came second with 19.1 million visitors, followed by London (19.01 million), Dubai (15.93 million) and Singapore (14.67 million). Mastercard's annual ranking is based on international visitor volume and spend at the 200 largest cities in the world, counting both business and vacation travelers in the prior year.

Yet, a No. 1 ranking in international tourist arrivals should not detract from what remains the need for not just Thailand, but every tourist destination including those in the United States, to both welcome and diversify away from Chinese tourists. The need for diversification was underscored in the United States this year when, for the first time since 2003, and after a decade of relatively rapid growth, Chinese travel to the United States declined from the prior year.

According to the National Travel and Tourism Office, which collects data from U.S. Customs forms, travel from China to the United States fell 5.7 percent to 2.9 million visitors in the 2018. In 2016 and 2017, the United States had welcomed more than 3 million visitors, but growth slowed. Still, whether in the United States or Asia, the spending of Chinese visitors significantly contributes to local coffers.

To date, the China market remains the biggest for Thai tourism. According to official government figures, visitors from China to the nation – Bangkok and beyond – made up nearly 10 million visitors out of the overall 38 million international arrivals last year.

The drive to capture more Chinese tourist dollars is understandable. China is now the world’s largest outbound tourism market according to the World Tourism Organization (UNWTO), the United Nations agency in charge of promoting sustainable and responsible tourism, making the country a major player in the international travel market.

Chinese tourists took more than 145 million trips outside of their country in 2017, a six percent increase over 2016 reports the China Outbound Tourism Research Institute (COTRI). Projections have this figure rising to 400 million by 2030. For comparison, the US outbound market tallied nearly 88 million in 2017, according to the US International Trade Administration.

It is not only the raw number of tourists that is impressive, but also the amount of economic spending that comes with them. In 2016, Chinese international tourists spent US $261 billion, according to the UNWTO. US international visitors spent US $123 billion during the same period. Chinese tourists are now the world’s biggest overseas spenders.

As China’s tourism impact grows and destinations in Southeast Asia design campaigns to lure Chinese visitors to them, they must be weary of over dependence on any single source of tourists.

Indeed, before any destination focuses on the Chinese travel market, it is important also to understand what percentage of spending by Chinese vs. other tourists actually stays in country. Earlier this year, the Nepal government banned popular Chinese digital payment apps WeChat Pay and AliPay saying payments from the unregistered systems were illegal and resulting in a loss of income to the Himalayan nation.

The United States, as well as Thailand and other Southeast Asian nations, need to start taking steps to diversify their foreign travel markets away from China to insulate themselves should a one-time Beijing benefactor turn bully, wielding the withdrawal of Chinese tourism as a club.

One solution is to look not just to tourism from Europe, Japan and Korea, but also to look across the Indo-Pacific region. Collectively, the 10 member states of the Association of Southeast Asian Nations (ASEAN) comprise the third largest population in the world, with more than 50 percent of its citizens under the age of 30. If ASEAN were a single economy, its GDP would be the fifth largest in the world, underscoring the nations' growing middle class with a rising purchasing power of its own.

As a Thai proverb says, “While the water rises, fill up your buckets (in preparation for drought).” Both the United States and Thailand, as well as all of Southeast Asia, would do well to heed this advice. U.S. President Ronald Reagan once famously declared, "Trust but verify," regarding dealings with the Soviet Union. Now, whether the United States or Southeast Asia, the mantra may well be "Welcome but diversify." Welcome Chinese tourists, but be prepared lest China's economy weakens or Beijing turns off the tourism spigot for political reasons and a drought of Chinese visitors ensues.

 

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