These are excerpts from the China Outbound Travel Handbook, newly updated for 2006 and available to purchase from ChinaContact.

Today there are more than 200 million Chinese who are financially able to travel overseas. Outbound numbers for 2004 reached more than 28 million, an increase of 43% over 2003. The World Trade Organisation (WTO) estimates a minimum annual growth of 12.8%, reaching 100 million by 2020. There are nearly 700 licensed outbound travel agencies in China.  More than 90 countries have been given ADS (Approved Destination Status), and this number increases yearly. It’s an exciting time to be working in tourism, and China represents the single greatest growth opportunity in the world for Western travel destinations and tourism companies.

APPROVED DESTINATION STATUS (ADS) POLICY
The emphasis of the Chinese government is clearly on developing inbound and domestic travel. The holiday economy is focused on promoting consumer spending within the country. Inbound tourism has priority, as it brings in foreign currency.

As for outbound private travel (tourism), the policy is chiefly concerned with controlling and regulating the travel trade and maintaining a sustainable gradual development of this sector. ADS was first introduced in the early nineties for destinations in Southeast Asia such as Singapore, Thailand, and Malaysia. Prior to ADS, travelling abroad was only allowed for business purposes and official visits, with government approval needed for every single visit. ADS policy was created to account for the Chinese citizens’ growing interest in foreign travel and the fast increase in disposable income.

ADS is granted to overseas destinations through a bilateral government agreement. The ADS only concerns tourism groups handled by assigned Chinese local travel agencies. Business and official travel to overseas destinations are not included in ADS agreements. The purpose of ADS is to have a control mechanism upon the organising parties on both sides (local travel agencies and international tour operators) in order to guarantee safe and reliable tourism services for the Chinese customers.
An important issue within ADS is to avoid possible illegal immigration through tourism channels. All tourism groups travelling within the ADS framework are supposed to be monitored by both Chinese and foreign authorities to ensure they return to China. Embassies and consulates apply different methods to monitor the return of the Chinese tourists. Whenever a tourism group member does not return to China, the local travel agency is held responsible, and sanctions are applied.

Only certified ADS travel agencies are allowed to promote and organise tourist groups and handle processes including visa applications and payment of foreign currency to foreign parties. Each of the certified travel agencies must assign special couriers to handle the visa application procedure. Countries without an ADS agreement are not allowed to receive tourism groups from China or to promote their destination in China, and they are restricted to business and official travel groups only.

• 118 different countries and territories have signed an ADS tourism agreement with the Chinese government, but only 81 countries were actively engaged in tourism promotion as of May 2006. The reason for this discrepancy is that, after signing the agreement, the two countries require additional time to negotiate the details of operating and monitoring the tourist groups.

• All the EU member states are included in the ADS agreement as concluded in 2004. In January 2004, the United Kingdom was the last EU member state to sign an ADS agreement with China, and it began operation in the end of July 2005. Switzerland, Norway, and Iceland have separate bilateral ADS agreements with China as non-EU members.

• View the full list of ADS countries and territories

The Tourism sector

There are 1,472 international (inbound) travel agencies in China. This is out of a total of more than 15,339 travel agents. Only 672 agencies are licensed to operate outbound travel. These travel agencies vary greatly in size. Some of them have branches nationwide, while others operate in certain regions only. There is no clear distinction between wholesale and retail travel agencies yet. As tourism has only recently been developed, the services provided to the customer are still rather limited.

Traditional transactions are concluded by salespeople, who visit the clients based on their personal networks. This way of operating is not transparent and highly dependent on the salesperson. These networks are the so-called grey areas. Although their name cards may show the names of certified travel agents, they operate independently and often switch from one agency to another (and so do their name cards). The flow of staff between travel agencies is very common, and staff retention is a major challenge. Any database of travel agencies in China must take this into account.

These days, more travel agencies sell their services and products at the storefront to meet the demand of the growing number of customers. Customers are becoming more sophisticated and therefore demanding quality and transparency.
The few wholesalers that exist are based in Beijing, Shanghai, and Guangzhou. They normally sell both to trade and direct consumers, and they operate multiple brands. The wholesalers collect their clients from all over China through a personal network of relations.
Pressure from below (the consumers), from above (government regulations), and from the outside (foreign competition) is expected to increase which could lead to local companies developing clear brands and diversifying their products.

The Chinese Traveller

Groups
Most people from China are first-time visitors and travel in groups, given the language barriers and unfamiliarity with the destinations. They belong to the rising middle classes and often travel in large groups (30–45 people). Certified travel agencies in China handle the visa procedure on behalf of the customers, following the ADS agreement with the destination country.

Individual Travel (FIT)
Individual travellers often have high incomes and big purchasing power. They are more likely to speak other languages and are experienced travellers. They can be quite demanding to their agent and supplier. FIT travellers must personally apply for visas. It is up to the discretion of each embassy or consulate whether to issue FIT visas for tourism. This is not covered by the ADS agreement or any other government policy. In fact, FIT is not classified by China as tourism.

Statistics on China are, in a word, confusing. The arrival figures, as registered by the receiving countries, and the departure figures, as registered by the customs in China, do not match at all. The main reason for this is the fact that Chinese customs only register the first destination upon leaving China. As so many travellers leave China at the border with Hong Kong, it is registered as the first destination, regardless of where the actual destination may be.

For example, in 2004 the Chinese customs registered 420,000 departures for Singapore, while the Singapore statistics show 880,000 arrivals from China.
The European Union member countries do not keep uniform statistics on Chinese arrivals. The passports of China, Taiwan, and Hong Kong all have the name China on them, which leads to confusion at the destination. Lack of unified computer data from all EU countries makes the statistician’s job very difficult. Only the first country of arrival is often reported though Chinese visit several countries on a single trip.

Direct flights are a major selling point in destination marketing. The first port of arrival determines the choice of tour operators in Europe and number of nights in each destination.

Travel agents would often bargain with different consulates to find the cheapest and simplest visa application and, with it, the choice of first destination. With the implementation of the overall ADS procedure, this should not be the case anymore, as all the embassies and consulates are supposed to apply the same rules. Nevertheless, ‘visa shopping’ still exists in practice, as some embassies and consulates process visas faster (they may have larger staff capacity at their visa departments), have better facilities (such as special opening hours for ADS visa couriers), communicate in a more transparent way, are more service oriented, or are less fussy with visa processing (lower rejection rates). All contribute to the image of a certain destination and have an impact on overall arrivals.

Internet

While the World Wide Web is becoming increasingly popular among Chinese, the Chinese central government is getting worried about the negative effects of this new media. While some worries are justified (addiction to online games, Internet gambling, pornography, and credit card fraud), others stem from the tight control China exercises on all other forms of media. The result of this concern is a high degree of censorship and restriction of Internet content. As China cannot control sites that are hosted outside its borders, it resorts to monitoring and censoring what Chinese can view from external sites. This can lead to certain servers, at certain times, being blocked. Since most websites are held on shared servers, any site can be affected by this.

The other issue not yet resolved is capacity: usage outpacing investment in underwater cables and routing systems. This results in frequent bottlenecks and extremely slow uploads of external sites. Companies and organisations that want Chinese viewers to access their sites need to consider that they will be frequently unavailable or load at such slow speeds that people may become frustrated and go elsewhere. The solution is to host a mirror of your site on a shared server in China. To do this, it is important to note the following:

• Chinese sites have different design requirements, often very busy sites with animation and colours.

• Registering your domain with .CN will improve search engine performance in China and avoid your domain name being taken by someone else.

• Chinese search engines also use registered domains in Chinese. A separate registration is required, and this is available only in China.

• Only companies registered in China can legally host a website in China. An ICP registration number is now required for any site, no matter what the content is.

'China - the future of Travel' conference includes dedicated seminars on localisation, internet marketing and the nature of the Chinese outbound travel market.