Insights into the Chinese Outbound Tourism - An Empirical Analysis. Opportunities for Romania

Abstract

Tourism is a key component of the world economy. Its total contribution to the global growth is considerable, accounting for 9.5% of the overall world GDP in 2013, when it attracted 4.4% of the total world investments it generated one of every 11 new jobs, and about 5.4% of the overall world exports. As it has happened in almost any other industry, a superpower like China has quickly turned into one of the most important players in the international tourism market, leaving an increasingly significant footprint in the field and having an important impact on its development. In this paper the authors intend, on the one hand, to look at China's swift growth in outbound tourism, and, on the other hand, at Romania's inbound tourism, trying to identify the ways by which Romania could seize the opportunity of becoming a significant destination for Chinese tourists in Europe and increase its export of tourism services to this country.

Headnote

Abstract: Tourism is a key component of the world economy. Its total contribution to the global growth is considerable, accounting for 9.5% of the overall world GDP in 2013, when it attracted 4.4% of the total world investments it generated one of every 11 new jobs, and about 5.4% of the overall world exports. As it has happened in almost any other industry, a superpower like China has quickly turned into one of the most important players in the international tourism market, leaving an increasingly significant footprint in the field and having an important impact on its development. In this paper the authors intend, on the one hand, to look at China's swift growth in outbound tourism, and, on the other hand, at Romania's inbound tourism, trying to identify the ways by which Romania could seize the opportunity of becoming a significant destination for Chinese tourists in Europe and increase its export of tourism services to this country.

Key-Words: China's outbound tourism, international tourism market, Romanian tourism market, China-Romama economic relations, 4P marketing mix.

1. Introduction

China's economic ascent of the last three and a half decades is the most spectacular accomplishment in the history of economic development, unique in magnitude, in its lengthy and unabating high pace of growth and outstanding by many of its outcomes. With its "catching up" effort, this country has managed to compress centuries of development needed by other countries to reach their present prosperity into just a few decades, turning it into their potent competitor and replacing them in global rankings. In such a short span, China became the second largest economy in the world, the largest manufacturer and the number one commercial power globally, the holder of the most sizeable foreign exchange reserve and the dominant force in many international markets. Equally remarkable is that its economic progress pulled out of poverty some hundred million people, led to an important - although unbalanced - growth of their incomes, lengthened their life expectancy and improved their living standards.

China's favourable economic evolution has created proper circumstances for a "catching up" drive in tourism too: better incomes, longer lifespan, a growing middle class and increasing openness to the world, have all given this activity a major impulse in both domestic and international markets. China is now one of the most visited countries in the world and one of the most promising sources of tourists for the international market.

The last decade was one of accomplishments for China, also from this point of view: as compared to other countries, its imports of tourism services grew the most, so that already one in ten international tourist is now a Chinese. Also, since 2012, China has become the largest spender on foreign tourism services, globally. If such a significant growth was possible when only about 4% of the Chinese had a passport, one can further expect an even much more spectacular jump of China's future spending in international tourism (Jackson, 2014). Under such circumstances, for the countries providing tourism services all over the world - many of which have been strongly affected by the global economic crisis - Chinese tourists have become a first rank target. This makes international competition for Chinese tourists increasingly fierce.

As a provider of tourism services itself, Romania camiot ignore such an opportunity to balance its commercial exchanges with China, to create jobs, multiply positive effects in its economy, increase value added and welfare. Therefore, Romanian tourism providers will have to adjust both their local capabilities and their commercial and marketing strategies, to succeed in attracting in Romania the Chinese tourist flows interested in visiting Europe, and in meeting an increasingly important share of this growing tourism demand.

Using recent data and analysing the latest statistics provided by the international organizations - the World Travel & Tourism Council, the World Bank, the World Economic Forum, the World Tourism Organization - but also by some national ones - China National Tourism Administration, the National Institute of Statistics in Romania - our intention is to make a brief assessment of China's outbound tourism and to give an overall view on the Romanian tourism supply and demand, trying to identify the options Romania might have of becoming a significant tourism destination for Chinese consumers.

2. China - the most important emitter country in international tourism

According to a China country report by the World Travel and Tourism Council (WTTC, 2014), in 2013, 9.2% of China's GDP was generated by tourism and its connected activities. With an annual growth rate estimated at 8.3% for 2014 and, on the average, at 7.7% for the next decade, the total weight of tourism in GDP is expected to reach 10.1% by 2024. At the same time, the current weight of 8.4% jobs created by the tourism and travel industry in the total number of jobs in China is expected to reach 11,6% in the next ten years.

Since 2012, China has become the leading emitter country in international tourism, by total outbound spending. At the time, 83 million Chinese tourists have spent around 103 billion USD abroad, which was about 40% more than in the previous year. The amount spent abroad yearly by Chinese tourists rose again by 26% in 2013, to 129 billion USD (Jackson, 2014). Although Germany is still the world leader by number of outbound tourists, Euromonitor cited by Evisionturism (2014) estimates that in 2017 China will rank first in this top too. Additionally, various statistics by either the World Tourism Organization or by China Outbound Tourism Research Institute (COTRI) confirm the expected sustained growth of outbound Chinese tourism, both in number and spending. According to COTRI, in 2013 the total number of outbound Chinese tourists reached 97.3 million. As in the first quarter of 2014 the number of Chinese tourists travelling abroad reached 26.4 million, the institute estimates that the 100 million threshold will be surpassed this year. Additional research (Chinatourism, 2014) forecasts that in 2020 the number of outbound Chinese tourists will reach 200 million, while their expenditures abroad will triple.

Another confirmation of international tourism becoming an increasingly important activity for China is provided by the growing weight of tourism expenditure in the total imports, during the 2005-2012 time span.

Statistics by China National Tourism Administration (CNTA) confirm, broadly, the same levels (Travel China Guide, 2014) and China's positioning as the largest emitter of tourism, globally. According to their data, 98.2 million Chinese1 travelled abroad in 2013, 18% more than in the preceding year, while their expenditures reached 128.7 billion USD, following a 26.8% annual increase. The Administration also confirms the growing trend of both the tourist number, to an estimated 114 million, and their expenditures abroad, to roughly USD 140 billion, by the end of 2014.

Looking at the developments that have taken place during the last ten years as they are revealed by the statistics of the World Bank, one can notice that not only the number of tourists and their expenditures were on the rise, but also the average expenditure per tourist, an extremely valuable index for the assessment of Chinese outbound tourism potential.

Noticing that these statistics don't cater for destinations or travel lengths, we underscore that the above values should be strictly regarded in terms of their trend and not for their proper values. From this respect, the undeniable finding is that since 2007 the Chinese tourists have kept increasing their travel budgets and we think there are grounds to assume this trend will go on further.

As statistics, especially the international ones, might not be so accurate in revealing and helping measure international tourism movement, we think that using the registered data of the travel agencies we might get a more precise image on the most popular destinations among the Chinese tourists travelling abroad. As such, we find out that in 2013 the number of Chinese tourists who used the services of travel agencies and tour operators raised to 33.6 million and their main 20 destinations were those included in the table below.

One can easily notice the high weight of the Asian destinations and the still unfavourable positioning of Europe in the hierarchy above. Only France and Italy managed to attract more than half a million Chinese tourists in 2013, followed, with lower numbers, by Switzerland, Germany, Russia and the UK.

But which are, besides statistics, the motivations and peculiarities of the Chinese tourist?

From the perspective of a consumer behaviour research, the Chinese tourist seems to favour group travels with long stays, which allow for visiting more places, even more countries, on the occasion of a single trip abroad (Dailybusiness, 2014). He seems to be attracted by the material issues of travelling, spending important amounts on keepsakes from the visited places. Additionally, he is concerned with the safety of his travel and with transportation options. In this respect, a research on Chinese tourist preferences (Marketing to China, 2012) reveals that the main factors influencing choices in terms of holiday destinations abroad are: the destination safety (87%), transport options (79.7%) and price (71.9%).

Another, more ample, study (Sparks & Wen Pan, 2009) looking at the Chinese tourists travelling to Australia, identifies, among other things, the tourists' main sources of information on the available tourism destinations and lists them by the importance they are granted, as it follows: 1 .television, 2. reviews, travel books, news-papers, booklets and 3. web sites.

Another qualitative research paper (Wu, Adler & Day, 2011) sheds light from two different perspectives on the Chinese tourists' criteria for choosing accommodation services: on the one hand, the travel agencies perspective, which consider price as the main selection criterion of their customers, and, on the other hand, the tourist perspective, who gives priority to location and the qualitative aspects of the package offered. As such, the main fact revealed is that Chinese tourists not necessarily make rational choices (price or branddetermined), but they attach an increased importance to the seivices associated to the touristic product.

Finally, Petersen (2009) identifies in one of Ins works four motivational factors specific to the Chinese tourist - (1) knowledge, (2) escape/relaxation, (3) prestige and (4) exciting experiences/adventure - developing around them a scheme of the interconnected activities that compose the motivational background of the Chinese consumer of outbound tourism. We hereunder present our own inteipretation of the connections that compose this motivational background.

3. Romania - a potential European destination for Chinese tourists

Romania is a country with rich history, diverse natural and anthropic resources and a high tourism potential. The Carpathians, the sea shore, the Danube and its delta, the bucolic and medieval villages, the monasteries, the spas, the overarching cordial hospitality of the Romanians, all combine into an unique holiday framework for tourists, especially foreigners.

For the purpose of this paper, we further make a brief assessment of the Romanian tourism industry, both in ternis of tourism supply (number of accommodation units by comfort categories), and demand (arrivals by destinations and comfort categories, features of the incoming tourism).

Except for 2010, during the entire 2009-2013 time span, the number of accommodation units has been increasing in Romania, so that, in 2013, there were 914 more units with accommodation function than in 2009 (Appendix A). This has been the result of a significant growth in the number of accommodation units in spas (32% more), in the mountain area (42% more) and in Bucharest, the capital city, plus other towns. As opposed to this evolution, the seaside and the Danube Delta are on a downward slope from this point of view. In 2013, one in every four accommodation units in Romania was in the mountain area and over 22% of their overall numbers were registered in the main cities of the country.

For a qualitative assessment of the Romanian tourism supply, we hereunder present a short analysis of its structure, by comfort categories.

One can distinguish a superior weight of the 2 and 3 stars accommodation units in the overall capacities (21% and 33%, respectively) and a still insignificant weight of the 5 stars units. Also, an assessment by location highlights high quality units in the Danube Delta and a more balanced mix of accommodation units by comfort categories on the seaside.

In 2013, just 21.6% of the overall accommodation units were used by foreign tourists, especially those in the 4 and 5 stars categories, as it can be seen in the graph below.

It can be noticed that, although when looking at the overall number of accommodation units, one in four tourists was foreign, when looking at them by comfort categories, proportions differ substantially: foreign tourists suipassed by far the Romanians in the 5 stars category (almost 2 foreigners for every Romanian), while in the 4 stars category the proportion is reversed (two Romanian for every foreigner). The more we look down the comfort category ladder, the less foreign tourists we find and the more their weight in the category totals diminishes.

Regarding tourism demand by destination in Romania, one can note during the 2009-2013 time frame (Appendix B), important increases of incoming foreign tourists in the mountain area (57%), the Danube Delta (43%) and in spas (42%). The graph below highlights the most favoured foreign tourists' destinations in Romania, in 2013. We can see that if the spa and seaside destinations do not seem to be favoured attractions, and that the weight of foreign tourists choosing mountain tourism reaches only about 10% of the overall incoming tourism, the two destinations which appeal to foreigners more, are, on the one hand Bucharest and other cities (almost 33%), and, on the other hand, the Danube Delta (about 28%).

Another interesting issue regarding the inbound tourism in Romania is the geographic area where the foreign tourists come from. The data in the table below indicate that between 2009-2013 a slight incoming decrease was registered in the case of EU tourists, at the same time with an increase in the total incoming flows from Europe. This suggests a growing number of tourists coming to Romania from European, non-EU countries. Also, an important growth of the incoming flows from Africa (47%) and Asia (41%) is to be noticed, as it might be a signal that Romania could become a holiday destination for these tourists.

We have to note the still low weight, of just 3% in 2013, of the Asian tourists visiting Romania, but also its relatively slow upward trend (from 2,2% in 2009). In the same context, looking at the transport means by which foreign tourists come to Romania, we also highlight the slow growth of air transportation (by only 5% yearly, inferior to the overall rise in tourist numbers) as it is the main transport means for faraway source countries, such as China. Noteworthy, the air transport still covers only about 17% of the total incoming tourism to Romania.

A clearer image of Romania's presence in the international tourism market may be given by the Travel and Tourism Competitiveness Index calculated by The World Economic Forum. For the purpose of this paper we will make a brief comparative analysis with the evaluations earned out for China's tourism competitiveness.

Hence, we notice that according to world rankings Romania lags behind China, but some criteria are in its favour and may become opportunities in attracting Chinese tourists to it. It stands out that the first competitiveness pillar (pillar A: regulatory framework) is in stark contrast with the third one (pillar C: human, cultural and natural resources). Within pillar A, Romania is superior to China in tenus of environmental sustainability, safety and security, health and hygiene. On the other hand, a major issue standing out in its case is the insufficient attention paid to its tourism industry, i.e. the prioritization criterion. Also, within pillar C, Romania is superior in terms of the specific tourism infrastructure, the criterion by which Romania's global relative positioning is the best (rank 34).

4. Opportunities to attract Chinese tourists in Romania

The relationship between Romania as an incoming country and China as an emitter country can be statistically described by the number of Chinese tourists registered in the Romanian accommodation units.

Between 2008-2010, the number of Chinese tourists in Romania has declined, but since 2011 the trend has been reversed, so that, in 2013, their total number was almost double the 2008 level. A similar trend has taken place in terms of number of accommodation nights, but in this case the sharp plunge of 2009 (of almost 55%) could not be corrected by the successive incoming increases following the 2011 reversal of trend. This can be explained by the fact that the average stay has been cut by half in 2009 (from 6, to just 3 days) and the downward trend has continued until 2013, when it has finally reversed, leading to the average stay increasing slightly to 2.1 days.

How could Romania capitalize on China's huge outbound tourism potential?

A strategy for attracting Chinese tourists in Romania should be built based on a macroeconomic approach of the four main marketing mix components (4Ps): Product (the tourism destination Romania), Price (of the tourism services offered in our country), Place (trade and distribution of Romanian services) and Promotion (the touristic brand Romania).

Product. The product is Romania as a tourism destination. The first step would be that of identifying the main components of this product, intended to be promoted and sold to China.

Romania has a large variety of tourism forms to offer - cultural, spa and health, rural and eco-tourism, etc. - and also first rank, unique destinations such as the Danube Delta, Bucovina, or Maramures regions. An important option could be to initially concentrate efforts on attracting tourists to destinations where Romania can compete by its uniqueness. In this case, mountain or seaside destinations could not be a priority, given the strong European competition. That is why Romania's initial positioning as a niche tourism market for Chinese visitors could be a valid solution for increasing incoming flows from China. The tourism packages offered could be integrated, as touring is a way of increasing both the average stay and receipts.

Generally speaking, considering the Chinese tourists' bias towards lengthy holidays in larger groups and for trips which cover more than one destination, the travel and tourism agencies in the European countries should cooperate, designing together packages which offer multiple countries tours, either following certain themes (such as "castles and citadels", "vineyards and wineries", "country life and traditions", etc.), or by simply combining unique destinations from different neighbouring countries, with a view to offering both variety and a multifaceted perception and understanding of Romania amid its surrounding countries. An opportunity which might be worth exploring is the one generated by Romania's recent past - as well as by that of the other central and eastern European countries' (CEE) - coupled with Chinese affinity with the theme of communism: the so-called "red tourism" could be an interesting business idea for tourism agencies (Frontpress, 2014) in CEE countries.

Price. Considering the profile of the Chinese tourist - as "having money and thirst of knowledge" (Grosu, 2010) - the price level is not so important as it is the quality of the services received in return. Mass tourism could be promoted at lower prices, while niche destinations - the Danube Delta, Bucovina, Maramures, rural and eco-tourism, etc. - could be charged more. Tourism services - food and recreation - but also the connected (medical, safety) or complementary services (rent-a-car) are essential. Besides, the competitiveness of the touristic product should be backed by measures such as reduced VAT for tour-operators bringing Chinese tourists in Romania and other fiscal incentives able to stimulate the business environment, promote and export Romanian tourism to China.

Place. Distributing touristic products requires special attention. Romania is short of distribution channels. Larger Romanian tour-operators predominantly choose the easier path of importing tourism/sending Romanian tourists abroad, but neglect trying to attract foreign tourists to Romania, which is a more challenging undertaking. They consequently generate a negative balance of payments from tourism.

To attract incoming tourism from China, Romania is not only short of the proper triggers, but it also faces a host of barriers: a minimum guarantee per tourist, red tape affecting the tour-operators' accreditation process (Wall-street, 2013), lengthy visa formalities, no direct Bucharest-Beijing (or other Chinese cities) air connection, etc. As such, decisions should be made in Romania to simplify visa procedures and re-open the direct Bucharest-Beijing air route. Transports play an essential role in the international tourism movement and air transport infrastructure is critical for tourists in selecting faraway destinations. That is why a sufficient number of direct flights to and from China could help revive Chinese tourists' interest for Romania and encourage their tourism demand for it.

To penetrate the Chinese tourism import market, Romanian tourism operators should establish jointoperations with Chinese private partners and design together packages and programmes, capitalizing on their knowledge on the peculiarities of tourists coming from different Chinese provinces.

Promotion. The main actions should focus on promoting in China the tourism brand "Romania". Chinese marketing experts recommend either on-line solutions (Marketing to China, 2012), or the simple, direct promotion. The first step would consist in opening tourism offices in China and then develop partnerships with operators from the distribution chains. Concrete options would be: to organize promotional events, take part in local and regional tourism fairs, make customized promotional spots for Chinese market, prepare and spread promotional prints and DVDs in Chinese. This might be extended to a special site promoting Romania, maybe even in the China Wide Web intranet, or on Weibo (which is similar to Facebook, or Twitter), of course provided China's opening to the world goes on further and this is legally accepted. Last, but not the least important, would be to involve international and local stars in promotional activities aiming at attracting Chinese tourists in Romania.

What could be the impact of the increasing number of Chinese tourists that visit Romania?

In case of a 10% increase in the total number of tourists, during the next two years (that is an additional number of 1333 tourists to the 13,331 totals of 2013) and admitting a hypothetical return to the average stay level of 2008 (see table 7), the total number of overnights could be:

OVERNIGHTS = (13331 + 10%:\T333l):v 6.13 = 39890 nights

Considering further a spending level per tourist of S 1,486, as it is forecasted for 2015, through a simple extrapolation of the data series from Table 1, we find that Romanian tourism receipts from Chinese tourists could raise to:

RECEIPTS = (13331 + 10%:\T333l):\: 1436 = 21790704 USD

5. Conclusions

The recent evolution of China's outbound tourism is prone to strongly continue in the future, impacting on all the other actors in the global market. Under such circumstances, our undertaking is important both for companies competing in the international tourism market and for the govermnent, which should be striving to balance our bilateral economic relations with China.

Turning into a leading importer of tourism services in just a few years and displaying a high potential to continue growing as a tourists emitter country in the international market, China is becoming a potential target for each and every economy with tourism capabilities and endowment, whether exploited or not.

Current developments in the Romanian tourism industry require joint efforts - of both the local, regional or national decision makers and the business environment (agencies, tour operators, providers of tourism services) - to position Romania as a desired destination on the Chinese tourists' map. With its rich natural and historical endowment and high potential to develop tourism services, Romania shouldn't overlook this important prospective partner, developing appropriate strategies to attract Chinese tourists and capitalize on their newly developed thirst for travelling, entertainment and discovering the world.

Acknowledgement

This paper has been financially supported within the project entitled "Horizon 2020 - Doctoral and Postdoctoral Studies: Promoting the National Interest through Excellence, Competitiveness and Responsibility in the Field of Romanian Fundamental and Applied Scientific Research", contract number POSDRU/159/1.5/S/140106. This project is co-fmanced by the European Social Fund through the Sectoral Operational Programme for Human Resources Development 2007-2013. Investing in people!

Note: A version of this paper was presented at the 2nd International Conference 'Economic Scientific Research - Theoretical, Empirical and Practical Approaches', ESPERA 2014, 13-14 November 2014, Bucharest, Romania.

References

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[17] ***, National Institute of Statistics

Appendix

Appendices