Among the many ways that the travel
industry seems to differ from other industries is that we tend not
to serve natives anywhere but in our own native lands.
No matter how
successful a British domestic tour operator is in taking the
English around England, hes not likely to be tempted to go into
France and try to build upon his success by taking the French
He may branch out
and take the English around France, but never the French. It just
Its different in
other industries, of course. When Coca-Cola, Ford and Citibank set
up in France, they want to see the French drinking, driving and
depositing -- they couldnt hope to build a local business simply
serving U.S. visitors to France.
But China -- home
to a billion-plus increasingly affluent consumers -- gives everyone
pause. Each year, China opens its doors wider to foreign investment
and partnerships, and recently laid out rules that will go into
effect in a couple of years for foreigners interested in wholly
owned travel agencies and tour operations.
The Western travel
industry -- hospitality and aviation, at any rate -- is already
highly visible in Shanghai, Beijing and Hong Kong, and has some
presence in other large cities, but its goals are to look first at
Chinas inbound market (Western travelers visiting China) and second
at building their brand for the Chinese outbound market (Chinese
Scant attention is
paid to the domestic Chinese travel product, even though the
average citizen has ample vacation time and typically vacations in
I wondered if
domestic Chinese travel would be discussed at the World Tourism
Marketing Summit organized by the World Trade University and held
late last month in Nanjing, China, under the patronage of the World
Travel & Tourism Council.
Thanks to that
patronage, several well-known Western brands were represented by
high-level executives. About two-thirds of presenters and one-third
of delegates were non-Chinese.
During the course
of the summit, it became clear that domestic travel would remain an
unspoken subtext. I did learn that theres an abundance of
interesting Chinese products that, though rarely seen by
Westerners, are popular in the Chinese domestic market -- extremely
popular, by the looks of the crowds in some photos. But the aim of
the Chinese presenters was primarily to interest foreign travelers
in their destination.
The thought of
foreign investment in domestic Chinese travel left my mind as soon
as my train pulled out of Nanjing for Shanghai. I hadnt been to
Shanghai in 20 years, and I was curious to see all the changes that
had taken place since I had last visited (change has occurred at
such a rapid pace that the unofficial motto of the city is, If you
havent been to Shanghai in the past six months, you havent been to
I certainly can
believe Shanghais profile changes radically every six months or so
-- the city looks as if 40 generations had passed since I had last
visited in 1984.
Except for some of
the architecture around the Bund area, it was simply not
recognizable. It has been transformed from a city where time seemed
to have stopped in the 1940s to a thoroughly modern global
As I researched how
to spend my time there, the description of an off-beat attraction
caught my eye: The Propaganda Poster Art Center. It is run by Yang
Pei Ming, an art lover and amateur sociologist who has amassed
thousands of original posters published during the Mao Tse-Tung
years and has turned two rooms in the basement of an apartment
building into a museum to display his collection.
In speaking with
him after I visited his pocket museum, I discovered that his day
job is working as the Shanghai branch manager of the state-owned
Jin Jiang Tours, a domestic tour operator and travel
Yang turned out to
be as fascinating as his posters. Hes an outspoken critic of
certain aspects of Chinese domestic tourism, and has thoughts about
foreign development, as well.
foreign involvement would be extremely healthy for domestic
tourism, in part because he thinks foreign service standards and
practices would elevate the travel experience for
Right now, air
travel -- no problem. Hotels -- no problem. Restaurants -- some
problems, because they make all the food the same for groups. But
the actual tour, and especially the tour guide -- big problem, he
The big problem,
Yang said, is two-fold: First, theres a lack of professionalism and
Guides only get
paid $50 a month, and the official policy of the government is to
discourage tips, so the only way for a guides to make any money is
to bring people to the places that pay them the highest
commissions. For them, theyre not in a service business, theyre
middlemen in retail businesses, Yang said.
Second, Yang thinks
tourism officials dont understand what tourists want.
The house where an
important person was born, or the site where an important meeting
occurred -- that building will be preserved and promoted, he said.
But other than that, theyre not considering architectural beauty or
Look at Shanghai.
It was an international city, with important German, French and
British influence in its buildings. But now, for 70% of the city,
its all gone, its too late, its lost forever.
If they had had the
vision, they could have put all the skyscrapers in Pudong (the
newest development, on the east bank of the Huangpu River) and
preserved the real Shanghai in Puxi (the limits of Shanghai before
its recent boom). The only thing that may help save the remaining
30% is that real estate costs are now so high.
As a result of poor
tour escorts and a lack of understanding by tourism authorities,
Yang said domestic Chinese travelers return home from vacations
They complain, he
said. And for them, its not cheap. The average land cost is $50 a
day, but I think theres a big market that would pay considerably
more if they got better service and were presented with a better
Currently, the only
option for getting into domestic Chinese tour operations or travel
agencies is through a joint venture, but within the next few years,
wholly owned companies will be allowed in Beijing, Guangzhou,
Shenzhen and Shanghai.
observations are correct, China may have an opportunity heretofore
unconsidered in the travel industry: To get involved in moving
natives of other lands around their native land. He believes
service can be used as a differentiator between foreign-owned and
locally owned companies.
But will it happen?
Undoubtedly some Western entrepreneurs will see some niche
opportunities, and I imagine that the European conglomerate TUI
might sniff around. But Im not sure U.S. mass-market tour operators
will bite. Large U.S. wholesalers are notoriously skeptical about
consumers who say that service is more important than price because
theyve seen how price moves market share.
They know, too,
that providing better service than your competitor is expensive.
While a billion consumers is an attractive target, tour operators
may conclude that the sectors razor-thin margins can cut either
Should they begin
to lose money, despite the large number of Chinese consumers, they
know theyll never be able to make it up in volume.