The Abacus

The China Tourism Boom Continues - But Are We Ready?

By: ACBC
13-10-2017

Every Chinese New Year it happens: Australian hoteliers brace themselves for an onslaught.  According to Tourism Australia, between 140,000 and 250,000 Chinese visitors arrive in the weeks around Chinese New Year, eager to celebrate the festival in a country renowned for its stunning beaches, unique flora and fauna and dynamic cultural life.  Throughout the rest of the year they are joined by over a million other Chinese tourists, and by 2026 this number is expected to reach 3.3 million.  This will carry huge benefits for Australia.  But are we ready to manage the Chinese tourism boom?

The China Tourism Economy: Reaching Australia’s Potential is a new report published by the Australia Chinese Business Council, in partnership with LEK Consulting and Trade Victoria, and based on extensive interviews with Chinese visitors and senior executives involved in tourism, trade and related sectors.  It shows there is a lot more work to do if we are to capture the full value lying within China’s growing middle class—a new generation of Chinese people who are keen on travel and ready to spend big when they do.

Chinese tourism is already a boon for Australia.  Last year, Chinese visitors spent $9.2 billion here, up 11 per cent from the year before.  There is no reason to think the Chinese tourism boom will end anytime soon.  China’s economy continues to grow at more than double the rate of the rest of the world.  And although China’s economy is now, in purchasing power terms, the largest in the world, China’s per capita income is still only about a third that of Australia’s.  So there is plenty of room to grow.  The Chinese Government is determined to continue to raise the standard of living of the Chinese people, and as this happens the Chinese middle class, which adds around the entire population of Australia to its number every single year, will continue to want to travel and have new experiences.

But the benefits of Chinese tourism go far beyond the direct economic impact.  Chinese visitors to Australia are more likely to buy Australian products upon their return, to study and even to invest in Australia.  There are currently 160,000 Chinese students studying in Australia, a 12% p.a. increase since 2012. 48% of students intend to stay on in Australia after graduation with aspirations of home ownership.

At a time when our relationship with China is perhaps the single most important factor in our economic and geopolitical future, this kind of person to person contact is an often under-rated element in that relationship.  A Chinese tourist or student in Australia is much more than a customer: they are a potential partner in the Asian Century.

But we must not take our role in the China tourism boom for granted.  Many countries compete for the Chinese tourist dollar.  Australia needs to make sure that we are offering what the modern Chinese traveler wants.  We also need to make sure that when they come, they have the kind of experience that will encourage a return visit and inspire positive feelings about Australia.  This will lead to recommendations to friends and family, and further growth.  Our report shows that we do pretty well on this score—but we could do a lot better.  And as tourist numbers increase we will need to make a serious effort to increase our China readiness, just to keep up. 

This begins with infrastructure.  No tourist has a good experience if they are constantly encountering crowded airports and congested roads, or if they can’t find a decent hotel room in the peak season.  We need to realise that in some ways the Chinese have embraced technology to a far greater extent than we have, and ensure that we provide, for example, adequate wi-fi and mobile payment options.

We also need to focus on cultural connectedness—from the simple provision of Chinese-language signs to an understanding of Chinese tastes and preferences when it comes to food, shopping and services.  We must make a continual effort to adjust and improve Australia’s branding in the Chinese market as their demographics and tastes change.  More Chinese visitors, for example, are now seeking to engage in active or outdoor activities when they travel.  Australia needs to promote itself as the best place in the world to do this.  Finally, we need to continue to improve our regulatory environment for both tourists and students by lowering visa fees and increasing the quota of work and holiday visas.

Australia has an unfortunate habit of underestimating China.  When I made a prediction, as Treasurer of Victoria at the turn of the twenty-first century, that before long China would be our state’s largest trading partner, people told me I must have my figures wrong.  But it happened in 2005, and the following year it became true of Australia as a whole.  Today we often underestimate China’s leading role in technology, R&D and innovation.  China is no longer just a buyer of our mineral resources, or the world’s cheap manufacturer; the country is shifting from development-led growth (which was a boon for the Australian resources industry) towards consumption-led growth.  This can be good for Australia too—but it means we need to provide what Chinese consumers want.  High quality tourism is one of those things.  We must act now to position Australia as a destination of choice—and a place to return to again and again.

John Brumby AO

National President, Australia China Business Council

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@AusChinaBC

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