Bye-bye 132 000 Chinese tourists

By Michael Jones

“I’m sorry, I simply do not see them” is an often-quoted response I hear when talking to high-end South African tourism brands about marketing their products in the China outbound travel market. Strange considering that official government statistics are adamant that South Africa received 132 334 Chinese tourists in 2012 making it our fourth-largest source of overseas arrivals.

If countless South African properties simply do not see any of the 132 334 Chinese tourists, where are they hiding? It’s not as if a group of Chinese tourists all wearing the same caps and herded by a tour guide waving a flag are exactly inconspicuous now are they? The answer is, other than the coach drivers, few South Africans actually know. After arriving at Oliver Tambo International it appears we do not know where these tourists stay or what they do.

The industry as whole is particularly concerned however with what they do as by now it is no secret that Chinese tour operators sell outbound packages to South Africa at a loss (normally between RMB8 000 to 10 000, the price of a normal return economy air ticket) only to recuperate their money through repatriated commissions from shady forced shopping activities. In the South African context this normally means diamond purchases from Chinese-owned diamond shops that do not even have a website nor do they see customers of different origins. These diamond shops negotiate diamond prices as if they were knock-off Nike sneakers in China’s famed markets, dropping prices to anything from 10% to 50% or more. Anyone in the diamond industry can attest to the fact that diamonds have wafer-thin margins, logically implying the original prices are inflated significantly above market value, in other words, these customers are being ripped off.

Furthermore the itineraries are as old, odd and as unexciting as a Nokia 3310 including the Voortrekker Monument (bizarrely their number one source of tourists are Chinese) and surprise, surprise, packed with Chinese restaurants with limited interaction with actual South Africans. Gauteng with its must-see destinations like Soweto are avoided like the plague, North West Province is only included with Sun City visits, the Cape winelands remain undiscovered while the Eastern Cape, Northern Cape, Free State, KwaZulu-Natal, Limpopo and Mpumalanga might as well be other countries as they are completely ignored.

Considering the extreme inauthentic South African experience as a result of the inferior itineraries and the discomfort of forced shopping practices it would be hard to believe any of these tourists would have anything positive to say about our country. But it is even harder to believe that we as South Africans have done little to protect our country’s brand positioning not to mention protecting our people’s right to earn a living from greater exchanges of revenue for South African-owned products and services.

For the record, South Africa is not alone in this situation as these practices are common in most outbound markets but thankfully Chinese consumer rights have advanced to such a degree that the Chinese government has now stepped in under consumer pressure. Accordingly, a revolution is about to sweep through China’s outbound tourism market where as of October 1 2013 China will legislate a tourism law to clean up the industry. The new tourism law includes many provisions but the most important of all includes Article 35 which states: “Travel agencies are prohibited from organising tourism activities and luring tourists with unreasonably low prices, or getting illegitimate gains such as rebates by arranging shopping or providing tourism services that requires additional payment. When organising and receiving tourists, travel agencies shall not designate specific shopping places, or provide tourism services that require additional payment.”

The consequence of the new law will result in previously under-market package rates to increase overnight bringing them in line with true market rates. It goes without saying that the sudden and significant package-rate increases will have a detrimental effect on future Chinese arrival numbers to South Africa. Without doubt, the biggest losers will be the mainland-based, outbound Chinese tour operators (many are expected to go bankrupt), the Chinese-owned and/or Chinese-managed landing operators, shops and restaurants in South Africa who have enjoyed the greatest share of this trade to date, while South African volume business products such as sightseeing and museum ticketing, transport companies and budget accommodation (whoever they were and wherever they are) will also suffer as a result.

The biggest winner of the new legislation, albeit over the long term, will be South Africa as a premier tourism destination as we as a nation will be allowed the space and time to claw ourselves up the brand positioning ladder where Chinese tourists will come to enjoy an authentic South African experience, South African hospitality and the best our country has to offer as their western peers already do. High-end South African tourism products and brands will also be major winners as for the first time a quick internet search will not reveal that our market is dominated by budget packages that dilute our positioning and call into question why one should pay two to four times more for a basic quality product. General South African-owned hospitality products and services (restaurants, shops etc) will also ultimately be the winners of this new law as it will result in the growth of the foreign individual travel market to South Africa over time. But before you get too excited in your coffee shop or jewellery store just remember that social-media platforms in China such as Facebook and Twitter are blocked and that you need to nurture their platforms such a Weibo (Chinese Twitter).

There is no question that our economy will initially be hurt by the new Chinese legislation but over time our tourism industry as a whole will benefit on a sustained basis to the point where perhaps the often-quoted phrase will be “We have fantastic China trade, which new markets can you tell us about?”

Michael Jones is a South African who has been living and working in the communications industry in Beijing for the past 12 years. When not getting annoyed with what he reads in the SA media he distracts himself by promoting African lifestyle and tourism brands in the China market.