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Recent media channels, tourism and retail associations in the UK have been extremely vocal in their frustration that Britain should attract more Chinese tourists but is lagging behind other countries like France and US. The British government has made announcements that it will look to ease the visa application process for Chinese and raise investment in tourism marketing. However, the anticipated growth is failing to materialise at a time of economic difficulties for the retail sector while many other countries are benefitting from the Chinese market, not least the United States.
I talked to Roy Graff, Managing Director of ChinaContact and asked him about his views on why the UK is not a top destination for Chinese and what can be done to make it one. Although this is focused on the UK, he offers A LOT of insight that is useful to all involved in the tourism and luxury sector who are interested in understanding how to attract more Chinese travelers.
Q&A with Roy Graff, CHINACONTACT
Q: The United Kingdom signed the Approved Destination Status (ADS) agreement with China in the summer of 2005. It’s been an approved destination for nearly 8 years. Why are Chinese tourist numbers not growing as fast as other countries?
ROY: In November of 2005, soon after the ADS agreement was signed, I helped UKinbound organise the first British delegation to exhibit in China, at CITM (China International Travel Market) in Kunming. Why was it UKinbound that led this delegation? Because the official government organisation responsible for marketing the UK abroad – VisitBritain – didn’t have the budget. Since then, VisitBritain has gotten serious about China but has repeatedly seen its budget being cut by both Labour and Conservative governments. Recent announcements of more investment (which is directed not only towards tourism promotion) not withstanding, overall marketing budget for VisitBritain is not sufficient to compete with what other countries are spending in China. Visibility and activities of other ‘direct competitor’ destinations, namely Australia, New Zealand, USA and France is much higher in China.
Even with effective promotion, the UK faces a few major challenges if it wants to attract mass tourism from China:
- The visa cost and cumbersome process of applying
- Being an island nation makes multi-destination tours more complex
- Cost of living is prohibitive for long-stay tourism
- Little knowledge and appeal of attractions beyond London
Q: In 2005 the media began the hype about millions of new Chinese tourists lifting up the UK hospitality and retail economy. It’s 2013. This is clearly not happening. Are Chinese tourists really the saviors of the high street?
ROY: The retail industry in London is very happy with Chinese consumers; we just need more of them. Britain was late to this game since the EU signed the ADS agreement two years earlier. At that time, the vast majority of Chinese tourists came in large groups and travelled by coach across Europe to visit as many landmarks as they could. But in the last 5 years, what became very clear is that Chinese outspend most other nationalities when they travel, and the rate of growth overall has surpassed 15% every year. In 2005, UN WTO (World Tourism Organisation) predicted that Chinese outbound tourists will number 100 million by 2020. It has since revised that date to 2015 and recently the President of China said he believed 200 million Chinese will travel abroad by 2020!
For the UK, I’ve long argued that the focus should be squarely on high net worth individuals and small groups of discerning tourists. It would be better to have 400,000 Chinese who spend £3000 on their visit than a million who spend £1000. In 2005, the idea that Chinese would outspend Americans, Japanese and even Middle Eastern tourists seemed ridiculous but this is fast becoming the reality.
Q: Walk us through what it’s currently like to be a Chinese traveler interested in visiting London for the first time. How does this compare to other options they have in Europe?
ROY: To illustrate this, we can look at the typical statement from the Home Office (responsible for immigration issues) when asked why it is so difficult for Chinese to get a visa to UK (the same applies to Indian, Brazilians, Russians…).
The UK’s government website statement says:
“The number of visas issued to Chinese nationals has risen rapidly in recent years. Immigration statistics released this month show that in 2012 we issued 75% more visas than in 2009 underscoring the UK’s increasing popularity as a destination for tourism, business and study.”
ROY’S RESPONSE: 2009 was a slump year in global tourism, with numbers from China drastically below 2006 levels. In real terms, Chinese visits to the UK stayed about the same from 2006 until this day.
“The UK’s government website statement says:
96% of Chinese nationals who applied for a visa last year got one highlighting how straight forward the visa process is for the vast majority of applicants. The success rate for students is even higher at 98%.”
ROY’S RESPONSE: The UK now issues tourist visas in 3 working days. The 96% process rate does not say how many are approved in 5 days (about half) and how many people give up on the process and simply don’t apply, or get their visas rejected at the private visa processing centre because of the complicated forms, the need for additional documents and the requirement for personal interviews and biometric data. According to tour operators, this is as much as 30% of all applications.
The UK’s government website statement says:
“The new visa services and resources are in addition to other recent enhancements for customers which include:
- an optional priority visa service for business visitors and tourists which returns visa decisions within 5 working days
- a simplified ADS process, including shortened on-line application form and streamlined requirements
- launch of two new step-by-step Chinese language visa guides for Business Visitors and ADS agents and their customers
- the establishment of a Business Network in China with dedicated UK Border Agency staff to assist businesses with their visa requirements”
ROY’S RESPONSE: Most of these are cosmetic changes that make little difference because the underlying assumption of the Home office is that all Chinese who apply for visa are guilty of wanting to illegally immigrate until proven innocent.
If you are a self made business owner in a second tier city thinking of going for holiday in the UK, taking time off to fly to another city in order to give your fingerprints, and not even having a guarantee you will get the visa, is a major hassle. Imagine if you had to do that as a British citizen wanting to go to China? By contrast, visiting Europe is both cheaper and a smoother process. There is a choice of consulates you can go to and the form is the same in all, and much shorter. You also have the entire EU region available to you to travel freely in.
The new changes introduced by the UK government to take biometric data on-site and allow people to hold on to their passport are good, but won’t scale sufficiently.
Q: How much does the average Chinese traveler spend in London when they do visit? What are they spending their money on? Is it only shopping as much of the media reports? How does this compare with the spend level of other visitors to London?
ROY: Average spend per person per trip according to VisitBritain is £1600. This is higher than most nationalities but isn’t the whole picture. Coach tour tourists are only in London 2-3 days and spend much less while independent travellers and business people are in London for longer and spend 2 or 3 times that just on shopping. 60% and more of their spend is on shopping but we know independent travellers in particular also want to try cultural activities such as afternoon tea, fine dining, watching horse racing.
Q: Despite the “hassle” of visiting London, it remains a popular place in the minds of many Chinese. What is the appeal of London to Chinese travelers?
ROY: I think you have similar appeal in New York City, Paris, Hong Kong, and Singapore – globally famous cosmopolitan cities that have a unique, distinct set of characteristics. Many of China’s cities have developed to resemble each other so this uniqueness is a draw. London has a long established Chinese diaspora community and a thriving China town. It is an education and business centre and had historical ties to China.
Despite London having higher prices than Europe for shopping, the sales offer great value and the selection is world class. Prices are still much cheaper than China. Chinese love value, so getting 12-15% off for VAT refund at the airport is great.
Q: There is a growing number of Chinese FITs (free independent travelers) now. What is the difference between the FIT traveler to London and the group traveler? Is there a difference in where they stay and what they’re looking for from the experience?
ROY: Yes, there are quite a few differences. FIT stay longer and choose better hotels in central locations. They try local activities and food more than group tours that usually end up eating mostly in Chinese restaurants. This is less a cultural necessity and more determined by tour operators’ cost control.
Q: What advice do you have for luxury hotels in London? What are they doing right? What can they improve on?
ROY: Hotels in London should make the most of their location and walking access to retail, food and entertainment areas. Preparing Chinese language information at the hotel, stocking good local Chinese language shopping and activities guides and being able to address concerns of customers in Chinese are all important. The major luxury hotel chains have done much to offer amenities to Chinese guests and train their staff on Chinese cultural awareness. Often times this applies only to those properties that receive a large number of Chinese groups and delegations. I think it is important that those hotels that get less frequent FIT leisure and business clients as well as smaller chains and independent hotels focus on this as it will encourage positive word of mouth promotion, a very powerful marketing tool in China.
The other thing that helps is to not only offer free wifi throughout the hotel but encourage clients (and casual visitors) to check-in and post recommendations on Chinese social media sites such as Jiepeng, Weibo and Weixin.
Q: What advice do you have for luxury retailers in London? What are they doing right? What can they improve on?
ROY: A major frustration for Chinese shoppers in the UK entails finding the right size(shoes/ clothing). Meanwhile, people complain that they often have to compete with other fellow Chinese shoppers in busy shopping districts. Nothing is more disappointing than going into an underprepared store and coming out empty handed. Off-the-beaten shopping alternatives would be much appreciated for the independent Chinese visitors.
Chinese luxury shoppers are extremely keen on showing off their purchases using social media. However they are careful not to disclose the actual spend of their purchases. They might however hint that ‘’several credit cards have been maxed out during the shopping trip”. The large department stores such as Harrods and Selfridges as well as purpose build shopping areas like Westfield have invested in research and staff training, hired Chinese speaking staff and started to offer Chinese language in-store information.
Retail outlets that want to make sure they are on the Chinese shoppers’ map would be advised to invest in cultural awareness and service training, offer Chinese language guides and have signs in Chinese showing that they accept the China Union Pay payment card. Learning to distinguish the different types of Chinese shoppers and knowing where they are from (North China, South China, HKG, Taiwan etc.) to better serve them would be great.
Remember that Chinese customers are instinctively suspicious of sales people, so aggressive or overly friendly sales approach may back-fire.
Q: What should the UK as a whole be doing to win more Chinese visitors?
ROY: The recent announcement for visa simplification and having the forms in Chinese is a good start and should be implemented as quickly as possible. Communicating the changes effectively to the travel trade and the public in China is equally important. As suggested by other retail associations and tourism bodies, repeat, multiple entry visas should be pro-actively offered to those who visited before and to those that had multiple entry visas to the US or Europe in the past. Perhaps the biometric data could be collected on arrival in the UK (as is the process in US) for low-risk applicants. We should certainly encourage more high-end tourists and long-stay leisure/business visitors so independent visitor visas are highly recommended.
Originally published in China Luxury Network, a private newsletter for the luxury and travel sector focused on sharing well curated insights by China experts and interviews with real Chinese consumers.