Posted: April 1, 2016 |  AUTHOR: KEN FOX | CONTACT ME

 

This blog is an update to an earlier one issued on October 1, 2011. It includes new data and wider coverage of Chinese people visiting the U.S. as tourists or as students enrolled in U.S. colleges and universities.

Overall Chinese Travel Trends
There has been a continuing surge in Chinese tourists and visitors to the U.S.. Consider the following:

1. Presidents Barack Obama and Xi Jinping announced 2016 to be the U.S. China Tourism Year
-The agreement marks the reciprocal extension of visa acceptance and supports increased travel between the two countries. The two countries have agreed to work toward expanding and shaping U.S.-China travel and tourism, and strengthening the bonds between people from both countries.
-Throughout the year, the U.S. Department of Commerce and the China National Tourism Administration (CNTA) along with Brand USA* and other partners, will design and execute year long programs to promote open travel between the two countries. Ideally, these programs will, ensure a quality visitor experience.

2. Initiated by the above, the U.S. Department of Commerce will offer an extended new B-category non immigrant visa limit of 10 years for Chinese leisure and business visitors, and 5 years for students and exchange visitors. Concurrently, this will ease the visa application process.

3. The above implies not only an increase in first time visitors to the U.S. but an expected rise in “repeat” Chinese visits.

4. Chinese travelers rank number #1 globally in terms of overseas tourism spending. One source claims 1.8 million Chinese tourists visited the U.S. and spent a total of $21.1 billion in 2015. This spending level is estimated to increase to $80 billion by 2021.

5. Chinese society is evolving in terms of income, a yearning to travel and a desire for “freedom.”

China is the world’s largest tourism market, representing more than 100 million outbound travelers in 2014 (Source: UN World Tourism Organization). This number is expected to increase to 234 million by 2020. Until 2013, Hong Kong was the most popular destination for China’s outbound tourists. The reasons include a close cultural similarity, lower travel costs and easily accessible. Plus, Hong Kong offered a “shopping paradise.”

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Gfk (Germany’s largest market research firm) reports one half of the Chinese outbound travelers are young, aged 15-29, “millennials,” aged 30-44 represent 37% and 10% are 45-59. Additionally, 7 out of 10 Chinese millenial travelers hold white collar or professional jobs, with higher incomes, are technically savvy and typically want to explore independently from the traditional family grouping.

The Presence of Chinese Students in the U.S.
1. The number of Chinese students studying in the U.S. in the 2014-2015 academic year was 304,040, a 10.8% increase over the prior 2013-2014 academic year. Out of more than 974,000 international students currently in the U.S., about one in three is now Chinese. This represents a five-fold increase since the 2004-2005 academic year when there were 62,523 Chinese students in the U.S.

2. By 2015, 41% of the Chinese students studying the U.S. were undergraduates. Some of this increase is due to Chinese high school students being more interested in studying English resulting in their taking U.S. entry exams, such as the SAT versus taking Chinese tests.

3. This increase in Chinese students on U.S. campuses has raised concerns about them integrating with other students in activities ranging from sports, social clubs, and community organizations unfamiliar to these students.

4. Chinese students sometimes provide challenges to university administrations and professors. School programs want to accommodate the growing number of Chinese students. Some examples of U.S. college efforts to better include Chinese students or help integrate them and feel more comfortable include:
The University of Illinois now broadcasts football games in Chinese
Purdue University hired Chinese speaking counselors to staff campus mental health centers.
At the Tippie College of Business at the University of Iowa, where 1 in 5 students are Chinese, the school has provided instruction for professors on how to correctly pronounce Chinese names.

Many university and government officials feel it’s positive to have Chinese students on campus to build a bridge between China and the U.S.

5. The increase of Chinese students to the U.S. also represents increased business. One source estimates Chinese students spent $9.8 billion in the U.S. economy through tuition and fees during the 2014-2015 academic year.

Continuing Impact on U.S. Hotel Business
The earlier blog highlighted some of the efforts made by major hotel chains to accommodate Chinese visitors or tourists in the U.S. These efforts continue with two examples:
Intercontinental Hotels Group (IHS) implemented and expanded their China Ready Program in 2015, which accepts China Union Pay cards and employs Mandarin speaking staff.
New York City’s Hilton Midtown Hotel (on 54th street) implemented their Huanying (means welcome in Chinese) Program, offering slippers by the bed, an electric tea kettle with packets of oolong tea and offering a traditional Chinese breakfast. This hotel also offers an in room welcome letter in Chinese and a Chinese language TV station.
Although group travel in the U.S. is very popular, more independent travel is expected in the future.

The Role of Chinese Tourists Shopping in the U.S.
California sees many Chinese tourists. Many of these tourist have saved for their first trip overseas and arrive on pre-planned tours (70%). The Los Angeles Tourist & Convention Bureau estimates 750,000 Chinese arrivals in 2015, which is double the rate was five years ago.

Very wealthy Chinese female shoppers often stay at the Four Seasons Hotel in Beverly Hills, where rooms start at $500 per night. At any given moment, one in 20 guests are from mainland China. The hotel has translated its website to Chinese and hired a concierge dedicated to these visitors. A favorite amenity of the hotel for Chinese guests is to use their chauffeured Rolls-Royce Phantom car for trips to shop on Rodeo drive.

Many first time USA trips by Chinese tourists to Southern California are not this exclusive. However, besides visits to Hollywood, Universal Studios, Las Vegas, Grand Canyon and Hoover Dam they want to go shopping. One favorite tourist stop in Southern California is the upscale Desert Hills Premium Outlet stores (located 20 miles west of Palm Springs). The outlet manager has claimed 20 buses carrying 440 Chinese tourists are parked at the mall by 2:00 PM. This does not include multiple other Chinese groups arriving by mini-vans. Inside the Coach Outlet store three Mandarin speaking sales people wait on customers.

The Los Angeles Tourism Board maintains offices in Beijing, Shanghai and Guangzhou, China to help tourists and tour operators plan their trips to Southern California. .

Increased non-stop Airline Flights to China
New non-stop flights from U.S. gateway cities to China facilitate travel and attracting Chinese tourists, students and business people to the U.S. Some examples:
Airlines are increasing non-stop flights from the U.S. to Chinese cities, some to second tier cities. United Airlines started non stop flights from San Francisco Airport to Chengdu and Xian with plans to add a non stop flight to Hangzhou in July 2016.
Delta Airlines recently started non-stop flights from Los Angeles to Shanghai and Beijing. It is also considering plans to start non-stops flights from Atlanta to China.
Hainan Airlines currently has non-stop flights from Beijing to Seattle, Chicago and San Jose (California).
China Southern Airlines offers non stop flights from San Francisco to Wuhan and Guangzhou.

* Brand USA is the destination marketing organization for the United States, established by the Travel Promotion Act in 2010, and began operations in May 2011. Brand USA works closely with the travel industry to maximize the economic and social benefits of travel in and to the United states
Commentary
Overall, the increased presence of Chinese visitors to the U.S. is viewed as positive. Learning about each other’s culture is important and helps build ties between the two countries. Japanese workers first arriving in the U.S. to work at Japanese auto plants took time before they integrated into their communities and with fellow workers. Hopefully, the same will take place here. However, more proactive and better efforts may be needed to integrate Chinese university students on U.S. college campuses, as shown by the universities cited above.

President Xi Jinping’s 2016 Tourism Year agreement with Obama is another example of China using “soft power,” a term first introduced by Harvard University Professor Charles Nye** in discussing foreign policy. “Hard” power is based on things like military intervention, coercive diplomacy and economic sanctions. Soft power, on the other hand, is the capacity to persuade others to do what one wants by utilizing intangible resources such as culture, ideology, institutions and political values. It follows other Chinese government examples of soft power such as their implementing Confucius Institutes around the world. India’s Prime Minister Narenda Modi also used “soft power” when he introduced a proposal at the UN General Assembly to introduce an international “yoga day.” This proposal was unanimously agreed upon, and subsequently set June 21 as International Yoga Day.

**Former Dean of the Kennedy School of Government at Harvard University

Resources:

  1. Tea kettles, slippers, congee: U.S. hotels are wooing the Chinese tourist class, David G. Herbert, Quartz/Reuters, February 16, 2016.
  2. Chinese Tourists Spend US$229 Billion in 2015,PR Newswire/ Gfk, January 13, 2106.
  3. Chinese Students in America: 300,00 and Counting, Bethany Allen, Foreign policy, November 16, 2015.
  4. Chinese Tourists are Flooding into The U.S. Thanks to a new visa Rule, Megan Willet, Business Insider, January 21, 2105.
  5. Chinese Travel to the U.S. Accelerates Dramatically/President Obama’s Visa Policy Promises Further Growth, Ed Fuller, Forbes, February 14, 2015.
  6. 2016 Is Set to Be U.S.-China Tourism Year, Ozgur Tore, Financial Times News, September 28, 2015.
  7. Eastern Promises: The Scramble to Scoop Up More of the Chinese Tourist Dollars Flowing into the Region, Gabriel Klein, Los Angles Magazine, January 12, 2016.
  8. The Effectiveness of Soft & Hard Power in Contemporary International Relations, Jan-Philipp Wagner, University of Dundee, May 14, 2014.
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©2017, The Global Galaxy blog is produced by The Soundings Group, LLC, Charleston, South Carolina, USA, www.thesoundingsgroup.com. The company is an international business consulting firm, specializing in new market assessments, market entry strategies and marketing guidance. The scope of Global Galaxy is to cover timely international trends, issues and business building ideas. Its purpose is to educate, inform and stimulate thinking for business opportunity analyses.

 

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