China. China. China. Everyone’s biggest dream, yet it could be everyone’s worst nightmare if one is not prepared. Yet it’s a market you have to be in if you want the scale. This session will look at how the digital world has changed the Chinese travel market, from how it’s changed the way airlines are operating and marketing to how it’s changed consumer behaviour. What trends are the experts gathered for this panel seeing that will make a difference to how you play your China card?
• Fritz Demopoulous, CEO, Qunar
• Kent Zhu, Group Director of Sales & Marketing, Shangri-La Hotels and Resorts
• Hao Wu, General Manager, Daodao (TripAdvisor China)
• Jurik Auer, Manager Online Marketing & E-Commerce, Asia & Pacific, Lufthansa German Airlines
Moderators: Don Birch, Managing Partner, China Opportunity Partners & Jens Thraenhart,Managing Director, Dragon Trail
So, day two at WIT is well underway and it’s time to talk about China.
Don Birch opens with an overview: 30 cities with a population of greater than 10 Million“The developing China is on the way out and the new China is on the way in. What are the implications of this?”
Jens describes being in China as a privilege. “It’s the biggest travel market in the world.” He says that Social Media is really happening in China. And he wants to dispel some popular myths: China is not just about big tour groups. The reality is that travel visa restrictions are easing in China so the ‘group’ thing is becoming less and less the dominant as the ‘face’ of China travel. This has implications for travel product offerings.
It’s noted by the panel that the actual average spend per trip is relatively low. The young generation in the first tier cities is looking to more independent travel whereas those in 2/3 tier cities are still clinging to the more traditional group traveling.
Fritz talks about huge numbers of ‘first-time’ travelers. He describes it as like a dumbbell – huge numbers at either end. The greatest thing is that all types of travel are expanding, however. This is backed up by some of the other panelists but interestingly lots of people don’t have online access to research independent travel. Special Interest tours are also a burgeoning market with people paying a lot of money for two-week trips to European destinations for example.
By 2015 there will be 100 Million Chinese tourists travelling overseas Don tells us. What are the implications for the destinations the people will go to? Do hotels in Germany, for example, have the capacity? Jurik tells us that capacity is being ramped up, certainly in the places he knows.
Another interesting point is that most travel literature (LP guides for example) are written by non-Chinese people and don’t reflect the interests of Chinese people visiting a destination.
Fritz says that he tends to see that the Internet used initially as a research and information gathering platform. Huge amounts of research is done he adds with the Chinese people always looking for the most efficient ways to conduct transactions. Jens reminds us that, despite all this, there are still bottlenecks with many social sites, for example, still blocked.
The vast majority of Chinese travelers are still off line we are reminded. Don thinks that it could be around trust as he has done all sorts of transactions whilst in China. Fritz talks about ‘getting a refund’ and the fear of hidden charges and online fraud as being stumbling points to greater uptake. But there is a range of companies looking to address these issues. Consumer protection issues stop a lot of people buying online.
“People will buy small things online, but these people can’t afford travel products. We need to understand who we are talking about.”
Most Chinese airlines still use a physical office. Online sales growth is slow because of a lack of the right technology and it can be very time consuming. Kent tells us that most business is still done with call centers. “The problem today is that we only have two major distributors,” Kent adds, and that investment now in your own booking engine could be well worth it when we see the expected numbers over the next few years.
Don asks what western companies could learn from their Chinese counterparts. (A question tweeted by Kevin May in the audience). Fritz tells us that focusing on some of the fundamentals of running a business will help you if you’re starting out in China. Look at eBay failing in China! – Nothing to do with the government. Jens says we shouldn’t ignore the ‘local’ considerations when setting up in China. “Be Patient”, Hao Wu adds.
Don suggests that Chinese customers are very price sensitive but this is countered with the argument that there are many types of customers in China and there are many looking for high-end prestige products and that that is a growing trend. Marketing should focus on what is coming – what the future will be.
Jens asks us what we think the percentage of Internet users is in China that supports censorship. He tells us that it’s 85%. (I wonder if that poll was conducted online?)
Fritz begins to end the session by reminding us that the Chinese consumer will continue to spend like crazy and that they love brands, love spending money, gambling and buying fashion products. The new international Chinese traveler will represent a huge opportunity to the rest of the world.
I wonder how the discussion on this type of panel might evolve over the next few years as we see China undergo its huge upcoming changes.
Coffee time.
