Arnie WeissmannAmong 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 around France.

He may branch out and take the English around France, but never the French. It just isnt done.

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 traveling abroad).

Scant attention is paid to the domestic Chinese travel product, even though the average citizen has ample vacation time and typically vacations in China.

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 Shanghai).

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 metropolis.

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 agency.

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.

Yang believes 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 Chinese.

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 said.

The big problem, Yang said, is two-fold: First, theres a lack of professionalism and training.

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 importance.

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 unhappy.

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 experience.

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.

If Yangs 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 way.

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.


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