Saturday, July 30, 2011

Chinese Tourism Profits: Overhyped, Oversold, and Over There

Had a great time biking on Pinglin Road today with Domenic and the lovely Sophie. Here we stop in Nanhu for lunch. 

A few weeks ago the Taipei Times had a piece on the way the tourism industry has not seen the big boost from Chinese tourists the Ma Administration has promised. I remarked then:
Academic with some good observations on the independent travelers from China, including the comment that Chinese tour firms owe Taiwanese $173 million. If Taiwan makes a billion gross from China annually in tourism, at a 5% return that's basically the industry profit since Ma boosted the tourism numbers.
Haha. Because China doesn't pay Taiwan tour firms, essentially the industry as a whole hasn't made a profit on the tourist "boom." However, it's even worse than I thought, as AP reported today in another excellent investigative piece. Just ignore AP's historically inaccurate and factually inept Formula describing Taiwan's relationship to China (didn't "split in 1949"), and feast your eyes on the numbers and quotes:
But interviews by The Associated Press with industry officials and Taiwanese tour operators, and an examination of China's Taiwan tour packages, suggest that the figure has been overstated by at least $700 million. Questions about the accuracy of the government's claims could prove embarrassing to the China-friendly Ma as campaigning heats up.


According to the Taiwan Tourism Bureau's Alice Chen, the Chinese tourist influx has meant big money for the island of 23 million people. Chen says that in 2010 some 1.16 million Chinese tourists spent NT$59.1 billion ($2 billion) in Taiwan, providing a substantial boost for an industry long in the doldrums.

The bureau's figures, Chen says, were collated on the basis of interviews at airports with just 1,896 of the million-plus Chinese visitors, rather than relying on hard data from vendors of tourists services — hotels, restaurants, shopping venues and the like.


The government estimates that Chinese tourists spent an average of $246 a day on the island in 2010. That's made up of $142 for shopping and $104 for the services that are provided by tour package operators — hotels, meals, local transportation, venue admission and incidentals.

But an examination of tour package prices shows they are much lower than the goverment's estimate and tour operators say that, at best, they get half of the money Chinese tourists pay to mainland tour agencies for these tours. That amounts to at least a $700 million hole in the government figure.
The tourism push is an ideal Ma Administration program: it soaks Taiwan to provide resources to China, to large businesses, in fact:
The Taiwan operators say their current business model has been foisted on them by tour operators from the Chinese territory of Hong Kong. These Hong Kong operators comprise only 13 of the 300 operators the Taiwan government sanctions to receive Chinese tourists on the island, but rake in some 50 percent of the take.
The Taiwanese operators, as the article recounts, are forced to offer cut-rate tours with tons of shopping to make up for the losses they take. This may have something to do with the legendary ill-behavior of Chinese tourists: I'd crap all over Taiwan too if I were dragged from store to store, given to substandard accommodations and meals, and abused and forgotten as a mere cash cow.

This disparity between government pronouncements and reality should also call into question the government's constant claims that the Chinese tourists really like Taiwan and would return. Independent and serious survey work is needed on this. It should also call into question key numbers in other areas of China relations, such as ECFA. Hopefully we'll see AP devote itself to a hard look at the numbers.

Should add that just because they tourism firms aren't making profits, doesn't mean that Taiwan as a whole doesn't gain economic benefits.

Finally, I'd like to end this post on a totally warm and positive note. A wonderful warm ad on Taiwan tourism. Don't miss it.

Don't miss the comments below! And check out my blog and its sidebars for events, links to previous posts and picture posts, and scores of links to other Taiwan blogs and forums! Delenda est, baby.


les said...

If the returns are so poor, and the agents are so likely to get stiffed for the bill, why do they bother?

The tourism bureau needs to remember that for every Chinese tour group that comes, there is a reduction in the numbers from Japan, Korea, SE Asia...

Michael Turton said...

Les, I suspect that a few firms make money so the rest chase the will o wisp profit....

Anonymous said...

that tourism is waaaaay too long, too slow and boring. it doesnt make me want to visit taiwan. they need to do something more exciting and sexier than that.

les said...

From friends and family in retail business the picture I get is that the Chinese tourists that are now arriving either have less spending power, or are less willing to spend than a year ago. They also appear to be slightly less well-behaved.

While there are still other proprietors very keen to invest in getting a slice of their business, there is a good chunk who don't think it's worth running onto that particular sword.

Anonymous said...

I don't think the boorish behavior of some of our Chinese 'friends' is due to being badly treated in Taiwan as you theorize in your article. In Thailand I was subjected to obnoxious behavior (pushing and shoving especially when there was no need for it and this by women too) from Chinese tourists. I've also heard other stories from other places. They can't all be being treated horribly no more than travelers of other nations.

chinese tourist said...

Great point! I've also heard other stories from other places. They can't all be being treated horribly no more than travelers of other nations.