Find here the China paradigm episode 95. In this interview, Sophie Sun, Founder and CEO at TravelRight tells how her company targets Chinese outbound travel to Europe and delayed flights of Chinese passengers with a unique business model.

Full transcript below:

Hello everyone. This is China Paradigm, where we, Daxue Consulting interview season entrepreneurs in China.

Matthieu David: Hello everyone. I’m Matthieu David, the founder of Daxue Consulting and its podcast, China Paradigm, and joining me today is Sophie Sun, the founder and CEO of TravelRight. TravelRight is a company that helps you to get your money back when there is a problem with your travel and we are going to try to understand how the product is built. Is it an interesting product for the delayed flights of Chinese passengers? Is it a product that helps you claim your rights toward those airlines and any travel agents or intermediaries? Let’s look at a few numbers. What I didn’t mention, but it is obvious that we are focusing on China. It is travelright.cn and we focus on China. So, let’s look at what it is to work in Chinese outbound travel to Europe. We talked about a market which is not as big as what we could think of when we think about the 1.4 billion inhabitants, but which has been growing very, very fast and very steadily. Now, we talk about 165 million outbound travels. That’s a common mistake to think of is that we very often are confused about travelers and travels. The statistic we are talking about concerns travels. So, the number of travels is much lower and the number of Chinese having a passport to travel actually is still low contrast to the population, so there is a lot of room for growth. That’s something everyone is looking at even though with the current situation. I think they are going to slow down, certainly in 2020. We talked about 35 million flight tickets bought and as a pillar of protection and I am talking about that; the protection because that’s where you are playing. It is with the protection of the consumers. So, thanks for being with us, Sophie. You started TravelRight 2 years ago if my information is right. Before starting TravelRight, you had been working at a very, very big company called Alibaba for 3 years and that’s something we will look into is what you learned from Alibaba to start your business. So, thank you, Sophie, for being with us and the first question is, what is your company doing?

Sophie Sun: Hi Matthieu. Thanks for giving the interview.

Yeah, you are perfectly right. You did very deep research. TravelRight is a bond for helping Chinese outbound travelers when they come from a very difficult situation like flight delays, flight cancellations, luggage lost and delayed flights of Chinese passengers a passenger ride is not of use. No one is aware that they were protected and even if they know, they don’t understand how to file for that. My job is to understand their difficulties and give them what they want and the solution is very easy. If the flight is delayed, the passenger just needs to come to our website travelright.cn and file their claim telling us what happened, and then they get their money back. So, the procedure is very simple. They delegate all the rights to us to talk to the airlines so they don’t need to handle the hassle by themselves and our business model is very interesting. We don’t charge anything until we get paid from the airline. So, passengers don’t need to take any risk. It is actually what we say is it is a minimal risk when you want to do a claim with the airline. A lot of passengers actually try by themselves because they want to get full compensation for the delayed flights of Chinese passengers, but finally, it comes back to us. So, I think the business is very interesting for Chinese outbound travel to Europe. 

Matthieu David: Thanks for the clarification. Actually, I have got a sense initially when I read what you do. TravelRight would be an insurance company, but actually, I think it would be wrong to say that it is an insurance company. It’s about the defense of the consumer. It’s a company that actually helps consumers to apply their rights, to claim for their rights and claim for the money they can get back. So, what I understand is that people don’t have to subscribe to anything for your service. Are you taking a commission on what they get back or what is your business model? 

Sophie Sun: Yes, you are right. So, because we have partnered with insurance companies; that is why they give us a word or a tip. In this product today, we only charge the service fee when we win the case for delayed flights of Chinese passengers. The customer doesn’t have to register anything. 

Matthieu David: I see. So, what would be the way, how do you make money?

Sophie Sun: Yes, just a successful theme. Once a case wins, we charge 30% as our service fee; 30% of the entire compensation. So, for example, if there is a delayed flights of Chinese passengers and you file a claim. You don’t pay anything in advance and while we get money from, for example, Air France for your delay and we take 30% for us and we transfer the rest of the money. So, you are getting 70% without making any effort. 

Matthieu David: I see. I understand. So, who do you define as your clients? 

Sophie Sun: My clients obviously are passengers of delayed flights that do Chinese outbound travel to Europe.

Matthieu David: Okay so, the people who are paying for your service you consider people who are actually; you take the commission from your clients. The environment has a lot of players. You have OTAs, you have airlines (learn more on how Chinese airlines are reacting after the Covid-19 crisis), you have the insurance companies who are actually covering the cost, sometimes reimbursing others and that may be actually the companies you are contacting to get the money back. So, would you mind telling us a bit more about China’s travel ecosystem and how you work with this China’s travel ecosystem and the product? 

Sophie Sun: Sure, so as you know in the travel industry in China, it is totally different than outside of China. That is why a lot of European people; it can come to compete with us directly in the China market, easily. The reason why is the China’s travel ecosystem is different. First of all, from the user behavior we don’t book flight tickets directly with the airlines so often. More than 70% of flights were booked online by online travel agents’ websites as we call them OTA and today actually, we partner with OTA to find delayed customers and that is our B2B2C model and this model is very light landing. So, we don’t need to invest massively for the B2C market which is very, very difficult to target a delayed customer today in China. So, the B2B2C is a faster way to reach our passengers and so obviously the insurance, in the beginning, the insurance company will really be surprised by their solution because what if they compensate the customers once the flight is delayed? It is not a lot of money because so much delay happens in China and the compensation is obviously very little. So, in China, if you buy delay insurance, it’s costing you let’s say 30 China Yen up to 200 China Yen. 200 China Yen is mostly for the national delay and that money; if you are delayed and the delay condition is very high; like more than 4 hours delayed or 5 hours delay. You only get up to 600 Euro compensation. Compared to what you get finally and with all the conditions; it just encourages passengers to protect themselves by their delay insurance, but regardless of all those, delay insurance is super popular in China because Chinese passengers will allocate it by the market and a delay happens every day. So, they have a high chance to travel out with a delayed flight. So, they must buy insurance to protect them. So, every time while we are talking to the passengers, telling them we have a solution, getting your compensation, etc. The first question they ask is, “How much do I have to pay in advance?” I tell them, “No, you don’t need to pay in advance. We are under insurance” and they say, “Oh, I am surprised.” So that’s just to explain to you what the reaction is from the passengers or the players in the market. 

Matthieu David: With OTA; how are you incentivizing them? Are you sharing commission or it is an add-on for the client so they are happy to add you on their website ad talk about you and mention you? How is cooperation?

Sophie Sun: Basically, OTAs don’t want to disturb any passengers while the solution is not valuable. So, they want to minimize it and so they don’t disturb any of the people. They don’t push messages to everyone, of course. They are only targeting delayed flights of Chinese passengers and then they have a condition. Of course, we want to target more than 3 hours delay because when there is more than 3 hours delay, we have a higher chance to get compensation and the cancellation now, so there we will see in-depth if their flight is illegible or not and give them compensation for the online travel agent. So far, most of OTA didn’t ask for the money. The reason they cooperated with us was not for money, initially now so far. So, some OTA even never discusses compensation for their part while working with us. So, actually, I think Chinese OTAs have a huge competition between each other and they want to be a unique service offering and value-added service to their passengers in China’s travel ecosystem. I think that’s the reason why they work with us and plus, we have a double culture. See, both have an organization power and a proficiency. We are professional in terms of asking for compensation with the airlines and they all trust us by sending their customers to us because our customer service in travel is perfect.

Matthieu David: You say one of the first OTA you worked with is Ctrip. Would you mind sharing with us how you can work with such a huge company when you start your business if I am correct? Is it Ctrip?

Sophie Sun: Yes, well not only Ctrip. We worked actually working with most of the OTA so far, and the reason for this is…

Matthieu David: So, the ones we know are Ctrip, Sky Scanner; who else? 

Sophie Sun: Sky Scanner hasn’t worked with us yet. So, if anyone knows Sky Scanner, please reach out to us. I think we are mostly working with… yeah, local-based. Let me explain to you why. I understand a lot of people are curious about that. In China, first of all, every company start-up; because digitalized life didn’t really start like decades ago. It just started ten years ago. Every company is new and because we understand every business has a day one. So, we actually are very open to all the styles, and sometimes you know, when we have start-up’s we actually focus more on the customer needs because that is why a start-up exists. We have discovered new needs and that’s why large companies actually appreciate innovation (learn more about innovation trends in China) and their service-focused startup and we are just arrived at what do they want to partner with and that’s it. I mean, a European country like in France; the start-up needs to prepare for years and then be able to sign their large company like Expedia and as you know like Expedia, they of course… our industry in China; we also are the biggest in the air service and I don’t know other ones; probably very tiny and they also take a look into our service quality; how we handle the claims with other OTA in China’s travel ecosystem. So, a lot of check-ups by the big companies, but they are convinced about our service.

Matthieu David: I see. Does it mean that for every single city traveler whose flight is delayed; they would actually be suggested to contact you or your company? 

Sophie Sun: Not everyone. It is only for serious delayed flights of Chinese passengers or cancellations. So, those other customers really need us and we don’t want to disturb every passenger. When any passenger flies to Europe, they should be aware of this regulation. 

Matthieu David: Good. We understand your product. You are basically helping consumers to activate their own consumer rights in Europe in case of Delayed flights of Chinese passengers. You are focusing on Chinese outbound travel to Europe and specifically for Chinese travelers. Is that correct?

Sophie Sun: Yes, that’s correct.

Matthieu David: Talking about the size of the company; would you mind sharing a bit where you are in development in terms of teams, offices, revenues if you can share, number of clients? You started two years ago. You are not part of Chinaccelerator. We’ll talk about that later on, but what about the size of the company?

Sophie Sun: So, my company; we first registered in 2018 and that is the time… five months after I resigned from Alibaba in France (learn more on how Alibaba is conquering Europe) and so I was based in France before. So, the initial team was recruiting in France and we were just coming from Hong Kong also and then we registered this company in China once SOSE decided to invest in us. So, our team; we have two teams. One is in France and another one is in Shanghai and there is a team in Shanghai because of our OTA partnership so, we have most of the people here. We have airline relation teams to make sure all the claims get welcomed and communicated with the different airlines and both in China and also in the west of Asia because we didn’t only receive a claim from China. We also receive claims from Asia and we have our customer service team, obviously. Customer service; we don’t really recruit local Chinese. We actually recruit international Chinese. So, they both understand how to handle the claim and also talk to the client directly. So, they understand and they are mostly having experience traveling abroad and so they understand the pinpoint for Chinese outbound travel to Europe. So, also customers can trust them easily. Another team is we call it the BI team is Business Intelligence and the Business Intelligence team is very important in our business because once we handle like if we hand 20 clients per day, it doesn’t require a lot of automation and data support, but once we handle more than 200 per day; then that’s something like really we need to focus our automation on and other data analysis, data support is very important for our industry. So, my BD team is only me. So, they don’t call me the CEO of the company. They call me a BD. I think since I was working for Alibaba so, I understand what is the big company needs, who they trust to work with, what type of partners they are searching for if they want to work on these surveys and so I think it is perfect to understand their situation and their concerns. That is why I can let them trust us and move the first one.

Matthieu David: So far, how many clients have you helped get a claim back?

Sophie Sun: We can’t disclose these numbers because we signed obviously there is a large hand that we don’t want to tell and it is not okay to tell because we signed an NDA for these parts. 

Matthieu David: Okay got it. How many do you estimate you could reach? What is the size of the market; the number of delayed flights with Chinese passengers or claims you could get? Do you have an idea of that?

Sophie Sun: So, obviously that’s something we need to verify in day one as entrepreneurs. So, we have a team that do Chinese outbound travel to Europe and there are 1.5-2% of flights that are seriously delayed or cancelled and since between China and Europe, it is mostly in line with up to 600 Euro compensation. So, the market is actually quite big, but we need to target the right passengers because it is not every Chinese that’s going to fly to Europe. China is big and yeah; the number in China is… let’s say it’s the same number as in Spain or in Italy because we are entitled to a bigger compensation if the number of travelers is large enough and later since we can potentially be the other OTA relation such as the South Korea market and Japan market and putting South Korea and Japan market together is actually possibly half of the China market. It is quite big and also Taiwan and Hong Kong are very interesting for us.  

Matthieu David: And it’s a growing market. The thing is that the numbers from China are still lower than they were saying in the beginning, but it is growing fast. It’s slow compared to the population, compared to the US. The penetration rate of traveling has… the activity is still low in China, but growing rapidly and certainly is one of the biggest markets in the coming decade. So, we talked about the product. Now, we know what you do, we know how you do it as well and we understand your business is B2B2C as you said. You go through intermediaries; you get it from the user which is using your service and gets 70% of the claim and you keep 30%. I’d like to talk more about how you discovered this opportunity? You said you were in France at the time, but how did you dig in and find out that that was something you could do and it would be relevant to do? We’re talking about Europe now. Bank one as a lawyer, for instance, to understand all of this. How did it come to you? 

Sophie Sun: Yes, so I was a big traveler and I love to travel and I think the travel experience for me is the most important in my life. I want to protect it and I want to keep it pleasant and less hassle. I think it’s for my personal hobby and interest it makes 100% sense to me to work in China’s travel ecosystem. I saw a lot of things and I since I am a Chinese living abroad, I understand what a Chinese feels when they travel outside of China and what they really need and they always make me think about, “I need to go for a better startup to help people solve their pain points.” So, why Chinese outbound travel to Europe is because I was living there and I understand the ecosystem there. I can build a partnership easily there. I think while I was working at Alibaba actually, there is an interesting story. We have a lot of Chinese people traveling to Paris and everyone has a different story and I think the most hazard that is happening is air travel and lost luggage, delayed flights of Chinese passengers, cancellation of the bookings; all those are really disturbing people and it can destroy the entire journey. That’s why I think working and I was working for an Airbus project before. So, for the air business, I don’t think it is like a mystery for me. For the air business, it is very simple. We understand how they operate, how the airline operates, what is the most important thing for them etc. So, for me solving the pinpointing in air travel is quite interesting. So, all putting things together and then one day while my friend told me, “Hey Sophie, I’m thinking about one idea for a very long time.” He presented an idea to me is that there is an idea in our company, actually. I mean 60% is for like our business and then I check the competition and I talk to the OTA’s and I say, “Okay there is a market. Let’s do that” and so, that’s why our product is number one and it doesn’t mean we will stop here because I think since the Chinese outbound travel base is huge. It’s like one hundred and we have thirteen million in travel to Europe, but that is only 15% of entire flights of outbound travelers and we want to protect every passenger; their rights and we want to not only compliment them after or help them with their flight delay or cancellation. We want to change or re-schedule and we want to also help them handle their luggage hassle and those are really important for a traveler. Let’s say this is just a… in China this is just for that number one and we believe it’s amazing what we can do together with OTAs to help Chinese travellers travel with a better experience thus improving Chinese outbound travel to Europe.

Matthieu David: I see so, I understand that you have a lot of people coming from Alibaba and you found out that they were very annoyed by the delays, loss of luggage and so on and other travel that you knew you could get paid back part of it and you saw there was an opportunity. I get that. You said that you worked for Alibaba for more than 3 years. I looked at your LinkedIn profile. I found out there was like two years and in France, you had been one of the first to join Alibaba in France now which is quite well established and gets a lot of visibility. What did you learn at Alibaba that helped you to start your business? I am asking you that because I have seen so many people with a profile to write Facebook headlines ex-Alibaba or ex-Google and I am always wondering how and why is working in such a company such a statement; as much as getting a degree, as much as it is defining yourself because people use it to define themselves on LinkedIn. So, what did you learn at Alibaba which could now define yourself and change yourself to start this business?

Sophie Sun: Yes, so people gain different things from different experiences. No matter who Alibaba was and who I worked with and which lawyer I worked with; I think if you understand what you want to get, which value you want to contribute and with those objectives, people can learn better than a lot of people. So, people’s learning skills are different. I believe you agree with me and that’s why I met with you today. See, Alibaba is valuable and they taught me, it is a cultural difference and a huge difference. So, I think still Alibaba is not the best example to go abroad. Facebook is western culture. Amazon; yes, but not Alibaba yet. The reason is that the Chinese culture is very strong. We have uni-culture and that culture doesn’t seem to really work very well with European culture and another thing that I found out is that China is big enough to make Alibaba grow very focused on China. They are just the focus in China. Internal needs are already huge. So, for them like going outside of China… for me, it is not really something essential. Well, others make like Alibaba’s decisions. Ours is very unique to any other country. I see the pain points and I learn from that and I said, “I want to build a company that is different” and the culture (learn about the corporate culture in Chinese and MNCs) should be really international. That’s why I think I built a team in France. I recruit mostly Chinese people and why I built a team in Shanghai is because I recruit mostly western minded workers. My team is very international today and the culture let’s say we can both recruit in Chinese locally. We have a Chinese customer service lady who didn’t speak very well English in the beginning and finally, she got along very well with the people in the team. So, I think we have done very well. By learning from Alibaba, I will have the culture and it is really important in the business or in our day one and the second thing I learned is no matter the company; how big it is, how powerful it is. They need to understand local needs. So, local needs mean, when you want to serve people from France, how, why, what do they need? I think if you have never lived there, you will never understand. So, putting yourself in the shoes of the travelers; international travelers in the different countries is really important.  

Matthieu David: So, what I understand now is that what you learned from Alibaba is that culture is actually a sizeable part of the business. So, it is a sizeable reason why you may fail or succeed in business or you may have the idea and play well with the idea; the initial idea. What you did say opened my eyes to a couple of things. I was always surprised at how people who are not technical developers would write on their LinkedIn profile ex-Google or ex-Facebook which are companies where people would find our technical people, but what they may have learned is a culture of innovation, which makes them different or like a new degree. So, give me an understanding of why people may state so much on their profile; the company they have been working with and it is especially big on Google, Facebook, Alibaba and I’d like to talk about your funding. You joined Chinaccelerator one year ago; soon one year ago. I think it’s like 9 or 10 months now and you got money from SOSV which is managed by William Bao. How does it work with Chinaccelerator and SOSV? Could you tell us more?

Sophie Sun: Okay yeah. So, first of all, my company wasn’t like especially searching for funding because we already established a big partnership in China, and obviously funding for us, isn’t a difficult subject, but we don’t necessarily need to take the money. Still, I believe founders who would be able to end their Taiwan’s team salary will be the most important sole leaders and sole foundation of the company. There are so many start-ups that need funding; continuous funding. So, founders who are working full time for funding to survive. We are not in this situation and that’s why the investors who joined us love this. So, William Bao who is the boss of SOSV in China. He liked our idea and my way to do business in Taiwan and that’s why the deal is very easy to close. The reason why we choose them, is also I can see not only because we have a huge amount of work, but it’s also because the organization of SOSV and Chinaccelerator in China are very well organized. They actually have a lot of history of servicing different start-up’s in different fields and they have strong partnerships with large companies. I think, all in all, we really built good collaboration with them and so the program is a 6-month program. Let’s say a 3-month intensive program and then another 3 months come actually earlier to stay with them to understand how they work. So, I am actually a founder who has really arrived to stay in the same office as them, even before the batch starts. We are on batch 16. When batch 15 was still there I was already in the office and brought my desk and by that time I had just moved from Paris to Shanghai and I am a lawyer and I need to find a team. Even they were servicing for their batch 15. My papers still had to still be finalized with their team. They started to help me out. I think it’s a team that is really generous to help. They do whatever they can. They understand the start-up pinpoint. They saw so many examples. So, we can avoid a lot of stupid mistakes by listening or taking their advice. Also, I think they have a luncheon every Friday with us with different founders and key members of the team. Sometimes I ask my intern to join me. So, we understand how to work with them. So, SOSV actually helped us a lot, not only helping me kick off the business but also to give me some advice as a team leader; how to train a team and also, more importantly, manage financially the risk. So, my company on day one, I actually have a founder who really saved a lot of money for the company. They keep a low bill rate in order to survive when there is a situation turning very bad. So, for example, today I was grateful for what we have realized in day one. We actually really are caring for each cent, how we spend and who we recruit and the team is also very aware of the situation today and that’s why we can go through a difficult situation together and I don’t know how long it will take for the Coronavirus to be cleared. Since China Chinese outbound travel to Europe is totally interrupted. I guess it will take at least 3 months to recover. 

Matthieu David: Yes, so for people who are listening to us, later in the year we are recording today, 18 March 2020, and Europe has banned any travel; the European Union as from today. So, I believe this is impacting what you are doing because you are specifically working with Chinese outbound travel to Europe. The ban will last for one month. 

Sophie Sun: I don’t think in one month we will recover. As you can see, the extension. China has managed the Coronavirus very well. It still takes us a month and a half or let’s say 2 months because it’s still continuing and it will take longer than that and that’s why I think the situation in Wuhan and Italy; probably the next step would be the US that would be really, really horrible. We are worried about that because we are exactly in that business. So, I’m a person that really hopes that Europe can manage well otherwise we can only wait and see, but I believe we are not the only ones who are worrying. No matter Chinese companies and you know, it is for the entire China’s travel ecosystem together.    

Matthieu David: I think a topic that is really useful to learn from currently is the topic of crisis management. Every entrepreneur is facing a crisis. Every big company can be facing a current crisis and how to react to it and how to manage it. What is your take on that? How do you react and how do you manage it?

Sophie Sun: Yeah, actually before I started this business my fear or worry is bigger than the reality and then the Coronavirus happened. So, my company was running very well no matter from the different perspectives. We have small problems, but I fix them immediately and make us a little bit stronger each time we fix problems, but this time it is different. This time it is the industry that is interrupted. So, I think under these situations that are really special… so first of all challenge number one was the working distance and while we have a working distance, we have to deliver the project like a new website and we started. I was scheduled to start a partnership with Ctrip like just 1 February. The 1 February was off. So, all those things after February this year, it is the most important month in my life in TravelRight and under so many expectations. We were expecting them to come and we prepared and finally, we have to work from home and all these things happened. We were in shock in the beginning, but immediately we realized how important it is to be united at this moment because each team realized, “Okay, we are a small team” so everyone’s performance will affect business. So, I think this sense of responsibility under the stress, we started to train ourselves to work distancing in high efficiency. So, we succeeded with the work and even now like I didn’t realize the difference between working in the office and in distance and my team will start office work, obviously tomorrow. They will be all in the office. I just returned from France since last week so I need to stay 14 days in my apartment.    

Matthieu David: We are in the same situation. 

Sophie Sun: And another thing is we actually deliver good products. Let’s say if you can check our new website and compare it with our previous website; the user experience… maybe you didn’t go to our previous version so we improved ours, but regardless of distance work. So, my top leader speaks Chinese but lives a New Zealand citizen, and his team is based in Shanghai. Fortunately, we are almost working in the same time zone. So, that’s in distance work and the other challenges are you know; we promised some people to be promoted. When the crisis happened a lot of companies actually fired people. They have no choice if they want to survive, but I had to keep my promise because my team; every one for me is precious and everyone carries importance. I don’t want to miss anyone in this crisis. On day one, the Coronavirus happened and we don’t know how long it will last, but obviously at least a month and a half. So, my estimation for China is accurate. We do promote our team. We realized our promise and some of the key members to let them join us you know; a founding partner and some of them join the talent pool. So, I really managed well the employees and the crisis and the founders insisted on doing the same which was good for the team and it really cheered up a lot of people in the team. On the other hand, we have to face a reality since Europe starts to have the Coronavirus and we realize the crisis is longer than we think. So, at this moment I trust my team who also understands the situation and is willing to do temporary sacrifices in terms of their revenue in order to let the company survive. So, I think the founder needs to understand to give and take. This is very Chinese and also, I think it is a very universal philosophy. Another thing is I was grateful for insisting on global rates in the company. So, we don’t recruit…. If we can manage with one person, we do not recruit two. We only increase the number of workers when the volume really comes in. So, I am not so aggressive which is right because even before the Coronavirus the Chinese economy was slowing down and other venture capitals (read our latest article on the venture capital market in China) started investing in most of the start-ups, especially in an early stage. So, those are the things I learned and we were insisting to do the same thing, but I think now we have the capacity within the team to make a change. It’s really important. Last week during our weekly meeting, the entire team was talking about how we bring a new avenue to the company. Every person gave one or two points to think about that and I found that my team has a lot of ideas; how to pivot, to bring extra revenue, and I really appreciate that. It seems that making a change is not only me. It is the entire team together. So that is why yesterday I wrote on my WeChat, “If your cash is not enough to support you for the coming 8 months” the entire team has to make a change together and that change is not only about a company change., it is also a personal avenue change, organization change and why do you need to standby and waste the situation? It is not just the company in the situation and then you can maybe re-join the company again. So, a lot of things could have happened and we can only make the choice. Do not be afraid to talk about your fear to the team because if you don’t talk about it now and one day you realize in the last moment that you are going to hurt someone and I think sometimes we need to let people know in advance; a psychological preparation. I am not being very negative. Actually, that’s the only way to save the company or to survive and survival will be the one to welcome the next up because life has ups and down’s also. So, why stop? If you can survive, you will be the person to welcome the up. So that’s what I wanted to say. 

Matthieu David: Yeah thanks for sharing your management of the crisis. What I understand is that your focus was on the team to make sure there was a team positiveness and you stand together and the second move was; which is very interesting is what kind of pivot we can do and make sure everyone is comfortable with a pivot on the product. So, you actually followed a typical crisis management program, which is to make sure that everyone is on board first and secondly, to see what can be added to the product to the current situation. It’s very interesting feedback that you gave to us. In the documents you sent to us talking about the team, you say that you are running a daily debrief meeting. Would you mind sharing a bit more about your management style? A daily debrief meeting looks very much like what entrepreneurial organizations and books are teaching entrepreneurs. So, would you mind sharing more about your principle of management?

Sophie Sun: Yes, so every person joining the team, I tell them… most of them are young people. So, I was a really lucky person to receive western-style management in day one of my careers. So, I was allocated by the western side management style, but I grew up in the Chinese… or let’s say my family is running a business so I have seen since I was young. I understand my mom allocating me and how she ran her business was very tough, but it is very real. So, I understand both the Chinese management style and the European management style, but compared to the styles; personally, I think we need to take those good styles. Let’s say western management style is mostly my company’s conduct. So, internal organization, a communication tool, we use western sides and partnerships, spirits, contribution, united when the situation is difficult. That is very Chinese because I think that on the western side, people are very self-protective. They protect themselves. They have a reason for doing that, but in China, we try to focus on the bigger picture and sometimes we sacrifice while it is necessary, but finally, will everybody do the same thing? A situation can change quickly to a positive situation and then I think we need to take it both sides. So, under the partnership, I really like the Chinese on my side. So, the region where I grew up is where Alibaba was born, where all the suppliers for Alibaba were born.  

Matthieu David: Where are you from?

Sophie Sun: Taisho. So, we are like one hour and a half drive away and so, in my region, every business was running by the family and the staff is zero which means family putting money together to support their relatives to run their business and they trust that person and probably he is the most intelligent and hard worker. During the day time, you are a boss, but during the evening time, you are sleeping on the floor. 

Matthieu David: Yes, for people listening to us, who may not know the difference between the different provinces, Zhejiang is on the east coast and very commercially dynamic and Wenzhou which has a very huge boo ha in France, particularly, but all over the world and they are known in China for being business people and indeed, there is this saying that I would prefer to sleep on the floor than to work for someone else. That is the mindset of the people living in Zhejiang and Wenzhou because Wenzhou is very well-known as a city of small to medium entrepreneurs in China. Is that correct? 

Sophie Sun: Yes, Wenzhou is very special. Wenzhou really supports entrepreneurship. Zhejiang still has a lot of corporate life and they want to be abroad and no matter if they qualify or not. It doesn’t matter. Running a small business like opening a restaurant is even better than any corporate life. So, they were thinking of this side. The western region less, but we are very reasoned. We are kind of aversive for the entrepreneur, but we don’t really overdo it. What I want to say is like I am not the type of person who wants to take too much risk because risk; if it is manageable you should take it. So, for me, which means they want actually the news why TravelRight is insisting on lowering the bill rate. We know the money comes as a trust from the other people, my investor is my best friend and they not only understand my business but also understand me. So, I am a very lucky person to have very good investors on board and I hope I can insist on doing the same thing so that our entire organization’s funding can run in a healthy way. A lot of founders are hiring or talking to investors. Talking to investors can take the entire day and that will make rouble of yourself. So, I would rather be modest and welcome fewer investors instead of welcoming all investors. We are very cautious about that.  

Matthieu David: We talked about the identity of coming from those provinces, but there is another identity you are mentioning in interviews and papers you have shared with us and this is to be a female entrepreneur in China. My feeling is that if there is a country where you can express yourself as a woman and an entrepreneur it is China because China has the highest number of a woman or female billionaires and it seems that it is has been the case for many years or decades that female entrepreneurs in China are part of the economic life and high positions, but what is your take on this? Do you feel the same as I do or do you feel China still has progress to make? 

Sophie Sun: Matthieu, you understand China very well. I can see that. True, female entrepreneur in China is something. It is popular and I met a lot of female entrepreneurs in China. In Shanghai, we have a lady who supports all the ladies in the tech industry and actually, William Bao and the lady who does the events. William in believing in the female entrepreneurs in China; he is an example to invest in a woman. I think supporting a woman is that we don’t feel such huge differences between males and females. So, that is a basic understanding. In family life, the woman takes leadership. In the big cities, that is normal is that local culture; the woman takes leadership. I will tell you why and probably I can find some clues for you. A lot of language schools (learn more about China’s language schools market) back to my university life it was a woman who started English majors and French majors and so, women are good at foreign language and foreign companies recruit people who speak good languages. So, they are recruiting mostly women, and women learn very openly about their culture. They are very sensitive to culture. You can see that the Chinese woman stays in Paris more than most. So, all these things make women learn the western culture very quickly and once you understand the culture better and you know how to deal with the people and you take the lead. So, you can see that in a lot of big companies., So, women leadership in foreign companies; they have woman leadership that is super strong. 

Matthieu David: That would be the last question on this topic. I feel you have spoken a lot about it. I’d like to dig a bit more. As far as I understand there are two kinds of feminism. One feminism is and I don’t know if you like the word ‘feminism’, but there are two kinds of what we call feminism. One is to say, “Male and female are the same.” So, you would need to treat them the same way. There is no difference. Another kind of feminism is to say, “Men and women are different.” We are biologically different, so we have to be treated differently, but equally. So, to have access to equal opportunities and so on in our differences because at some point, women and men may have different constraints in life which could be biological and all that, but he has to be respected and valued in the same way. What kind of feminism do you believe most China is in because again, the place of women in business has been one of the obvious successes of the development of China, but what kind of feminism it is? Is it that male and female are the same; the exact same way or male and female are different, but we make sure we have access to similar opportunities? 

Sophie Sun: Oh yeah, I think another thing about that; before you ask me this question because rarely in China people ask, “Is a man and woman the same?” Your father loves you. Your parents love you and your sister more or your brother more. So, it is kind of a very remote question in China, but I do ask it a lot as a female entrepreneur in China. I am curious, probably. There is a woman who wants to catch up to me and say, “You should understand them.” I think China asks the question last today because they are almost equal, I guess. I am away for 7 years in China, probably it was not what I saw today. Maybe one year later you give me another interview and I will talk differently, but so far, I feel that woman entrepreneurs in China are mostly supported. So also, I think both men and women should access of course equal opportunities in different industries. It is encouraging the ladies in the tech business, in the tech field which is good, I think. People are different and we cannot only divide the woman and the men. All people are different so, they have different skills and we shouldn’t say, “Okay in legal teams or in tech teams, I need to recruit a man more than a woman”, but from my company, I found out that men and women are equal (learn more on gender equality at work in China). They are all excellent, but I tend to and it’s like it’s not just me that makes the choice. We all just want to recruit the best people ever, who fit with the team, who are motivated and that is very important because skills can be trained, but motivation we cannot change easily. So, always we pick the people who are most motivated. 

Matthieu David: My feeling is that China is more in the family zen of ‘we are the same’ and male and female should be treated the same as in the western countries; Europe and the US may be more in the second feminism, I feel which is to say, “We need to do positive action for women because they are not elected enough in politics so we force to choose one male and one female all the time to be elected” or we push them to have access to certain things by creating regulations. That’s why I’m all the more surprised at how it has advanced and has been successful in China Simon De Bovoar, The Second Sex book is famous and well known in China. That has been one of the surprises when I arrive in China 10 years ago when I was picking this team, how popular and well known and respected she was for her feminism. So, yeah. Thanks for joining us. It was very interesting. We are talking about a time that is very challenging for you and very challenging for other people and a lot of countries and companies. As entrepreneurs, we all believe that it will all be back on track soon. Hopefully within 2 or 3 months and I wish everyone is staying safe.

Sophie Sun: Thank you, Matthieu, for the interview. I am happy to talk with you and share my experience. Hopefully, we can have another interview after the crisis is finished. I hope you are staying safe with your team. 

Matthieu David: Stay safe everyone. Thanks for listening. Bye-bye, everyone. 

China paradigm is a China business podcast sponsored by Daxue Consulting where we interview successful entrepreneurs about their businesses in China. You can access all available episodes from the China paradigm Youtube page.

Do not hesitate to reach out our project managers at dx@daxue-consulting.com to get all answers to your questions

This article China Paradigm transcript #95: How one company leverages delays of Chinese outbound travel to Europe is the first one to appear on Daxue Consulting - Market Research China.

China is the world’s largest outbound travel market in both the number of tourists and spending. Drivers of China’s rising outbound travel market include rising incomes, relaxed travel visas, increased global awareness, easier access to travel information online, and more international airlines. Outbound travel is, of course, the driver of Chinese duty-free consumption. This report explains how duty-free shops, both in China and overseas, can reach Chinese travelers.

[Data Source: chyxx.com, Chinese Duty-Free Consumption report by daxue consulting, growing number of Chinese outbound trips]

Popular destinations of Chinese outbound tourism

South-East Asian and East Asian countries are the first choice for Chinese outbound tourists. Top destinations are Thailand, Japan and Vietnam. The choice of these destinations is due to the geographical proximity to China and the ease of obtaining a visa.

[Data Source: Analysys& National Tourism Administration in different countries, Chinese Duty-Free Consumption report by daxue consulting, top outbound destinations for Chinese tourists]

Key trends of Chinese outbound tourism

The rapid growth of outbound tourists continues to drive Chinese duty-free consumption, but the per capita single-consumption amount has not changed significantly. Besides, due to the opening of new airline routes and the general increase in consumption capacity, non-first-tier cities have become major growth engines. In terms of age distribution of tourists, the growth is concentrated on those born between 1950 -1970, and 1990 -2010. More and more Chinese travelers are interested in both shopping and new experiences. Restaurants, museums and special performances are key projects for outbound travel.

Outbound tourism expenses

Due to the rising purchasing power of the middle classes, Chinese consumers’ spending on outbound tourism has been the world’s No.1 for 7 years and the number is still increasing. Regardless of tourism destinations, Chinese often spend a large part of total travel expense on cultural activities, accommodation, and shopping.

[Data Source: UNWTO, Chinese Duty-Free Consumption report by daxue consulting, China’s growing expenses on outbound tourism]

When asked about favorite shopping destinations during travel, more than 60% of Chinese outbound tourists prefer duty-free shops, as have assured quality at a cheaper price. Retailers around the world focus on Chinese customers because of their strong purchasing power. For example, in South Korea, Chinese duty-free consumption accounted for 83.4 billion RMB on duty free goods in 2018. This accounts for 73.4% of the total sales of duty-free stores in the nation.

[Data Source: McKinsey & Company, Nielsen, Chinese Duty-Free Consumption report by daxue consulting, duty-free stores are the most preferable channel for Chinese tourists]

Global duty-free sales

Due to an increasing number of travelers and rising spend per person, Asia Pacific region drives most the global growth of duty-free sales. In emerging countries such as India and China, Chinese middle-class consumers have the spending capacity to promote the growth of the duty-free industry in the global market.

[Data Source: Tax Free World Association, Generation research, Chinese Duty-Free Consumption report by daxue consulting, growth of duty-free sales in APAC]

Global duty-free sales in different channels

Due to the high volume of passengers, good maintenance and having a wide variety of brands and products, airport shops account for the largest amount of global sales. Downtown shops and border shops had realized significant increase in sales with the continuous expansion of shops in urban areas.

[Data Source: Statista, Chinese Duty-Free Consumption report by daxue consulting, airports take a lead as duty-free channel]

Inbound duty-free market in China

Due to policy support in recent years, China’s inbound duty-free shopping is now competing with South Korea’s dominant position. Offshore duty-free shops grew quickly during the last few years with the relaxation of restrictions and the increased number of product categories.

COVID-19 hits the Chinese tourism industry

The damage to the Chinese tourism industry because of outbreak is equivalent to a loss of 1 trillion RMB GDP. Many travel enterprises estimated the ongoing shutdown costs the industry about ¥17.8 billion every day.

[Data Source: Tai Media APP, Sina Finance, Chinese Duty-Free Consumption report by daxue consulting, decreasing domestic trips due to COVID-19]

Only 2% Chinese tourism related companies felt that they had not been significantly affected after the COVID-19 outbreak. Coronavirus impact on tourism in China especially visible among travel agents, hotels, and retailers (related to tourism). 

Chinese tourists contribute to the tourism industry in many countries. For instance, in 2018, Chinese tourists represent more than 70% total tourism in Hong Kong and Macao, similarly, more than 25% total tourism in Thailand, Japan, Vietnam and Korea. The impact on the economies of these countries will likely rebound in the second half of 2020.

[Data Source: Press reports; McKinsey Global Institute; Pengpai News, Chinese Duty-Free Consumption report by daxue consulting]

Coronavirus impact on tourism in China opened the opportunities for new online approach in this sphere. During the COVID-19 outbreak, many scenic areas and museums used live-stream to increase exposure and attract tourists, which attracted a lot of traffic. Even after the outbreak, the live-stream still can be watched by elderly and people with disabilities, and can be used as a preview before travel.

Short-term and long-term coronavirus impact on tourism in China

[Data Source: TravelDaily, Chinese Duty-Free Consumption report by daxue consulting]

Key Characteristics of Chinese Outbound Tourists

Chinese outbound tourists demographics

Those born in the 90s and 80s make the majority of overseas tourists. They are, on average, highly influenced by social media and they usually plan carefully to find value-for-money trip sand shopping. These Chinese tourists pay attention to both quality and price, they like customized activities and products offered by local stores.

[Data Source: Analysys & National Tourism Administration in different countries. China Tourism Academy, Chinese Duty-Free Consumption report by daxue consulting, majority of Chinese outbound tourists are young people]

Most Chinese outbound tourists come from tier-1 and tier-2 cities (provincial capital cities), over half are female. Most are also upper middle-income citizens who are willing to spend money while traveling to seek high-quality experiences.

[Data Source: Analysys & National Tourism Administration in different countries. China Tourism Academy, Chinese Duty-Free Consumption report by daxue consulting]

Chinese Duty-free consumption: The most popular duty-free goods

Skin care and beauty products are the most popular goods in duty-free shops. Women are the most important consumers, since the top selling products are women’s products. In addition, Chinese tourists tend to buy famous wine and wrist watches. Many Chinese tourists research duty-free products before purchase by reviewing online recommendations. Even after they arrive at their destinations, Chinese travelers will continue to research about duty-free goods. Brands can reach Chinese tourists by launching their own Chinese websites and apps. This allows consumers to shop anytime, anywhere, at their convenience.

Buying purpose of Chinese Duty-free consumption

When visiting duty-free stores, Chinese tourists of ten purchase duty-free goods for themselves or as gifts. A small percentage of Chinese duty-free consumption accounts for buying duty-free goods on behalf of others, such as Daigou, which is someone who buys goods from foreign markets and sells them back to consumers in mainland China. Many duty-free consumption behaviors among Chinese tourists are planned spending rather than impulse spending, they make plans based on the info from guides and comments on Chinese social media and travel websites.

[Data Source: PTRA, m1nd-set, Chinese Duty-Free Consumption report by daxue consulting]

Payment methods of Chinese overseas tourists

The payment methods of Chinese tourists vary by age and travel destinations. The post-70s and 80s Chinese tourists tend to use bank card payment during trips. For post-90s Chinese tourists, mobile payments make up a big proportion of their payment methods. Cash payment is used by all the generations of Chinese overseas travelers. They use bank cards more frequently in developed regions where credit cards are used more commonly, such as the USA. At destinations where tourists can easily connect to mainland China’s banking system, such as Hong Kong, Chinese tourists prefer mobile payment since it is convenient and a better way to keep track of spending.

[Data Source: Nielsen, Chinese Duty-Free Consumption report by daxue consulting]

How Can Brands Reach Chinese Outbound Tourists

Offer content that adapts to Chinese consumers

China outbound tourists generally choose to read travel recommendations before trips, and the most convenient way is to use popular media platforms that specialize in tourism and shopping, such as Weibo, WeChat public accounts, Mafengwo, etc. Those platforms normally provide accurate content by precisely targeting groups to permeate. Naturally, major brands choose to cooperate with these platforms to get them mention their products in articles in order to gain a high degree of attention.

Interact with consumers by delivering targeting brand campaigns

As competition intensifies among brands, companies nowadays innovate and differentiate themselves by delivering customer-centric campaigns in China, and experiences that give their target audience a compelling reason to become customers. As for duty-free brands, participating in similar duty-free shopping festivals can better interact with consumers and increase brand recognition in this field. For Chinese consumers, this kind of offline events make them have easy access to some foreign luxury brands that are not easily available in mainland China.

Provide more duty-free exclusives

Since Chinese outbound travelers purchase ahead of the Chinese New Year period and other holidays, travel retail exclusives are key purchase drivers at those time period. Also, “uniqueness of products or services” is one of the most impactful factors among duty-free shoppers. Duty-free stores offer some famous Chinese brands with lower price, compare with domestic stores, like Moutai. Because of the export tax rebate policy (exported goods pay less tax), Moutai in duty-free shops is much cheaper than the same product in domestic shops, which attracted many Chinese overseas tourists who like Baijiu (白酒).

[Data Source: daxue consulting, Special selection Moutai in duty-free market]

Cooperate with mobile e-commerce to reach traveling consumers

By cooperating with a mobile e-commerce platform like GlobuyX, duty-free brands can settle in mobile e-commerce to expand their promotion channels and connect with Chinese consumers. Globuy launched a WeChat mini-program that allows duty-free brands to exposure advertisements, duty-free goods discovery and pre-orders, WeChat menu links and exclusive benefits. Through this kind of cooperation, brands can reinforce their awareness and branding, achieve the purpose of communicating brand events and products with consumers and increase footprint and exposure online and offline in China.

[Data Source: GlobuyX mini-program, Chinese Duty-Free Consumption report by daxue consulting]

KOL Marketing to reach Chinese duty-free consumers

With the strong development of KOLs in China, consumers will now hold a wait-and-see attitude and buy products after KOLs. Therefore, some high-end duty-free brands choose to cooperate with KOL to increase their sales. According to Weibo data, the number of discussions on the Sanya Duty-Free’s Night in reached 30,000 times, and the number of likes exceeded 5,000. During Sanya’s Duty-Free Night, they successfully attracted a large number of fans by holding meet-and-greets with fans for major KOLs, including cosmetics, fashion, etc. When KOLs interacted with fans (take pictures, signature, etc.), they also recommended products to them.

How Duty-Free Shops Can Attract More Chinese Outbound Tourists

Global competitive landscape of travel retailers

The global duty-free and travel retail market is highly fragmented, and the market is dominated by non-Chinese brands.

Chinese Duty-free consumption: Business overview of Dufry

DufryAG, from Switzerland, is the world’s largest duty-free retailer with over 2,300 shops in 65 countries. The combination of organic growth and M&A enabled continuous high growth of Dufry.

[Data Source: The Global Travel Retailer 2019, Chinese Duty-Free Consumption report by daxue consulting]

Dufry’s digitalization strategy

Dufry aims to be present at every stage of the whole Chinese customer journey. By using digital and technology innovation, it is enabled to improve consumers’ shopping experience and provide personal tailored services. Travel loyalty program combining shopping and travel benefits.
 

After one year of membership, average purchase frequency increased 80% and the average spending increased 131%, comparing to the data collected one year before the membership. Dufry has virtual lipstick testing technology in the store, customers can change the color with a tap of the screen.  The strategy engages customers during in-store shopping experiences.

Dufry’s pre-order service for Chinese consumers

Dufry’s “reserve & collect” website allows consumers to pre-order duty-free goods online, then pick up and pay for Hong Kong’s offline stores. The website had 5,570 visits in November 2019. The service adopted Chinese consumers’ demands for convenience and preferential price.

Chinese Duty-free consumption: Overview of the China duty-free Group (CDFG)(中国免税集团)

As a state-owned duty-free company, China duty-free Group (CDFG) has realized high-speed development in recent years with powerful support from the Chinese government. The company has started to step into the global market, although it focuses on China’s domestic market.

[Data Source: chyxx.com, Chinese Duty-Free Consumption report by daxue consulting]

CDFG’s new travel retail strategy

Utilize digital technology to enhance connection with consumers. For example, in 2018, CDFG built a membership big data platform that helped the company have better understanding on their customers. Then, personalized service can be offered to ensure better shopping experience.

[Data Source: tfwa.com, Chinese Duty-Free Consumption report by daxue consulting]

CDFG’s strategic cooperation with Alibaba

In November 2018, CDFG officially built strategic partnership with Alibaba Group to expand the retail market in China. The cooperation focuses on areas including e-commerce, big data and logistics, aiming at establishing a new tourism ecosystem. The partnership allowed CDFG to use Alibaba’s digital tools and e-commerce platforms to optimize offline duty-free shopping and improve its logistic efficiency. According to the agreement, consumers can use Alipay in CDFG’s offline duty-free stores. As one of the merchants on ‘Fliggy buy’ (the global shopping channel on Fliggy, platform owned by Alibaba), CDFG can provide its products and content to attract Chinese consumers.
Powerful support from Alibaba group ensure CDFG better performance on digitalization and have access to more consumers’ information.

CDFG’s social media strategy

In addition to KOL collaborations, CDFG also leveraged live-stream promotions. The live-stream focused on skincare and cosmetics demonstrations. Also, it picked some popular brands to introduce price, size, discount, etc. by interviewing salespeople. Many Chinese consumers favor this kind of videos that share in-store experience. Audience members who share the video can have a chance by lucky draw to receive Guerlain’s perfume for free. This attracted much attention from Chinese customers and received 3.67 million views on social media.  

The upgraded strategies of duty-free retailers

As in the case with many offer industries, digitalization offers great opportunity to the duty-free and travel retail industry. For duty-free retailers, digital technologies are tools that can build a travel retail ecosystem. By working closely with brands, airports, airlines, etc., data can be integrated to obtain a complete view of the customer journey and buying behaviors. Therefore, duty-free shops and travel retailers are enabled to provide superior customer experience and establish loyalty programs. By integrating online and offline channels, travel retailers are able to further increase personalized communication with customers at home, during their whole journey, and when they are at the airport.

Chinese traveling shoppers usually learn about duty-free products from shopping related content and other people’s comments on Chinese social media platforms. Understanding and adapting to the needs of Chinese tourists is critical. Chinese consumers have different shopping habits from other countries’ tourists. Duty-free retailers should have content and promotion activities that precisely target different types of Chinese consumers.

Key Takeaways

China’s travelers are increasingly sophisticated. The Chinese millennials (born in the 80s and 90s) are sophisticated, price sensitive, and usually search on social media and travel websites before tourism and purchase. They seek high value, unique and exclusive products during their trips.

Experience is as important as price. Chinese overseas travelers value unique experiences. Innovative store design, engaging customer service, targeting emotional connections and flexible payment methods can bring better shopping experience to Chinese duty-free consumers.

Reach consumers ahead of time and optimize convenience. Most Chinese tourists plan their duty-free purchases ahead of time. Brands and duty-free shops promote products by allowing pre-orders, remote fulfillment and mobile payments. This helps Chinese consumers move purchases from being impulse to planned, and reduce ‘inconvenience’ as a barrier of shopping.

Attracting Chinese consumers by exclusive deals. Many Chinese tourists want to buy products they cannot find in China. Duty-free stores can drive demand by having a greater array of limited-edition products, value packs, and duty-free exclusives.

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This article Chinese duty-free consumption: China as the World’s Largest Outbound Travel Market is the first one to appear on Daxue Consulting - Market Research China.

Matthieu David interviews Sophie Sun, a founder at TravelRight. If you’re a traveler and flying to your destinations is your choice of transportation then you’ve definitely dealt with flight delays before. For people flying from China the answer to their flight delay related issues seems to be TravelRight, which is not an insurance company but it is a valuable resource to OTAs and travel insurance companies across China. Let’s find out why in this China Paradigm podcast!

• 0:10 Guest introduction
• 2:38 What does TravelRight do?
• 4:53 What is TravelRight’s business model?
• 5:59 Who are TravelRight’s customers and is the company meeting their needs?
• 9:56 Why do OTAs like to work with TravelRight?
• 15:20 TravelRight – a short company history
• 18:44 The delayed customer market – how big is it?
• 21:19 How did Sophie Sun come up with the idea for TravelRight?
• 26:33 The value of an Alibaba education
• 31:10 The funding behind Travel Right
• 36:17 The Coronavirus outbreak – how does it affect TravelRight?
• 37:44 The Pandemic Paradigm – how to manage a business crisis
• 47:07 Shopie Sun’s management style – a western education
• 54:10 Opinions on being a women entrepreneur in China
• 1:01:41 Outro

How a company claims flight compensation for Chinese passengers

One relevant episode

We believe, that China, with 20% of the world population and as the second world economy, is impacting every single business, small to big. That is why it is a new paradigm. How does China impact your business is the ultimate question we will answer through those podcasts.

China paradigm is a China business podcast sponsored by Daxue Consulting where we interview successful entrepreneurs about their businesses in China. You can access all available episodes from the China paradigm Youtube page.

This article China Paradigm 95: Navigating the travel industry in the time of the Coronavirus is the first one to appear on Daxue Consulting - Market Research China.

Full transcript below:

Interviewer: What is the new service ‘Ctrip point of interest’?

Olivier: Ctrip developed a new function in their app to regroup what they call the point of interest. What is Ctrip in general? It’s a kind of booking.com so people use it for book tickets, hotels etc. And what they want is that people will use their app more to search information while travelling or after and share their thoughts on Ctrip.

Ctrip’s indirect competitors are more Mafengwo or Tripadvisor. And this app became very successful because it is based on user generated content. Ctrip is going to ask its users their personal information to put it on a platform to regroup everything under tags. Those tags are called ‘points of interest’. Let me give you an example: a point of interest can be a museum, a church, a shop, a restaurant, it can be anything Chinese tourists need to see on a trip. And the more people are going to share their information the more points of interest will become popular and bring traffic. That is their first move.

As a marketer, because of my clients are restaurants or shops based overseas, it is a big opportunity for them because they can take control of this point of interest, put ads, manage content like putting some pictures to be in the top popular things to see in the city and attract the people.

So I’m a new traveler and I need to go to Paris for example. I have 3 days. Ctrip will make for me recommendations of the top 10 points of interest like the Louvre, Notre Dame and this kind of things. So I will be able to follow what Ctrip and all the users are recommending to me and check the pictures. Everything not based on beautiful flyers but on user generated content. That is the new concept of Ctrip point of interest.

Daxue Talks is a show powered by daxue consulting, a china-based strategic market research company founded in 2010! With Daxue Talks, you will stay up to date with all the latest business updates in China.

This article Daxue Talks transcript #31: Attract Chinese tourists in your local shop overseas is the first one to appear on Daxue Consulting - Market Research China.

China’s silver economy is full of potential for brands who know how to market to seniors in China

What does China’s aging population mean for brands

Often referred to as the seniors’ market, the Silver Economy in China covers all products and services intended for people aged 60 and older. China has gradually transferred into an aging society as the byproduct of the one-child policy. The graph below shows the rapid growth of the senior population in China. With elderly taking up a larger portion of the population, the question for brands is how to market to elderly in China.

By the end of 2018, China had nearly 250 million people aged 60 and above, accounting for 17.9% of the total population. Every year, 8-10 million Chinese people turn 60 years old. By the end of 2025, there will be around 300 million Chinese senior citizens, accounting for one-fifth of the total population.

By 2035, China is one track to become a hyper aged city as predicted. Contrary to the popular belief, the silver generation in China is an underrated group of consumers. They are eager to spend money in different areas, from elderly care service to luxury tour packages. 40 percent of Chinese retirees have the ability to go on luxury holidays. Additionally, in 2013, among 2.5 million people whose income is more than 130,000 yuan, 51 percent of that group were 40 to 49 and 21 percent were older than 50 years old. That being said, businesses in China should not ignore the emerging silver market as the silver generation market in China is larger than expected.

With a retirement age of 60 for men and 55 for women, Chinese pensioners are among the youngest in the world. For mass-market companies in industries such as leisure, health, banking and insurance, this population of people, aged 60 or more, is a very attractive target. Not only are they younger than previous generations, but they enjoy more free time than the active population. They are also experiencing a growth in purchase power and account for around 10 million more people every year. In 2050, seniors are estimated to be around 500 million in China, up from the current 220 million today. Thus marketers are working on adapting their products towards this new and high potential market. However, targeting Chinese seniors is not as easy as it seems.

Great opportunities ahead on the senior market

First of all, the purchasing power of Chinese seniors remains largely under-exploited by companies. According to Wang Jiyong, vice-chairman of the Chinese Senior Industry Association (CSIA), “the senior market is worth more than 170 billion renminbi (around 28 billion dollars in 2015), but the products that are addressing this market today are only worth 120 billion”, which represented, in 2015, an untapped opportunity of around 8 billion dollars.

Some studies, such as one by the National Committee on Aging, estimate the senior market at 594 billion euros, which represents 8% of China’s GDP. This estimation is far above the CSIA’s, but the findings remain the same: companies have still not been able to fully take advantage of China’s senior market.

The elderly feel neglected by advertisers

In 2013, the wide majority of the 3,600 Chinese people older than 60 who were asked to share their thoughts on this subject revealed that they felt ignored by marketers. Only 8% of the seniors thought that marketing and advertising were addressed to them in a relevant way, the Wall Street Journal reported.

Another study realised through qualitative interviews by the group HKTDC, proved even more so how the absence of marketing specifically targeting seniors generates a feeling of marginalisation. According to respondents, if there were products designed for seniors, especially in the apparel sector, those items would be highlighted, neither through advertising nor regarding distribution since they can only be found in second-tier malls.

What marketing strategy could be adopted?

However, the Chinese elderly don’t expect marketing that would directly target them, because it would be another form of marginalisation. Regarding the apparel industry, where the offer for seniors consists essentially of low-quality products, the elderly interviewed by HKTDC prefer to see middle-aged models in ads for quality products addressed to the mass market.

Volkswagen is one of the few Western brands that was able to efficiently target seniors with a commercial for its Beetle, showing elderlies imitating teenagers. Moreover, marketers should not hesitate to use the Internet and social networks to engage with the older generations, since these days, they are more and more connected.

Chinese senior citizens’ consumption habits

Chinese senior citizen’s consumption is distinctly different from the consumption of the younger generation. Most of the senior population in China hold the traditional opinion that it is important not to spend frivolously. They are more careful about their purchase decision. Thus, marketing to the seniors in China is different from marketing to the younger generation.

However, even though senior citizens care about products’ practicality and price since they are more frugal than the young generation, with a rising disposable income and improved economy, the spending pattern of the elderly generation changed from traditional frugality to enjoyment. China’s senior population are more likely to spend money on these four areas:

1. Leisure and exercise
2. Fashion and beauty
3. Healthcare products
4. Care services/goods

How tourism packages are tailored for seniors in China

“Mom and Dad Relaxation Tour”: huge demand, tailored design for elderly in China

The silver generation in China is one specific market in the tourism agency industry in China. China’s senior citizen travelers make up 46 percent of China’s outbound tourists. Compared to younger generation, they have plenty of free time as they are retired and have accumulated wealth to travel. “Senior travelers currently contribute around 20 percent of China’s total tourism market value,” says Zhang Qi, a manager at Ctrip, China’s biggest online travel agency.

Different from the young consumers, when the silver generation in China plans to travel, they have more concerns about travel details like travel insurance and less energy to research on their travel plans. As a result, in Ctrip’s report, 82 percent of the silver generation in China are willing to travel with a travel agency. Despite that, the silver generation in China usually have special needs when choosing a travel agency.

Screenshot of a zhihu question “Is there any suitable travel agency products for the senior citizens in China?” In the description, it mentions the author wants to find a travel product for his/her elderly parents: 1) Customized itinerary for senior citizens 2) Quality customer service 3) The tour guide needs to be responsible for the elderly people and not allow them to get scammed 4) Similar aged tour mates.

Facing the current market, the travel agency industry provides more tailored travel packages targeting senior citizens. In 2016, the Ministry of Tourism in China announced the related guidelines about the elderly and tourism agency.  The guidelines aim to ensure the rights for the elderly people to travel and includes, for example, that transportation and sightseeing schedules should not be too heavy, out of health concerns for senior tourists. Therefore, big travel agencies like Ctrip offer tours like “Mom and Dad Relaxation Tours” to market to senior citizens in China.

Marketing to seniors in China: not for Weibo and Little Red book

Finding the appropriate marketing strategies for marketing to seniors in China is complex. Compared to the younger generation, the silver generation in China prefers to use offline travel agents as their choice because the senior citizens are relatively less active in social media. While the younger generation tends to do their research about tour agencies on social media or websites, the silver generation tends to trust brands they are familiar with. In this case, marketing to seniors in China needs offline stores and physical advertisements, including flyers, brochures, etc. For example, Spring Tour travel agency which has been operating in Shanghai for 30 years has 50 branches across Shanghai, and has succeeded at marketing to China’s ageing population.

While the senior citizens have less internet literacy, with the development of technology the senior generation in China has been more active on the internet. According to a Ctrip report, 51 percent of the silver generation in China use APPs to order travel agency tour online in 2018, an increase of 16 percent from 2016. Thus, different travel agencies should also not ignore online marketing channel.

Optimizing  senior citizens’ online shopping experience in China

The silver generation in China enjoys online shopping. It has become the new favorite past time of China’s old generation when 92 percent of them prefer to shop online, as research indicates. Apparently, Taobao, the Alibaba-backed online retailer. has realized the large potential of the senior citizen market in online shopping. In year 2017, Taobao has 6 million users aged 60 to 69, spending possibly at around $200 billion a year.

However, the senior generation in China experience some difficulties in online shopping. For example, they still have concerns about E-payment security. Online payment has become a new trend in China, as in 2017, China saw $15 trillion in mobile payments. Secondly, the seniors in China are behind in the cashless society. The reasons behind that are plenty, including the seniors’ poor eye sights to see every detail on the screen and poor memories to remember how to use payment app, and simply not being native users of technology.

Taobao applies a series of strategies for marketing to the seniors in China. In 2018, Taobao launched an elderly-friendly version of its App to market to Chinese senior consumers. Compared to the original APP, this version is designed to be easier for older shoppers to use by simplifying the online payment process with a function called “pay for me” for the elderly to send the payment link to their children.

Because the senior generation’s purchase decisions are usually influenced by the opinions of their family, the customized app also displays their children’s account on every page so users can easily share products or start a conversation online. It also has a larger, less crowded interface, and simpler platform layout. Alibaba recruited a pair of “Senior Experience Officers,” for providing user feedback of the “elderly-friendly version”  app and exploring the possibilities for improvement in order to marketing to the seniors in China better.

Additionally, Taobao started a program called “Taobao College For Seniors” in Hangzhou, teaching the senior generation about shopping experience online.

Targeting Chinese seniors: Careful analysis of the market is crucial

In order to understand the specific needs of seniors in China, it is crucial to deeply study their consumption habits, recommended Kunal Sinha, principal at Ogilvy & Mather China, when interviewed by the Wall Street Journal. For instance, only 7% of the budget of urban people aged 55 to 65 is dedicated to garments, while most expenses are related to food.

Deeply analyzing this kind of data appears to have been one of the keys to success for brands that were able to thrive in the senior market. For instance, Pinetree Senior Care Services, a company providing home-based care for elderly people, spent three years observing consumption habits and expectations of Chinese seniors before understanding that they disliked the model of nursing homes. The study clearly benefited the company as it has grown by 55% (year-on-year) since 2012.

Thus, the Singaporean company was able to bypass one of the main obstacles that numerous local and international groups are confronted with regarding the nursing home market: the price of the service. For Joseph Christian, a member of the Harvard Kennedy School interviewed by CKGSB Knowledge, the current financial resources of a majority of retired Chinese people are still too low to pay the price wanted by nursing homes. If there were any advice to give to marketing teams that are interested in marketing to seniors in China, it is, to begin with, a careful analysis of elderly peoples’ main expenditures.

Designing your own strategy to market to seniors in China: Daxue consulting & the silver generation in China

Having previously done research and analysis for a variety of clients targeting the Chinese silver generation, daxue consulting is an expert in providing quality reports and data for those aiming to get into this unique market. Our previous works for clients included a thorough assessment and localization of nursing homes within China, as well as conducting a survey to gain information regarding the use of the internet for online purchases by Chinese seniors. Daxue is no stranger to China’s older population and with our ever-expanding research; Contact us today to learn about your company strategy in marketing to seniors in China.

Our report on Silver Economy in China:

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Italian National Tourism Department Promotes Chinese Tourism in Italy on Digital Platforms

In 2018 more than 5 million Chinese tourists went to Italy and it’s estimated that this number will exceed 6 million in 2019. According to the Italian newspaper, IL SOLE 24 ORE’s report on July 30th, each Chinese tourist in Italy spent 1167 euro on tax-free products on average. How can Italian tourist destinations attract Chinese tourists? Italian National Tourism Department has a Weibo account which has attracted 310,836 followers with 2,191 posts and an average posting frequency of 3 posts per week. To promote Chinese tourism in Italy, it has been dedicated to sharing Italy-related information, covering from views, food, history, events, local customs and so on.

The top two hottest posts of Italian National Tourism Department are polls for your favorite Italian food in summer and the place in Italy you want to have a road trip at the most. As a result, gelato and Tuscany won the most votes respectively. Their voting posts with interactive dialogues and hashtags successfully promoted followers engagement.

To further enhance users engagement and gain more followers, Italian Tourism Department can use lucky draw with incentives. For example, in mid-autumn festival, Atout France encouraged followers to repost, comment and @ their friends with French wine as incentive. Moreover, compared to the Weibo official accounts of other countries Tourism Departments who usually have 1-3 posts every day, Italian Tourism Department has relatively small number of posts and low posting frequency.

Baidu analysis of Chinese Tourism in Italy through Chinese perception of Italian cities

Florence

Florence takes first place of the search results of the Italian cities we focused on, and 10% of tourist spending in Florence is from Chinese tourists. Being perceived as the cradle of the Renaissance and home of the greatest artistic treasures in the world, Florence is a popular travel destination for Chinese people, where they enjoy visiting the museums and churches especially Pizza del Duomo. Besides the tourism-related content, its football club, ACF Fiorentina, also contributes to the high search volume. They also search about Florence Village, the premium outlets in 6 major cities of China.

When people search Florence on Baidu, there are quite a lot relative keywords about other popular travel destinations in Italy such as Rome and Milan since they are the top 3 most well-known Italian cities, as well as the tourist attractions in Florence.  

Bologna

Bologna is a lesser-known Italian city for Chinese people with limited search results. People mostly search for information about universities in Bologna including the courses, application and rankings. The football club is also highly-ranked in the search results. Bologna is recognized as a niche tourist destination for Chinese and they are interested in its history since it is the oldest city in Italy.

The relative keywords are usually related to its football club such as Sinisa Mihajlovic, the former coach of Bologna Football Club, and the University of Bologna.

Naples

Naples is another well-known Italian city with relatively high search volume. It is known as the birthplace of pizza and the most important city in the south of Italy. Chinese tourist enjoy visiting the old castles by the sea, volcanos and the food, while they are also worried about the security of the city. There are a lot of search results about the four Neapolitan novels by Elena Ferrante and the TV series based on these novels. Likewise, Chinese people are also interested in its football club, SSC Napoli.

The top 3 relative keywords are Neapolitan novels, Carlo Ancelotti who is the coach of Naples football club and Reine de Naples, the Breguet watch created for the Queen of Naples.

Sicilia

Chinese people have relatively high awareness of Sicilia and their knowledge about this city is mostly from movies, such as Malena (西西里的美丽传说) which is named as ‘The Beautiful Legend in Sicilia’ in China and is famous among Chinese audiences with good reviews. Attracted by its beautiful views, mixed culture, Mediterranean weather and fascinating stories, a lot of Chinese tourists choose it as their travel destination such as couples spending their honeymoons. It is also known as a wine-producing area.

Foreign movies are quite popular among the Chinese audience, and movies have even been cited as a reason Chinese tourists choose certain travel destinations. It can be shown in the relative keywords, including Malena, the Godfather and the leading actress of Malena, Monica Bellucci, that the popularity of Sicilia is highly connected to movies.

Milan

Milan is the hot Italian city with the highest daily search volume. It is perceived as one of the world’s fashion capitals by Chinese people and the news about Milan fashion week every year strengthened this perception. In Milan, Chinese tourist spending makes up 36% of all tourist spending. In addition to its reputation amongst Chinese for fashion, it is also renowned by other aspects such as the commercial center, architecture, universities and football. The AC Milan football club takes up most of the top Baidu results. For most Chinese tourists, they are interested in its shopping centers, art museums and churches.

According to the relative keywords in Baidu index, Milan not only has high correlation with its football club, but also other popular travel destinations in the north of Italy including Venice and Florence. Due to their geography locations, Chinese tourists usually visit them together and they search for the transportation information between these cities beforehand.

What you should know about Chinese tourism in Italy

As Italy maintains its reputation of a world-class tourist destination in China, Chinese tourism in Italy is booming. In the meantime, Chinese tourism as a whole is becoming increasingly sophisticated with more focus on customized travel and niche destinations, which created more opportunities for lesser-known Italian cities. By understanding Chinese perceptions of Italian cities, they can reach to Chinese tourists and promote Italian tourism in a more effective way especially through digital marketing. Platforms such as Weibo, Red and WeChat are crucial to raise Chinese tourists awareness of Italian tourism.

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Atout France Actively Promotes French Tourism on Chinese Digital Platforms

The Weibo official account of Atout France has attracted 1.6 million followers with 6,125 posts in total and an active posting frequency of 1-3 posts per day. It has been sharing a wide range of topics about France, including views, food, history, travelling tips, exhibitions and events information, to interact with Chinese audience and promote Chinese tourism in France.

The top 5 hottest posts are all related to the new Paris tourism ambassador, including the endorsement of a C-pop boy group. This shows celebrity endorsement and KOL marketing can effectively boost awareness in the tourism industry, especially among young travelers like  Generation-Z.

The Atout France official Weibo account has a high engagement of its follower. They posted interactive dialogue, “Do you know the story behind Le Moulin Rouge?”, voting on “What’s your favorite sea food in Plateau de fruits de mer” and offered incentives through a lucky draw to encourage followers to comment and repost, thus enhancing follower engagement.

Baidu Analysis of Chinese Tourism in France through Chinese perception of French cities

Marseille

Marseille is a relatively popular travel destination for Chinese people. Chinese travelers show interest in its natural views and outdoor activities, and they relate it to a lot of famous French literature, such as The Count of Monte Cristo. Marseille is also well-known for its football club, Olympique de Marseille.

To distinguish the search result of Marseille and a Chinese actress who share the same Chinese name, we use “法国马赛” (France Marseille) as the search word in Baidu index. It is mostly related to other popular travel destinations in France such as Paris and Lyon. People usually go to multiple cities when they travel to France and they like to compare and contrast Marseille with other famous cities or do research about how to travel from other cities to Marseille beforehand.

Lyon

Lyon is also a well-known French city among Chinese people. Information about universities in Lyon such as their rankings, applications and courses takes up most of the top search results. As a travel destination, Lyon’s art, food and architecture are most attractive for Chinese people. Chinese people are developing a stronger interest in football, hence they are also interested in its football club, Olympique Lyonnais.

Nice

Nice gains high search volume on Baidu platform. It is another popular travel destination which is usually connected with sunshine and beach. The football club, OGC Nice, is also shown in the search result. The peak in the search index appeared when the Nice truck attack of 2016.

The relative keywords are also mostly other travel destinations such as Monaco and Lyon. Since Monaco and Lyon are close to Nice, Chinese travelers usually visit them together.

Bordeaux

Bordeaux has the highest number of search results on Baidu platform which are mostly related to wine. More and more Chinese tourists in France and Europe are visiting wine vineyards. In addition to Bordeaux wine, the travel guide and football club are also highly-ranked in the search results. The daily search index has been stable with some minor ups and downs in the last 4 years.

The top 3 relative keywords are Gavotte Wine, the wine producer, Cabernet Sauvignon, the one of the most recognized red wine grape varieties, and Bordeaux Mixture which are used as a fungicide in vineyards. 

Strasbourg

Strasbourg is a relatively unknown city among Chinese with limited search result. It is known as an important port city in France especially for people working in international trading industry. It is also a travel destination chosen by some niche Chinese travelers, who are usually interested in its French and German mixed culture, Christmas fair and European Parliament. The RC Strasbourg Alsace football club also contributed to Chinese people’s awareness of this city.

Nantes

Chinese people are less aware of Nantes, which can be shown in the small search volume. Its best known for the University of Nantes and the FC Nantes football club also caught Chinese people’s attention. Travelers who choose to visit Nantes are usually attracted by its history and quietness.

Versailles

Versailles is known by Chinese people not only as a city in France but also as a French historical fiction TV series set during the construction of the Palace of Versailles during the region of Louis XIV. The TV series has gained large popularity in China which has accounted for the main search volume and Chinese audience are attracted by its historical stories, magnificent views, fine clothing and accessories. For traveling, Chinese people are mostly only aware of the Palace of Versailles and frequently searched for the travel information such as transportation from Paris and tickets.

When people search Versailles on Baidu, the relative keywords have high correlation with its history including the Palace of Versailles, Louis XIV and the Treaty of Versailles.

What you should know about Chinese tourism in France

Along with much of Chinese consumption, Chinese tourism in France is also experiencing a consumption upgrade, with more focus on experience, niche destinations, and customized tourism. How can a tourism board effectively reach these increasingly sophisticated travelers? Digital marketing is an effective channel, but there are so many platforms to choose from. In combination with a KOL marketing strategy, niche and lesser-known cities in France can put themselves on the radar for Chinese travelers. As demonstrated by the success of Atout France’s digital strategy, Weibo is one platform that can be used. However, Xiaohongshu can also be used to promote destinations including stores, restaurants, and hotels. WeChat is also not to be overlooked, not only running a WeChat account for promotion, but also local vendors can set up WeChat pay for Chinese tourists in France.

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Where in Germany do Chinese travel?

China is the largest source market worldwide – there were 149.72 million outbound trips from Chinese tourists in 2018, with a Y-o-Y increase of 14.7%. Asian countries are the first choice for most Chinese when they travel abroad. Europe has become the second favorite destination for Chinese, over 16 million Chinese citizens visiting Europe in 2018.

Chinese tourism in Germany is booming. Germany maintains the well-deserved reputation as a world-class tourism destination among Chinese tourists. According to Ctrip Travel, in 2018, Germany ranked No.4 of the top 5 popular European tourist destinations by Chinese outbound travelers in Germany was the second most popular European destination in the first half of the year. The majority of Chinese tourists choose an itinerary combining German destinations with other nearby European destinations, such as Austria, Switzerland, France, and Italy.

China has also been a significant market source for Germany. In 2018, Germany welcomed 2.85 million Chinese tourists. Among them, more than 30 percent chose Bavaria as their destination of choice, followed by Hesse, North Rhine-Westphalia, Baden-Württemberg, and Berlin. As one of the top MICE destinations in Europe, Germany gains Chinese travelers’ attention with various of exhibitions, including electronics, cars, books, esports, etc.

There is also great performance of Chinese tourism in Germany on social media. German tourism may also benefit from being listed second of top countries of “Lonely Planet’s Best in Travel 2019”, which was also distributed on Chinese social media. German has been listed as No. 1 of ”Nation Brand” Ranking of Anholt Ipsos Nation Brands Index (NBI) in 2 consecutive years, 2018 and 2017.

The German National Tourist Board actively promotes German tourism destinations on Chinese digital platforms

Chinese Tourism in Germany has been promoted by the Chinese government

‘Germany has a good image of ‘Dream tourist destinations’ in the hearts of Chinese tourists. In 2019, we will continue brand promotion and increase digital marketing efforts to increase the exposure rate of major online platforms in China with some innovative promotion methods’ Ms. Li Zhaohui, the chief representative of the Beijing Office of German National Tourist.

The Weibo official account of the German National Tourist Board has attracted nearly 1.5 million followers with an active posting frequency of 3-4 posts per day. It has been dedicated to sharing plenty of information relevant with Germany, covering topics ranging from food, views, local customs, tips for applying for a German visa, to attract Chinese travelers and promote Chinese tourism in Germany.

Posts about destinations’ introduction with pictures and posts for visa application are the two hottest post topics. This implies that the Chinese audiences care not only about exciting tourist attractions but also practical information needed to plan a trip.

The German National Tourist Board’s official Weibo account has a relatively lower engagement than the official accounts of other countries and regions, such as New Zealand and Italy’s National Tourist Boards who post more exciting information. For example, the Italian National Tourist Board creates interactive dialogue with its followers,” Tell us which kind of Italian food is your favorite in the heat of summer?”, and associate it with a lucky draw to enhance the follower’s interests in the account.

Baidu analysis of Chinese Tourism in Germany

To understand Chinese perceptions of Germany, Baidu, the #1 search engine in China, is a good tool. The volume of search (more than ¾ of the total search made on Chinese Internet) exhibits the market digital trends. Here is the Baidu analysis of Chinese tourism in Germany cities.

Dresden

Dresden is a relatively niche city for Chinese tourists. Based on the Baidu analysis there is alimited search volume of the word 德累斯顿 ”Dresden” on Baidu. The recent search peak in the chart is related to the  Bundesliga football match in Dresden happened between the late January and early February.

A complete Baidu Baike introduction of Dresden emphasizes its City size; City structure; Natural environment; Military and political situation. There are three relative keywords about it: Dresden University of Technology, Industry and University

Düsseldorf

“杜塞尔多夫” Düsseldorf is more known for its football team. Chinese netizens show more interest in the league and football match. The vast majority of the search peaks of “杜塞尔多夫” Düsseldorf are related to sporting events. The several soft peaks appeared in its five-years Baidu index records are relevant with German Bundesliga.

The news and search related to Chinese players participating “2017 World Table Tennis Championships” in Düsseldorf, boosted the highest search peak in the record. Düsseldorf is also sister cities of Chongqing, Guangzhou and Shenyang in China, which also gains certain attention from Chinese Baidu users.

Frankfurt

Frankfurt is almost the most famous and hot German city according to the Baidu search volume and Baidu index result. According to the top search results, Frankfurt is renowned by various aspects, such as its central location in Europe, financial center, education, football, architecture, etc. The highly anticipated exhibitions in Frankfurt, such as Germany International Motor Show and Frankfurt Book Fair generated many search peaks in the past five years. However, the highest popularity of searching was in the context of “DOTA2 Frankfurt Autumn Championships” in 2015. Which is not surprising considering the popularity of esports in China.

As the central European transport hub, Frankfurt is highly related to keywords as “Frankfurt Airport and Frankfurt Time”. Also, when it comes to Frankfurt, Frankfurt University is another keyword with a high correlation.

Hamburg

Hamburg (汉堡) gains a high search volume on Baidu platform. However, due to the fact that the Chinese translations of “Hamburg” and “Hamburger” are the same, so the search result is relatively skewed. We will only focus on the content related to “Hamburg” city. Most of the top search results related to Hamburg, are relevant to travel in Hamburg, indicating Chinese Baidu users showing certain interest in visiting Hamburg. Moreover, Hamburg portal is also highly searched.

To distinguish the search results of “Hamburg” from “Hamburger”, we use “德国汉堡” (German Hamburg）as the search word. The search trend is very flat, expect for one peak happened in 2017, in connection with G20 Summit in Hamburg.

Hanover

Hanover is also lesser known to Chinese, compared with big German cities like Frankfurt and Munich. Most of the search results are organic and related to history, travel and industry.

Cologne

Cathedral has the correlation when it comes to the Baidu searches of Cologne.  Moreover, the transportation, industry, history are highly ranked as well in the search results. News of various exhibition in Cologne usually generates high presence on Baidu search engine, such as the latest video game exhibition leading to a search peak. 3 out of Top 4 historical search peaks shown as Peak D, F, and H in the Chart, were highly associated with Cologne International Game Show. As for the highest point A, it was caused by the vicious incident of “90 women were sexually assaulted in New year’s eve in Cologne.”

When people search Cologne on Baidu, there are quite a lot related keywords and Top 3 are: Cologne Cathedral, Cathedral and Cologne, Germany.

Leipzig

As a relatively unknown city among Chinese, the search results of Leipzig is also limited. It is recognized as a tourist destination by some niche travelers. The history and music from the Chinese travelers are all around the recommendation of Leipzig. The RB football league partly contributes to the awareness of Leipzig in China.

Munich

Munich takes second place of the search results of the German cities we focused on.  The football league, tourism-related content and industrial engineering accounts for the main search volume. Electronica Munich is another attractive exhibition among the Chinese travelers, and the frequency of searching grew with the show annually. In comparison, Chinese is familiar with this reputable city, and it is frequently researched and covered  by many classic European itinerary.

A Russian movie Движение вверх (Three Seconds) about a famous basketball match in Munich (2005) is scored with a high rank on Douban (A website is known for movie review in China), generating a result of almost all the associate keywords of Munich is about movie, download, movie platform, etc. 

Nuremberg

Not many Chinese are aware of Nuremberg. According to the Baidu index, the city stays at a low level of perception for years, with an average small search volume and a gentle search trend. Currently, Nuremberg is best-known for the Nuremberg Trials and Nuremberg University. Some sports match related to Nuremberg also caught Chinese netizen’s attention. When people search Nuremberg on Baidu, there are only two relative keywords about it: Nuremberg University and University.

Stuttgart

Another large German city, Stuttgart, is also known for its football and industrial automation for Chinese. Self-driving travel and self-guided tour appear more in the search results. Many universities also come up as frequent searches. 

When people search Stuttgart on Baidu, there are only two relative keywords about it: Stuttgart University and University. Chinese people have little knowledge about Stuttgart.

How can a destination get put on a Chinese tourist’s map?

The Chinese outbound tourism market is increasingly sophisticated and headed towards more niche destinations, and planning more customized travel. This creates the opportunity for lesser-known cities to welcome Chinese tourists. The modern Chinese traveler will do plenty of research online through social media platforms like RED and Weibo, hence a digital marketing plan is crucial to be recognized by Chinese travelers.

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How has artificial intelligence been utilized in the hotel industry in China? How do technology-driven consumers perceive high-tech hotels in China? How can AI improve the guest’s experience in the Chinese market? What AI companies are developing technology that will be used in future smart hotels in China?

A new stage in the development of China’s tourism and hotel industry: AI disrupts guests’ experience, in a good way!

Alibaba’s Future hotel FlyZoo, a unique robotized hotel in China

Alibaba, known mainly for being the e-commerce and technology giant in China, opened its first robotized hotel in December 2018, the FlyZoo Hotel. The Alibaba Future Hotel in Hangzhou was built by Fliggy, Alibaba’s online travel platform, along with other business units such as Alibaba A.I. Labs and Alibaba Cloud.

The main objective of this high-tech hotel is to demonstrate that artificial intelligence is already transforming China’s Hospitality Industry and that it will inspire the tourism and hotel industry in China and around the world to embrace innovation.

Wang Qun, CEO of FlyZoo Hotel, repeatedly said in many interviews that they would continue to create ‘smart brains’ for automated hotels in China, as well as more customized experiences for guests.

4 AI digital innovations in FlyZoo Hotel

Facial recognition

FlyZoo is equipt with a facial recognition check-in system. On the way to the room, the elevator recognizes the customer and identifies the floor of their room. The room door opens without the use of magnetic cards or keys. All this, thanks to facial recognition technology. As China’s largest R&D spender, Alibaba is the largest single investor in SenseTime; an AI start-up known for its facial recognition technology.

The vocal assistance of Tmall Genie

At the Alibaba Future Hotel, the 290 rooms are equipped with the vocal assistant Tmall Genie, who obeys all the guest’s orders by voice, whether it is to dim the lights, change the temperature, open or close the curtains, turn on the television or even order food.

The robot

The one-meter high robot activated by Tmall acts as a concierge, accompanying the guests to their room, providing room service, doing laundry, and even acting as a waiter in the hotel restaurant. At the bar, the bartender is a robotic arm that can produce more than 20 different cocktail mixes.

Buy and pay with a click

Customers begin their adventure at the Alibaba Future Hotel by booking exclusively online through Alibaba’s Fliggy App (Alibaba’s online travel agency). When booking the room, travelers can also choose all the features that allow them to customize their trip as much as possible: the type of room, its location in the hotel, the orientation, and direction of sunlight.

Like all Alibaba products, the Hotel of the Future also offers the possibility to shop online. Guests can buy anything they see in the hotel, such as the decorative products, using the FlyZoo purchase application. The check-out and all payments are made with a simple click on Alipay.

China’s Hospitality industry: International hotel chains install AI technology when joining giants Alibaba and Baidu

Marriott International

International hotel chains are also transforming into high-tech hotels in China. For instance, introducing Figgy’s facial recognition check-ins the application powered by Alibaba in the Hangzhou and Sanya locations of the Marriott International Group. Alibaba plays an important role in the implementation of AI technology in the hotel industry in China, this time partnering with international hotel brands. Founded in August 2017, the joint venture of Marriott International and Alibaba Group is an innovative digital travel service and consulting company that aims to launch AI technology in the hospitality industry. Alibaba’s goal is to revolutionize the hotel experience selling high-tech solutions, thus leading China’s hospitality industry into the future.

This initiative appears to be successful, as joining Alibaba means also benefiting from its capacity to engage customers and create networks. From the news section on Marriot International’s official website, “along with digital enhancements, Marriott International has also witnessed a significant growth of over two million loyalty members as of June 2018. Enabled by the joint venture, members can now link their Marriott Rewards and Fliggy memberships through status matching, earn points, and enjoy benefits from both programs”.

InterContinental Hotel & Resorts

Similarly, the InterContinental Hotel & Resorts Group (IHG) has teamed up with Alibaba’s competitor Baidu to enter the high-tech hotel generation and pioneer the introduction of AI in hospitality in China. By developing “Smart rooms” with artificial intelligence in its Beijing and Guangzhou hotels, the aim is to redefine the customer experience in China’s hospitality industry.

The Baidu DuerOs platform integrates AI technology into the Smart Rooms through voice control devices. For example, guests can choose the ambiance of their rooms between work or leisure mode. By offering an increasingly personalized experience, based on customers’ choices, the circulating information allows the management system to fine-tune guests’ tastes and expectations.

Want to learn more about the development of artificial intelligence in China? We got you covered, download our AI in China White Paper.

In addition to the use of robots to automate service and concierge tasks, AI in Chinese hotels has also been introduced by the dissemination of data allowing to automatically define the profile of the consumer and thus offer customized and personalized experiences. Artificial intelligence brings the service or product closer to the consumer, in a country of millions of inhabitants where the possibilities of consumption are infinite. Using the preferences of the clients, stored during previous trips, AI technology automatically offers prepares hotel room for the client anticipating their preferences, offer a higher output quality than when relying only on human effort.

Are consumers receptive to automated in China’s hotels?

China, where data sharing and facial recognition are well integrated

AI in automated hotels in China offers a high-quality personalized service to its guests, and it is possible thanks to the circulation of data that refines the profiles and preferences of clientele. The dependence on smartphones makes it possible to store deep reserves of consumer data that hotels use to study and access the needs of potential customers.

In China, there is a massive data network that circulates between companies and state institutions to locate and watch the country’s inhabitants’ lives, among other uses. Chinese upper-class leisure travelers are favorable to the diffusion of their data and accept more easily to share information on their hobbies, their profile on social media, photos, job, and geolocation. On a survey realized by Mazars, 97% of Chinese travelers were willing to share at least one piece of personal information against 80% of Western travelers. The integration of AI in the tourism and travel industry in China is easier than elsewhere.

Facial recognition check-in in hotels in China is just another example of the spread of AI-technology across Chinese industries: facial recognition is used by banks, financial institutions, airports, restaurants, many Chinese start-ups, mobile apps, and the government. On a Washington Post’ report in 2018, an inhabitant from Chong Qing stated that the facial recognition camera that allows access to her apartment is a useful convenience: “If I am carrying shopping bags in both hands, I just have to look ahead and the door swings open,” she said. “And my 5-year-old daughter can just look up at the camera and get in. It’s good for kids because they often lose their keys.” Personalized services driven by AI technology have become a priority for Chinese travelers.

A fascination with AI and modern technology

Chinese consumers, especially from new generations and increasingly the growing middle class of Tier 3 and Tier 4 cities, are attracted to virtually everything tech-related. The notion of artificial intelligence is much more deeply rooted in the Chinese mindset than in the Western’s.

Exposure to futuristic products or experiences is a real pleasure for today’s Chinese population. High-tech hotels in China represent not only a step forward in comfort and modernity, but also an attraction. With growth in China’s smart home appliances, guests would look for the same level of comfort and automatization during their stay in hotels than at home.

Chinese consumers also prefer interacting less with humans, as technology improves. The FlyZoo Hotel is robotized in all the tasks facing the public, but not in those behind such as the kitchen and cleaning services. The robots are part of Alibaba’s devices to combine high-tech with reduced personnel costs, eliminating the need for guests to interact with other people.

Consumer comfort levels with mobile payment in China

Another attractive feature of implementing AI in hospitality in China is online payment and purchasing. With 583 million people using mobile payment transactions in China in 2018 and still growing, online check-out and payment in hotels are bound to be the first innovation in hotels that haven’t implemented it yet. Some hotels in the US and Europe, such as the Landmark in London are already launching WeChat Pay and Alipay systems.

China is a mobile-first market, which greatly contributes to the success of online payment. Another reason is that mobile payments are powered by the strongest technology players in China: Alipay, the main payment method belongs to Alibaba Group. On the other hand, WeChat Pay belongs to Tencent, and the almost 1 billion users of WeChat in China prove its popularity.

Could high-tech in hotels in China affect human resources?

In a study conducted by PwC, 21%existing jobs in China’s service sector could be displaced over the next 20 years. However, it is estimated that there could be a 50% growth in jobs created by AI and related technology over the next 20 years.

With AI solutions in the hotel industry in China, it is possible to cover consumer assistance throughout the booking process, and problem-solving during the guests’ stay, therefore reducing the human labor factor. Most guest requests can be handled automatically by AI-enabled response technology in hotels, resulting in savings in time and costs, and an increase in guests’ engagement with the brand.

In the official Marriott International website, Mr. Henry Lee, Managing Director of Marriott International Greater China states that “with technology, our hotel associates can work more efficiently to do what they do best – delivering personalized service to our guests.”

Therefore, in China’s robotized hotels, both basic and repetitive functions, as well as complex problem solving for involving customer interactions, can be carried out without the need for human contact. Still, even Alibaba’s FlyZoo Hotel, the most robotized hotel in China, has a human guest service workers, who are free from mechanical and tedious tasks and can focus on the human side of service.

AI in the hospitality industry in China: Artificial Intelligence meets tourism trends to deliver the best guest experience

A new Chinese tourist profile

China’s tourism sector continues to grow. In 2018, travel and tourism contribution to China’s GDP had amounted to 1,509 billion USD with spending mostly coming from domestic consumers; leisure travel accounted for of 81.4% of total versus business travel accounting for 18.6%. Chinese consumers travel mainly for leisure, and with a motivation to reaffirm their status, vis-à-vis others by publishing their travel experience on social networks.

With the rise of the traveling middle class, new profiles of Chinese tourists are defined, and the hotel industry will not stop growing. Travelers increasingly demand standards,  finer things. Thus a new kind of traveler arises: the free independent travelers (FIT).

The FIT travelers

Free Independent travelers are young, well-educated, and relatively affluent. The FIT use all types of electronic devices that will allow them to travel more comfortably. Smartphones are the FIT’s travel planner, tourist guide, means of payment, and communication with their peers. FIT are tech-savvy consumers that drive growth for most technology innovations and make a potential guest of high-tech hotels in China. By using AI and intelligent devices in the hotel, valuable personal data is also collected form the traveler. On a survey conducted by Mazars Consulting and YouGov, some of the results imply that “Chinese travelers are indeed looking for comfort and convenience more than other countries surveyed. Armed with this data, AI algorithms can determine the clients’ habits, either to lure them back by offering a tailor-made experience or to sell them additional products”.

The increasingly connected Chinese travelers

Planning the trip beforehand

Independent travelers are willing to spend more but at the same time, are more demanding. The new generation of Chinese travelers, especially Y generation and millennials, are known for thoroughly planning their trips ahead of time, to find the option that best suits their expectations. Millennials’ spending accounts for 65% of total consumption growth, becoming a group of people with the power of reshaping China and the world. The vast majority use social networks and travel agencies to assess their alternatives, in addition to relying heavily on references from other customers.

ATKearny’s consumer study on the segmentation of the Chinese tourism market observes that 70% of travelers use online travel sites for gathering information, with 58% booking accommodation on sites such as Ctrip or Qunar. Online tour operators rely heavily on content gathered on user experience.

In addition, travelers do exclusively use websites dedicated only to travel. It is increasingly common to find travel products on China’s giant e-commerce platforms such as Taobao, and social networks such as WeChat. Through Wechat, hotels can create brand awareness and communicate their services. Similarly, in addition to chat messaging, WeChat also has chatbots and mini-programs, where hotels can add e-commerce and booking functions.

How can the hotel industry in China benefit from data mining-powered by AI technology?

Personalized services are a reality in almost every consumer goods and services industry, and is a reality in the hotel industry in China. Travelers are looking for tailor-made experiences, services tailored to their expectations and tastes. Some hotel brands are using technology and social media to get as close to the consumer as possible. The collection of personal and behavioral data during the hotel stay are extremely useful when defining the consumer’s profile and presenting offers related to the hotel industry or offers to buy products.

Technology giants Baidu, Alibaba, and Tencent are investing millions in AI, developing powerful databases that bring the offer closer to the consumer in an increasingly accurate manner. Tencent runs Wechat, which has access to more than 1 billion users on its platform, Baidu is the largest search service in China, and Alibaba is the largest e-commerce platform. These three companies have access to an infinite amount of information that allows data mining to define consumer demand. By launching AI technology in hotels in China, the technology giants can easily approach the traveler and meet his/her expectations and desires, changing the hotel industry dynamics. Demanding travelers would spend less time looking for the perfect fit, and almost tailored-made offers would be presented to them.

AI in hospitality in China AI uses during the consumer journey

Artificial intelligence technology can be introduced into almost every phase of the traveler’s consumer experience. The match of relevant consumer data with personalized and automated service thanks to high-tech devices in hotels in China lead to excellent customization, which, in return, allow guest excitement and satisfaction. At the same time, guests become more engaged and loyal to hotel brands, and would not hesitate to share the experience with their peers. Hotel companies who understand the importance of AI in hospitality in China first would acquire a significant competitive advantage.

Companies in the hotel industry in China should embrace innovation through the implementation of AI-enabled technology, and partnering with the best AI companies. Alibaba, Baidu, and Tencent, as well as Huawei, are amalgamated AI companies, but there are also plenty of SME AI companies in China that are developing AI technology as well.  Implementing AI such as facial recognition, or machine learning devices that power data mining is a source of competitive advantage. The AI Smart room, for example, is undoubtedly attractive for Chinese travelers and is laying the foundations for a new degree of modernization and customer satisfaction.

Hotel companies can also partner with AI companies in China that work separately by basis, technology, or just application. To know more about the existing AI companies in China, please direct to Daxue Consulting’ research in the AI landscape in China here.

Author: Ines Beneyto Brunet

See our report on AI in China:

This article AI in hospitality in China: Are robots taking over the hotel industry? | Daxue Consulting is the first one to appear on Daxue Consulting - Market Research China.

“Customized travel in the Chinese tourism market is unique in that it is characterized by its popularity, youthfulness, and high growth rates.”

– COTRI director Prof. Dr. Wolfgang Georg Arltstated

Growing demand for private tours for Chinese tourists

Customized tours are trips with personalized itineraries. This provides tourists with flexibility catering to specific interests and individual needs. In the Chinese tourism market, high-end customized tourism is aimed at clients with relatively high disposable income who can afford such expensive services.

According to the report published jointly by China’s online tourism giant Ctrip and China Outbound Tourism Research Institute (COTRI), “Customized Travels of Chinese Visitors to Europe”, the number of private tours for Chinese tourists to European countries has increased by 130% and made up 10% of the whole outbound customized travels. China’s customized tourism market is fast-growing and shows huge potential.

2019 Chinese travel consumptions trends

With the growing number of tourists traveling abroad, customized travels for Chinese tourists are actively developing. One of the goals is to prevent overcrowding, especially during holidays. According to the Hurun Report, around 3.9 million families in China have assets worth more than RMB 6 million, and 1.6 million households have more than RMB 10 million. Besides, a growing number of high-income groups in China are delighted to spend money on outbound tourism because they believe overseas travel experience is a vital contributor to improve life quality and happiness.

Based on the report, China’s high-net-worth individuals totaled 1.67 million in 2018. These travelers are ready to spend a generous budget for tourism. Professional service and individual approach are the most valued drivers in the high-end tourism market in China.

For those Chinese tourists with more disposable income, the uniqueness of a travel experience is prioritized over cost savings. The following data demonstrates the sequence of decisive factors for Chinese tourists. Beauty and uniqueness of tourist attractions (56%) are most important to high-net-worth Chinese tourists, the next factor is safety (47%) and then ease of visa procedures (45%). Relatively less important factors are friendliness of local people (35%) and affordability (34%).

Following the demand, many travel agencies now offer private tours for Chinese tourists. As a popular online tourism company, Ctrip launched its “high-end customized travel platform 3.0” to promote the development of the high-end tourism market in China.

Ctrip organizes private tours for Chinese visitors

Ctrip can now organize customized private tours for Chinese tourists. Its customized services take significant share in China’s customized tourism market, by upgrading facilities, such as flight tickets booking, accommodation reservations, route arrangement, exclusive car service, Chinese speaking tour guide, etc.

 Specifically, Ctrip’s platform also works on arranging experiential activities to contribute to the high-end customized tourism of Chinese travelers, such as study tours to prestigious universities, honeymoon packages to watch aurora borealis or visit hot spring, wedding tours, and mock marriage ceremonies, local food tours, etc.

The main target audience of high-end customized tourism in China is 35-50-year-olds due to the higher consumption level. High-end tourists aged over 46 years old account for nearly 60% of the long-distance customized travel. And most of them choose to travel with partners and families. As for younger tourists, they prefer to have shorter trips because their time for vacation is more limited. Thus, private tours for Chinese tourists also need to offer age-appropriate services. This is one of the big challenges shaping this industry.

The high-end travel agency, HHtravel’s report shows that the high-end customer groups have a strong willingness to travel to South America, Northern Europe, Africa, Russia, Australia, Canada, Maldives, Japan, and Southeast Asia.

In order to follow the consumption trends of Chinese high-net-worth individuals,  Ctrip’s high-end customized travel platform 3.0: HHtravel, has developed various tourism projects. For example, travelers can choose to ride a speedboat across the Horizontal Waterfalls in Australia; dine under stars at a camp on the Savannah in Kenya; run a Marathon or watch the NBA finals. Aiming to meet the diverse needs of Chinese visitors, all these activities can be adjusted with clients’ individualization.

Rethinking the classic Chinese tourism market

There are two ways to travel in the current Chinese tourism market: Fully independent travelers (FITs) and Modular outbound travelers (MOTs).

As a traditional way for Chinese visitors to travel abroad, travel packages offered to MOTs are mainly covering tourist landmarks and include coerced shopping in a fixed itinerary. The travel expenses are pre-fixed with the agency, but hidden costs of optional activities often come up. Such group tours usually have tight schedules at a lower price, due to the larger number of destinations to visit at one time.

Currently, a number of Chinese traveling as FITs is growing because of the flexibility and freedom it offers. The penetration of global information online also made it easier for FITs to use mobile apps to receive local information on the tourist destinations before and during the trip. However, the experience of FIT is insufficient to be applied for everyone and can also be time-consuming.

The classic travel agencies in the Chinese tourism market contain separate service types for FITs and MOTs. The former travelers usually choose travel agencies to help them book flight tickets and accommodations, because the cooperation between airlines and local hotels with travel agencies can bring discounts. Apart from this, the main business and profit of travel agencies rely on groups tours. MOTs only need to follow schedules pre-arranged by the agency. However, one problem remains: agencies have often force travelers to do more shopping and activities to earn commission.

Chinese travelers no longer believe that the meaning of tourism is simply to meet with their relatives and friends living abroad, go shopping, or eat fast food. Currently, Chinese travelers pay more attention to local cultural and natural experiences. Hence it is considering as an emerging approach to provide new and authentic offers to private tours for Chinese tourists.

Process of customizing private tours for Chinese tourists

Because customized travels of Chinese visitors is becoming a hot topic and the demand is fast-developing, many travel agencies modify their original journey packages narrowing down group tours to small groups or offering business travel groups. While prices have been greatly increased, the service quality has not been improved significantly. It means that there is a big market potential and room for development.

Customized travels for Chinese high-net-worth individuals should focus on the top-notch quality services and the exclusive use of highly scarce resources. This kind of butler services for customers include the ability to solve all problems that occur during the journey and make a real-time adaptation. Service providers in the travel planning stage follow this process:

For a subsequent journey, the customized services should always keep in touch with customers to follow their status and care their feelings.

Customized travels of Chinese visitors: The sophisticated future of high-end tourism

According to the COO of Ctrip, Mr. Ming Guo, with the advancement of technology, the future development of the high-end tourism market in China will offer more online services to make the traveling process more scalable. There are multiple online resources of touristic information which are easy to be accessed. Combined with the database, the algorithm of machine learning will be more precise to match travelers with personalized needs. As machine learning becomes stronger and more powerful, it would be used to meet the customers’ expectations.

Business opportunities for international companies

According to COTRI’s forecast, the number of Chinese outbound tourists will reach 4 million in 2030. Based on the fast and impressive market growth rate, Ctrip predicts China’s customized tourism market will increase by 200% in the next three years.

Undoubtedly, the development of the high-end tourism market in China, along with the increase in customers will bring higher profits to tourism companies. It will also expand the public’s interest and return on investment in terms of tourism resources. For those touristy cities that want to further increase the share of the tourism market, it is crucial to provide tourists with personalized tours.

For international companies, to develop high-end tourism market in China, it is necessary to combine advantages of local tourism resources and cooperate with well-known tourism companies in China, in particular, with the online service of individual trips.

In addition to research China’s customized tourism market and build local travel database, international companies can also take advantage of educational resources for expertise and training professionals.

Building a reputation among China’s customized tourism market will be a focus for China’s travel agencies as they compete for more share in the growing market segment. Thus, tourism companies that provide the highest quality of services have every chance of becoming leaders in the Chinese tourism market.

Transformation of China’s tourism market with COVID-19: Consumption trends

Outbound tourism has declined as the world is gradually affected by the pandemic. With the coronavirus under control in China, short trips within the country have been popular, particularly road trips. According to a consumer survey, confidence in domestic travel rose by 60% in first two weeks of May with the top three destinations in 2020 being Shanghai, Guangzhou, and Beijing, all of which are reachable by car or train.   

Following the crisis, the younger generation is more willing than the elderly to travel. On Tomb Sweeping Day in April, 60% of the people who booked trips were under the age of 30, which is a huge surge from 43% in the same period last year. According to a report by China Tourism Academy, more than 43 million domestic tourism visits were made within China during the Tomb Sweeping break, generating 1.1 billion USD.

Author: Yufeng GUO

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This article China’s customized tourism market in 2019 | Daxue Consulting is the first one to appear on Daxue Consulting - Market Research China.