One belt, one road: a story behind the Chinese abroad

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Though growth in Chinese tourist numbers are forecast to fall over the next five years, a government led initiative indicates that boom in foreign tourism is no short-term bubble

Chinese president Xi Jinping is determined to get his fellow-country out travelling to explore the world. It is part of his yi dai yi lu (One Belt One Road) policy aiming at ‘connectivity’. 

According to a recent UK think tank Chatham House’s report on ‘One Belt One Road’, Xi Jinping talks of connectivity in terms of trade, investment, finance, with flows of tourists and culture exchanges opening the paths. This strategy, Chatham House says, is not widely understood.

So, in spite of the soaring numbers, the boom in Chinese foreign tourism is no short-term bubble: it is part of official policy - and thus the corporate sector and its entrepreneurs are under orders. It is not reliant only on the economy or the banks’ willingness to extend credit (although they increased lending at the fastest pace on record in January).  All good news for investors in the Chinese travel sector!

Though official policy does also seems to be to keep the economy well fuelled. “Judging from recent speeches by top leaders and January’s credit growth, this year policymakers seem to be determined to make the economy grow above their bottom line of 6.5%,” Reuters quoted Larry Hu, China economist at brokers Macquarie Securities as saying.

The ‘road’ in question for Xi Jinping’s far-reaching plans for Chinese business is principally the country’s historical trade routes, says the Chatham House report. They extended across Eurasia and down into the Pacific and round to East Africa. But Chinese travellers and entrepreneurs are now going further (to the US, for example), Chinese tourists going so far as to include the North and South Poles among their new favourite destinations.

Have faith

China’s New Year holiday travel numbers show the Chinese need little encouragement to go out. The China Outbound Tourist Research Institute has just published a report quoting Chinese travel agencies and Tuniu as saying that over 60% of all travellers booked with them at the New Year traditional holiday time were going overseas.

Other reports put actual outbound numbers then at 6 million. This is after a year when outbound travellers rose by 20% to around at least 120 million, although the US magazine Forbes has said that when all the numbers are in, border crossings could have been nearer 140 million.

Yet Chinese travel companies feel that the outside world does not appreciate their prospects nor have faith in China’s tourism growth. Major OTA eLong is one of them: the US’s NASDAQ-quoted company announced early last month (February) that it was being taken private by its major Chinese shareholders. With other Chinese companies this has been the precursor to a launch on the Chinese stock markets and brokers are expecting the same will happen with eLong.

The investment story still seems a good one. On the back of the New Year and 2015 booming travel figures, Hong Kong-based broker CLSA recently said that regardless of the slowdown in the economy it remained bullish on Chinese outbound tourism. And it maintains its long-standing forecast of “200 million Chinese overseas trips by 2020.” However, it does suggest that Chinese outbound tourist growth will slow to 9% over the next five years as opposed to 17% the past five years.

Forbes comment on China’s economic growth is that lessening it might be, but it is still increasing the wealth of the top 5%, the majority of foreign travellers. “At the same time, the ‘new middle classes’, even if their growth rate is often overstated, are adding their spending power to the total amount of renminbi used to visit foreign countries, experience new cultures, do business and shop in fake-free stores,” it says.

As to destination, CLSA forecasts that Chinese travellers looking for unique cultural experiences are most likely to head to South Korea, Japan, Thailand or the US in the next three years. South Korea is attractive for its relatively cheap luxury goods and cosmetics, whereas Thailand offers beaches and other cultural destinations.

CLSA’s adds that a survey it carried out shows that if money was no object, the most desired destinations are the US, France, Maldives and Australia, in that order. Research from booking site found that Chinese tourists are finding their way into new sectors. There was a 30.64% rise in cruise ship bookings, with all tours being popular.

App and accommodation action

What is also new, says China Outbound Tourist Research, is that Chinese travellers are raising their sights on accommodation. The trend towards opting for a cheap hotel in order to have more money for shopping is, it says, changing - even at home. For the New Year holiday Golden Week, demand for hotels with high rating far exceeded expectations: over 60% of travellers booked hotels with 4 or 5 stars.

Nor are Chinese tourists confining themselves to the traditional famous foreign travel destinations. According to OTA Ctrip, Chinese tourists now book holiday in more than 100 countries and regions worldwide.

More and more apps are coming on to the market to help the Chinese traveller abroad - including Chinese language satnavs! China Internet Watch names last year’s top app suppliers as Ctrip, Qunar, CY, Didi Travel, Tuniu, Kuaidi Travel, eLong, Airplane Butler, High-speed Rail Butler and Lvmam. Most travellers booked by mobile rather than PC – 60% of the total! And mobile use, it says, was up 400% year-on-year in the third quarter.  

Bookings for top destinations are, says China Internet Watch, still dominated by Qunar (acquired by Baidu last October) and Ctrip. Their market is still mainly top-end business travel packages. But it also names others as growing fast, including Alitrip, or Tongcheng,, and

An emerging sector

The share registers of leading OTAs show that back in China (as opposed to New York or London) there is no shortage of appreciation in travel prospects among investors especially from entrepreneurs in the industry., which concentrates on outbound travellers, is backed by China’s largest real estate group, Dalian Wanda and (confusingly in the cat’s cradle of investment cross-holdings that make up China’s online travel industry) includes Tencent and Ctrip among its shareholders.

Lvmama is one of the largest DIY travel and tourism sites in China, selling Asia-based sightseeing tickets, visa services, resort vacations, and cruises. A major investor is Jinjiang International, which is among China’s largest tourism conglomerates.

A fast emerging travel sector this year, says China Internet Watch, is that for backpackers and independent travellers. Sites among those it names are, and - all three are, it says, “getting more popular with the younger generation”. received an investment of $60 million from one of China’s leading international travel companies, Utour, just last month. is a subsidiary of Tongcheng Network Technology, another major OTA and with a specialisation in scenic attractions, hotels, international air tickets. In the past Tongcheng has partnered with eLong and has attracted investment from Tencent and Ctrip as well as Dalian Wanda. It is already following Xi Jinping’s strategy.Last November it set up a JV with Japan’s long-established tourism agency H.I.S. Co. and a month later struck a similar deal with South Korea’s Lotte Travel.It is now going for the southern side of the continent by setting up a JV with hotel group Wenmei Holidays to focus on Thailand.

Stock markets may not yet have picked up as yet on the One Belt One Road story behind China’s growing travel networks, although it has not been lost on big backers like the Asian Development Bank. But perhaps they will as events unfurl.

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