Travel and Tourism Sector in China: Development Trends and Future Business Potential

This paper analyzes the development trends in the travel and tourism sector in China, including the factors driving growth such as the adjustment of the country's economy, increased leisure time, and unbalanced economic structure. It also explores the potential for international tourism and the need for simplifying access policies. The paper concludes with a discussion of the future of the industry and the importance of planned infrastructural projects.

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Chinas development trends and future business potential in the travel & tourism industry
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INSTITUTION
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CHINAS DEVELOPMENT TRENDS AND FUTURE BUSINESS POTENTIAL IN THE
TRAVEL & TOURISM INDUSTRY
The travel and tourism industry has emerged to be one of the critical sectors in the Chinese
economy. With the overproduction of the manufactured goods and in line with the low demand
for the same products, the service industry had to intervene to bridge this gap. One of the service
industry that rose was the travel and tourism sector. This paper analyzes the development trends
in the travel and tourism sector. It continues to analyze the future business potential of the same
industry.
China is the most populous country in the world with over 1.4 billion people. Besides that, it is
haphazardly becoming one of the largest markets for international tourism. A closer study to the
economic situation in China attributes the development of China's domestic tourism to three
factors. These factors include structural adjustment of the country’s economy, the increment of
leisure activities especially in the China cities and the increase in per capita income. There was a
steady growth of China's economy in the 1990’s. According to statistics, the GDP per capita
increased from US$400 in 1990 to US$700 in 1996. This trend resulted in an increase in income
to the citizens living in the urban areas stipulating mass tourism in the country (Koldowski &
Yoo, 2006). The saving rate has steadily increased at a given rate of approximately 30% since
1999. This has seen the continuous increase in the GDP per capita income to the people living in
the urban areas and consequently growing of the tourism sector. This trend has been boosted by
the successful handling of the regional financial crisis that arises in Southeast Asia. This has seen
the steady growth of the GDP per capita income which has continued to increase the amount of

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disposable income in the pockets of citizens. The results can be traced to the growth of domestic
tourism in the country. To reaffirm this trend, statistics have pointed travel as one of the three
major consumption hotspots on a Par together with real estates and cars.
The Chinese government introduced a five-day week system and a new national holiday system
in 1995 and 1999 respectively. This enabled the Chinese citizen and especially those in urban
areas to get much more free time. The seven- day spring festival holiday, international labour
day, the two-day weekend, the national day and some other short time holidays sum up to one-
third of the whole year (Koldowski & Yoo, 2006). This means that the Chinese people have at
least four months in a year set for a free time which can be utilized for leisure. This has greatly
contributed to the growth of travel and tourism sector in the country. Most of the Chinese people
utilize this free time by traveling to various destinations on a family tour, picnics, groups tour
and so on. During those holidays and weekends, one will find many Chinese are on the road
traveling, and an impact of the same is felt in the tourist destination sites which are characterized
by an influx in the number of visitors. The number of visitors to the various hotels and
hospitality facilities increases during the weekends and holiday times.
The third major trend is the unbalanced Chinese economic structure. The unbalanced nature of
the economic structure in China has called for a greater need for adjustment. The economy was
flooded with manufactured goods as a result of overproduction. This was also occasioned by the
deficiency of domestic demand for the manufactured goods. An adjustment had to be made so
that the imbalance had to be fixed (Du, 2014). This gave rise to the growth of a service sector.
Travel and tourism is an integral part of the service sector are entering a new period of
development as the century continues to turn. The overproduced manufactured goods have been

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partially assimilated by this service industry. This has been marked as one of the adjustment need
which has been adopted to curb the imbalance in the Chinese economic structure.
Chinese domestic tourism emerged as one of the growth points to other sectors in the country.
Besides making a positive contribution to the promotion of regional economic growth, it has
greatly contributed to the promotion of local economic structures (Highbeam.com, 2017).
Additionally, it is through the travel and tourism sector that other economic sectors have been
developed. It has been the driving point of related industries. This has positively enhanced the
employment activities together with activating the much-needed domestic demand. It is through
the diverse aspect of Chinese tourism that has attracted various authors whose research majorly
focusses on market segmentation and the existing relationship between distance decay and
resource areas with reference to the unlimited growth in domestic tourism.
When one shifts focus to external tourism in China, it is critical to note that in 2014 only about
5% of the population had a travel passport. This indicates that there is an immense potential for
Chinese to travel abroad. Over the last decade, there has been an increase in foreign travels
which was influenced by speedy urbanizations, eased restrictions on foreign travel by the
government through the various policies and the increase in disposable incomes as a result of
increased GDP per capita (Downey, 2003). Apart from the foreign travels, the Chinese tourism is
thriving at a considerate rate. The UNWTO data ranked China at number four globally with
reference to the number of international arrivals who visited the country. In 2014 alone, China
recorded a whopping 55 million international travelers. This shows that the tourism sector is
growing at very high momentum.
In the contemporary statistics, China is marked to generate over 13% of the global tourism
receipts. This has a significant positive impact on many other destinations around the globe with

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a special focus on the Asia Pacific destination. This calls for the Chinese travel and tourism
industry leaders to comprehend the rising needs of the Chinese travelers. Similarly, they have to
create an enabling environment for the world so that other countries may be ready to receive
them. Going by the report published by Oxford Economics and InterContinental Hotels Group
(IHG), it is estimated that by the year 2023, the global annual arrivals from China will total to
approximately 97 million.
The rapid world economic growth is set to see more than 400 million people entering the middle
class. Many of these new entrants are predicted to originate from the Asia Pacific region.
Considering that tourism is a key focal point in driving the economic growth and creation of
employment opportunities, there exists a strong incentive to attract the new entrants to the
middle class in other countries. In the global ranking, Chinese travelers are ranked among the top
spenders on both per trip parameter and on the number of nights parameter. This means that
there is a universal believe and expect that the position of Chinese households regarding classes
is directly proportional to their spending. Thus, as the Chinese households move from low class
to middle and upper class, the demand for long-haul leisure trips and luxurious accommodation
and shopping increases (Fu, Cai & Lehto, 2015). According to reports and statistics by IHG, the
primary destinations for Chinese travelers remain to be major cities. A survey conducted by IHG
indicates that 85% of Chinese travelers chose cities as their destination of choice.
Considering the booming outboard travel in China, the travel and tourism industry possesses
potential in transforming into a competitive destination. Looking at the 2015 report compiled by
the travel and tourism competitiveness, it can be revealed that China was ranked at position six
on Asia Pacific regional level and position 17 at a global scale. Since China is rich in cultural
resources where it is ranked 4th globally and also rich in natural resources with a worldwide rank

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of position 3 in world heritage of natural sites, the country has a massive strength to expand and
grow its tourism sector (Schröder & Widmann, 2007). China is considered as one of the rapidly
growing economies where is believed to be the world’s economic superpower competing closely
with major economies like the USA.
China is emerging as the worlds powerful economy. Its has initiated mega infrastructural
structures while others are contained in the country’s blueprints. Her continued investments in
infrastructure will attract more visitors including investors into the country. Tourists will flock to
the country to view the skyrocketed skyscrapers and other mega infrastructures. One of the major
strength to the growth of the tourism sector in China is the implementation of the planned
improvements in air infrastructure which had a global rank at position twenty-five in the 2015
report (Wang, 2016). To position the country in the global competitiveness as far as travel and
tourism sector is concerned, the government should focus more on developing policies which
creates an enabling environment to do business. The Chinese government should consider
increasing the international openness more so by relooking at the travel restrictions. The
government should ensure that there is ease of travel so as to attract visitors and also reduce the
turn around time while processing passports and visas.
Recent research has pointed out that simplifying access to travel for a Chinese traveler increases
the influx of arrivals by an estimated value of 20%. It is therefore important for the travel and
tourism industry leaders and all the stakeholders concerned to consider simplifying the access
policies (Vogel, 2016). This would include relooking at the demanding visa application and
processing procedures.
In conclusion, it is notable that the developing trends in China's travel and tourism industry are
influenced by four major factors including an adjustment in the country’s economy, availability

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of more leisure time, changes in government policies to support the industry, and the existence of
unbalanced economic structure. However, the future of the industry is enshrined in its potential
to realign with international industry changes. The sector will thrive with the utilization and
implementation of the planned infrastructural projects. The travel barriers characterized by
complicated travel requirements and procedures need to be relooked.

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