07/06/2014

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:00:07. > :00:09.One in ten tourists worldwide are Chinese.

:00:10. > :00:11.That number is set to double by 2020.

:00:12. > :00:16.How are Chinese travellers transforming

:00:17. > :00:18.the global tourism industry? Here in Hainan, I am Linda Yueh

:00:19. > :00:44.and we're Talking Business. A warm welcome to the programme.

:00:45. > :00:49.The rapid growth of Chinese tourists is transforming the global industry.

:00:50. > :00:56.We hear from CEOs of global hotel chains, plus the head of China's

:00:57. > :00:59.largest online travel site. And former basketball star Yao Ming

:01:00. > :01:04.tells us what he thinks of sustainable development.

:01:05. > :01:06.But first, I went around Hainan, known as China's Hawaii, to find

:01:07. > :01:18.out how tourism has changed. Braving the crowds.

:01:19. > :01:25.The Hawaii Hainan's beaches are teaming with tourists.

:01:26. > :01:30.Can it last? TRANSLATION:

:01:31. > :01:33.They have been everywhere domestically.

:01:34. > :01:36.So new places, like Dubai, are very popular.

:01:37. > :01:40.They've already been to Hong Kong, Macau, Japan and Korea, so they are

:01:41. > :01:41.interested in new destinations. People from Hainan want to

:01:42. > :01:47.travel internationally. And they have.

:01:48. > :01:52.Nearly 100 million overseas trips were taken

:01:53. > :01:55.by Chinese tourists last year. By 2020, the number

:01:56. > :02:01.of trips is also expected to nearly double, to 200 million per year.

:02:02. > :02:06.They spent more than any other travellers, about $1 billion.

:02:07. > :02:11.And this figure is expected to triple.

:02:12. > :02:14.This explosive growth in tourism has happened quickly.

:02:15. > :02:19.20 years ago, this kind of place would be where

:02:20. > :02:21.you would find Chinese tourists. That is because the government

:02:22. > :02:27.tightly controlled the movement of its people overseas.

:02:28. > :02:30.But now, it's all changed. That means that other countries

:02:31. > :02:35.and their businesses are keen to compete with China to cash in

:02:36. > :02:37.on the tourist dollars. The Chinese like Cambridge,

:02:38. > :02:42.they like Oxford. They are interested in Bath.

:02:43. > :02:45.They are interested in our history. We have to make sure that travel

:02:46. > :02:48.agents can explain that in a compelling and exciting way,

:02:49. > :02:54.particularly because the volumes, we hope, are going to triple by 2020.

:02:55. > :03:00.A Chinese love story, retold in a Broadway style.

:03:01. > :03:07.This is China's attempt to appeal to travellers.

:03:08. > :03:08.But will the fairy tale ending be enough to keep

:03:09. > :03:17.the audience coming back for more? How are the taste is of Chinese

:03:18. > :03:18.tourists changing? And what are

:03:19. > :03:33.their favourite destinations? I caught up with CC Zhuang, the head

:03:34. > :03:41.of cumin, China's largest travel site. Chinese travellers are more

:03:42. > :03:49.interested in going overseas. We see tremendous growth in overseas

:03:50. > :03:53.travel, especially coming from the second`tier cities. The smaller

:03:54. > :04:01.cities, not Beijing or Shanghai, but some of the smaller places? Yes,

:04:02. > :04:05.places like Chengdu. So I think it will be one of the trends over the

:04:06. > :04:09.next few years, particularly the focus in south`east Asia, Australia,

:04:10. > :04:14.Japan and South Korea, which are in a similar time zone. More than

:04:15. > :04:20.Europe or the US? Yes, much more than Europe and the US. They still

:04:21. > :04:26.have much more time lapse, more people flying as a group. It is much

:04:27. > :04:32.less frequent travellers. For a similar time zone, Australia, New

:04:33. > :04:35.Zealand, we see very high growth in independent travellers. They can

:04:36. > :04:45.just book for themselves and just go. Europe predominantly is catering

:04:46. > :04:49.to Chinese rather than international travellers, going to your website.

:04:50. > :04:53.You become the biggest in China already. Are there plans to change

:04:54. > :04:57.the site so you can attract more global visitors? Global visitors is

:04:58. > :05:01.certainly one of our long`term targets. But I think in the

:05:02. > :05:07.short`term and mid`term, we are still going to focus on Chinese

:05:08. > :05:15.travellers. I think I can see that the travel technology is undergoing

:05:16. > :05:19.significant disruptive changes. When people talk about travel, it is only

:05:20. > :05:23.about flight booking, hotel booking. But that is only part of the travel

:05:24. > :05:30.experience. That is a reservation before the trip. You can do that

:05:31. > :05:37.with a PC, only before you get in the taxi and go to the airport. At

:05:38. > :05:41.the terminals, the Company can no longer engage you. At the mobile

:05:42. > :05:46.penetration, you will be able to contact consumers through the life

:05:47. > :05:52.cycle of the trip, in terms of taxi calling, grounding, destination

:05:53. > :05:56.services, restaurants, bars, destination theme parks. So, a lot

:05:57. > :06:01.more service, we can provide for consumers. If you look at it this

:06:02. > :06:07.way, imagine, ten years down the road, every person travelling is

:06:08. > :06:15.somebody wanting to execute this experience. We have wisdom, mobile,

:06:16. > :06:19.we know where the consumers eating, what he is doing, what his schedule

:06:20. > :06:24.is. The conditions change, the weather changes, you know, a special

:06:25. > :06:29.event happens, we can inform consumers through mobile

:06:30. > :06:33.applications. If there is some payment, they can always go through

:06:34. > :06:37.our payment centre in China. We can do all of the customer protection

:06:38. > :06:42.for them. It's an exciting world. Imagine, you are helping millions of

:06:43. > :06:48.Chinese people learn and unfamiliar land. They are doing some itinerary

:06:49. > :06:54.arrangement to enjoy the time. So, I think there are some evenings we can

:06:55. > :06:59.do for Chinese users. For the next ten years, we are going to focus in

:07:00. > :07:03.China to help consumers to really enjoy their travels overseas, and

:07:04. > :07:09.domestic. A little bit more about your business, you founded the

:07:10. > :07:16.company, but you decided to sell majority stake to the big Chinese

:07:17. > :07:20.search engine. Talk me through that, getting a shareholder, going public,

:07:21. > :07:29.those kinds of things that you have done, that you are thinking about.

:07:30. > :07:33.From a personal point of view, you're going to grow up, at a

:07:34. > :07:42.certain point you go to face some competition. If you are facing some

:07:43. > :07:47.very strong competitors, you're going to get some thing called a

:07:48. > :07:53.prisoner's dilemma. If you are in a prisoner's dilemma, the best ways to

:07:54. > :07:56.find out how to get out. Just a simple competition is no longer help

:07:57. > :08:06.for each party. I think with a battle situation, travel is such a

:08:07. > :08:15.large category, the battle is done, China is interested. They have been

:08:16. > :08:24.in the market aggressively. As a smaller company, we are about five

:08:25. > :08:30.or eight years behind Baidu. I think we have to figure out a strategy to

:08:31. > :08:39.get out of the prisoner's dilemma and try to maximise the future. It

:08:40. > :08:45.turned out to be a good strategy. As of today, we are the leading travel

:08:46. > :08:52.search engine in China. Moving forward, I think we can do more

:08:53. > :08:55.things with our partners. Finally, what is the single biggest

:08:56. > :09:02.requirement for Chinese tourists is going overseas? Food. Food,

:09:03. > :09:07.restaurants. Chinese? Chinese, particularly. Not Chinese food, that

:09:08. > :09:12.you have to provide at least half Chinese food. I noticed there are

:09:13. > :09:18.some restaurants trending in the Western world. It's called

:09:19. > :09:22.half`half. They have some Chinese food and some local food. The

:09:23. > :09:30.Chinese stomach is probably the most stubborn thing in the world. I think

:09:31. > :09:37.travel providers have to refine their recipes. That was CC Zhuang.

:09:38. > :09:43.For Chinese tourists, visas are a perennial issue, particularly when

:09:44. > :09:47.travelling to the US and Europe. But the chief executive of Hilton Hotels

:09:48. > :09:53.says the industry is pushing for change. You look at the US as a

:09:54. > :09:59.great example. Just a year ago, a little over a year ago, the average

:10:00. > :10:03.wait time was 60`90 days to get a visa. I don't know about you, but

:10:04. > :10:07.it's a long time. It costs you thousands of dollars in off`air, you

:10:08. > :10:10.have to stay in a hotel just to get a visa, then you have to wait 90

:10:11. > :10:15.days, if you are lucky enough, you get one. Most people are going to

:10:16. > :10:19.say, I'll try another option, that's just too hard. We worked hard with

:10:20. > :10:26.the US State Department to increase staffing at consulates in China. As

:10:27. > :10:32.a result, over the last year or two, the wait times are now under one

:10:33. > :10:37.week. So, what do you see? A huge increase in Chinese travellers. Our

:10:38. > :10:40.hotels alone, last year, we saw over a 50% increase in Chinese travel

:10:41. > :10:46.just because of the wait times. There is more to do there. The

:10:47. > :10:50.demand is increasing. 100 million is going to 200 million. We have to

:10:51. > :10:53.continue, not just in the US but in Europe and other destinations around

:10:54. > :10:57.the world, we have to continue to be smart about the use of technology

:10:58. > :11:03.for issuing a visas, increasing the number of consulates, increasing

:11:04. > :11:10.staffing levels to continue to meet demand. But I think we are making

:11:11. > :11:16.terrific progress. How our global hotel is responding to the growth of

:11:17. > :11:19.Chinese tourists is? And what are the changes mean for China's

:11:20. > :11:24.domestic market? I caught up with the chief executive of

:11:25. > :11:32.Intercontinental Hotels, to find out how they are catering to Chinese

:11:33. > :11:37.taste is. In some ways, tourists and people that stay in hotels want the

:11:38. > :11:40.same things. The basics of safety, security and consistency. That is

:11:41. > :11:43.one of the reasons why you are seeing the global brands, not just

:11:44. > :11:47.us, but the global brands taking a bigger share of the market. So,

:11:48. > :11:54.there is a bit about giving good hospitality services. I think with

:11:55. > :11:58.the Chinese, it is a relatively new phenomenon, as the middle`class

:11:59. > :12:03.rose. They are quite particular about some things they want when

:12:04. > :12:07.they travel. We have a China Ready programme. Being the biggest global

:12:08. > :12:12.operator in China, we are very well placed for Chinese customers who

:12:13. > :12:15.know our brand. A lot of them feel they want their local brands, they

:12:16. > :12:19.want Chinese food, they want to be treated appropriately. Mandarin

:12:20. > :12:24.speakers, some of those basics. It's not that dissimilar to many other

:12:25. > :12:30.travellers. I think it's about the fast growth and making sure that you

:12:31. > :12:37.are delivering and experience to the brand they are used to in the

:12:38. > :12:41.country they come from. China, internal tourism has grown a great

:12:42. > :12:48.deal. It How do has. You think it has changed and will change? The

:12:49. > :12:53.outbound is it a big number, the internal numbers are enormous.

:12:54. > :12:57.Again, what we find, interestingly, is that, particularly the growing

:12:58. > :13:01.middle`classes, they absolutely want that consistency of this

:13:02. > :13:07.international brand. We have 200 hotels in China. 200 in the

:13:08. > :13:12.pipeline. Second biggest market... After the US? We have been here 30

:13:13. > :13:18.years now. We launched a new Chinese brand which is understanding that

:13:19. > :13:22.there those international qualities are important and consistency is

:13:23. > :13:27.important. Chinese people want Chinese food and a Chinese

:13:28. > :13:31.experience. It's more than localised brands, it's about downstanding what

:13:32. > :13:34.the consumer wants. There is this always impression that global brands

:13:35. > :13:39.do very well in China, including yours, against a Chinese`owned

:13:40. > :13:45.managed hotels? If you look at consumers. We did a a survey. We

:13:46. > :13:51.called our trends report in January, consumers who we spoke to around the

:13:52. > :13:58.world, China, UK, Germany, India, US, they want definitely want the

:13:59. > :14:03.security of this global brand. It stands for a trust, a trust mark.

:14:04. > :14:09.They want localisation as well. They want a brand that is global, local

:14:10. > :14:13.toll their market. The food is appropriate, setting is appropriate.

:14:14. > :14:19.They want the personal touch, which is not about the right flavour of M

:14:20. > :14:24.M's or apples in your room, it's about feeling personal. Which is why

:14:25. > :14:29.this need we saw through our research of what Chinese customers

:14:30. > :14:33.want led to the launch of the brand. It's about incite into the

:14:34. > :14:37.customers. Some want local global brands, many don't. I think you have

:14:38. > :14:41.to listen to your consumer as a global organisation. One of the

:14:42. > :14:45.things about China many things about China, of course, one of the things

:14:46. > :14:49.about China for global businesses is that it's a very difficult market.

:14:50. > :14:55.How have you found it? You have been in China for so long, in terms of

:14:56. > :14:58.competing in that market? Is regulation, changes in terms of

:14:59. > :15:05.policies? I mean, it is difficult, but I think as a global business our

:15:06. > :15:19.whole business model is partnership. We have 4,700 hotels our main brand,

:15:20. > :15:23.we own seven out of 4,700. It's about partnership. We choose

:15:24. > :15:27.carefully who we work with. Work with the right local partners who

:15:28. > :15:30.own the market. In China, yes, it's a different system. The government

:15:31. > :15:35.has been very clear. Travel and tourism is one of the five pillars

:15:36. > :15:38.of economic growth. They have put resources, put finance behind it.

:15:39. > :15:43.They encouraged it. They recognise you cannot grow an economy, you

:15:44. > :15:48.can't urbanise an economy without that. That has been helpful to our

:15:49. > :15:53.industry. Government has been clear about what it wants. We have gone

:15:54. > :15:57.along with that. What do you see is the fastest growing market for

:15:58. > :16:01.tourism in the world? For tourism? Our business, if you look globally,

:16:02. > :16:05.half business, half tourism in that sense. So there is no question I

:16:06. > :16:10.think probably China is right up there. Both business and tourism?

:16:11. > :16:14.Both business and tourism. The China outbound into other parts of Asia is

:16:15. > :16:18.very big. Also, look at the Maldives now, it has become a China

:16:19. > :16:21.destination, which it wasn't before. It's understanding the travel flows

:16:22. > :16:27.and those needs. China is at the heart now of our business and will

:16:28. > :16:34.be for many years to come I think. That was Richard Solomans. How have

:16:35. > :16:40.holidays changed for Yao Ming and his family? Since retiring from the

:16:41. > :16:44.MBA he has joined a body advising the Chinese government and still

:16:45. > :16:53.commands millions of dollars worth of endorsement deals. I had a chance

:16:54. > :16:59.to sit down with a Chinese star. The last 15, 20 years China become a

:17:00. > :17:08.rising power. People become richer than before. After that, you know,

:17:09. > :17:16.including me, want to see the world. The world, everywhere on this

:17:17. > :17:21.planet. I heard recently the number is somewhere around 100 million

:17:22. > :17:31.people cross the border from China last year to visit another country,

:17:32. > :17:36.another area as a tourist. I think it becomes a culture in China. I

:17:37. > :17:43.remember when I was young, when holiday came we would say ` let's

:17:44. > :17:49.visit another uncle's family, let's visit another family members family

:17:50. > :17:54.and visit our cousins. Now, it's, which city is our next stop. That is

:17:55. > :17:59.how it has changed for Chinese It's a people. Change, I think, that has

:18:00. > :18:03.been fairly recent, isn't it? Because people think of, sort of,

:18:04. > :18:07.the fast growth in China, I think that when you are living here and

:18:08. > :18:13.you see the middle`class develop, I think the pace of change is really

:18:14. > :18:18.quite extraordinary? Talking of the middle`class, like you say, that is

:18:19. > :18:26.a major power for any country. Any country. The number, the numbers are

:18:27. > :18:32.very big, particularly in China, 1.3 billion population here. The

:18:33. > :18:38.middle`class can be one billion, one day. What kind of a business

:18:39. > :18:47.opportunity can create off and also can bring the benefit to all those

:18:48. > :18:50.tourism cities such as here or maybe around ice Asia or even in the

:18:51. > :18:56.world. I think that's a very bright future. I wanted to ask you a little

:18:57. > :19:01.bit about sports men and women in China who are becoming global

:19:02. > :19:07.figures in tennis, in track and field, of course, you know, you are

:19:08. > :19:12.the famous son. How has that changed? Do you expect more Chinese

:19:13. > :19:28.athletes to become global figures? Let me explain a little bit. In the

:19:29. > :19:34.past, some sports stars have been heroes for us. I remember the names

:19:35. > :19:40.when they won Gold for Team China we were all very excited about it. We

:19:41. > :19:57.almost like worshipped them right there. I mean, but back to old days,

:19:58. > :20:05.I must say (inaudible) they will be labelled as a national hero. They

:20:06. > :20:12.are living a very sportsman, they are living in a small box of a life,

:20:13. > :20:17.training, training and living in a small area. Their folks are there.

:20:18. > :20:24.They are very little to touch outside. Today I would say our

:20:25. > :20:30.generation is more has had more character. I'm sorry, I should not

:20:31. > :20:53.use that word "character." Personalities. Our talking and our

:20:54. > :20:57.acting is more like ourself. Not because we change, we have more

:20:58. > :21:03.flexibility to do what we like. What do we like to do. What we like to

:21:04. > :21:09.say. I believe that path will never change. Speaking of the country, do

:21:10. > :21:17.you have concerns about China, as it changes so rapidly and dramatically?

:21:18. > :21:32.Yes, I worry. Like you said, I'm worrying about that, but I'm glad to

:21:33. > :21:39.see that kind of topic is on a panel, or the national meetings,

:21:40. > :21:49.they all have an agenda, a topic about how can we (inaudible) country

:21:50. > :21:58.sustainable. We cannot build anything we want everywhere. We have

:21:59. > :22:02.to think about 50 years from now. 1 00 years from now. It's taking time,

:22:03. > :22:07.but I'm glad that already people are but I'm glad that already people are

:22:08. > :22:13.already starting to think about it. That was Yao Ming, like his family

:22:14. > :22:18.millions of Chinese travel abroad. For an industry it means adapting to

:22:19. > :22:23.Chinese tastes, particularly the need for Chinese food. But it also

:22:24. > :22:28.raises challenges for China to keep tourism dollars at home. That is all

:22:29. > :22:37.we have time for. Check out our website and me on Twitter. Join us

:22:38. > :22:43.next time for more Talking Business with me, Linda Yueh.

:22:44. > :22:49.Good evening. Most of us saw rain at some stage during the day. Some of

:22:50. > :22:53.that rain was quite heavy and thundery. That band of rain will

:22:54. > :22:55.clear away from the far north of the United Kingdom, leaving behind a lot

:22:56. > :22:57.of dry weather. There