Issue #81 - Exporting Travel Products to China
With Chinese outbound travel stalled, SMEs are sending shopping to China by app.
Welcome to issue 81 of Asia Travel Re:Set…
What (and when) is the end-game for China’s “Dynamic Zero-Covid” strategy?
It’s a question being asked by governments, economists, multilateral organisations and the media. And, of course, it is a hot topic in China.
No-one is currently able to provide a clear answer.
With mass testing and variable lockdowns in place in different cities, and without (as yet) an approved Chinese mRNA vaccine, the room for policy change is narrow.
China’s government is sticking to its “around 5.5%” full-year GDP growth target, and is unlocking a new round of infrastructure investment and stimulus measures.
Finding economic solutions as Omicron case rates increase will be hugely challenging.
The travel industry is watching closely. Not only destinations that need Chinese tourists to return, but airlines and hotel groups with expansion plans in China.
Thanks for being onboard.
The Sunday Itinerary
- “IN THE NEWS”
- Exporting Travel Products to China
With Chinese outbound travel stalled, SMEs are sending shopping to China by app
- April Sees South East Asia Get Upbeat About Travel!
What’s the outlook for 2022 as Singapore, Thailand & Malaysia drop travel testing?
“IN THE NEWS”
Some fascinating air travel stats, graphics and analysis from across Asia Pacific in this week’s OAG Webinar, Tipping Point - Has Travel Confidence Returned?
This week, I chatted with Peden Doma Bhutia, Asia Editor at Skift about the race among regional destinations to entice Indian travellers: “All countries in Southeast Asia will be chasing the same source markets now, and India is the primary target.”
And, I got a mention in this piece by the Khmer Times about South East Asia’s travel landscape (taken from an interview I did with Bloomberg).
Exporting Travel Products to China
With Chinese outbound travel stalled, SMEs are sending shopping to China by app.
Chinese cities issue notices encouraging people to avoid May Day travel (Global Times)
China’s Covid travel restrictions compound economic pain (Financial Times)
China’s Politburo vows new tools, policies to cope with economic turmoil (South China Morning Post)
One-third through 2022, China’s “Dynamic Zero-Covid” challenges are multiplying.
This weekend, May Day holiday mobility restrictions are being implemented in several provinces to curtail domestic travel during a traditionally busy period.
Today, China Daily reported: “The Chinese capital city of Beijing intensified restrictive measures against COVID-19 to best reduce cross-infection as high mobility is expected during the five-day Labor Day holiday.”
The government is clearly concerned about the risk of virus transmission on a national scale amid outbreaks in several Chinese cities .
The impact on China’s travel industry is worsening.
This week, the 30th Guangzhou International Tourism Fair was symbolically postponed from 20-22 May, until 4-6 December.
The online GITF conference discussing the future of Chinese tourism, at which I will be speaking, will still take place on 19 May (Chinese National Tourism Day).
Statistics from OAG show airline capacity at Shanghai’s two airports slumped more than 55% this week. Beijing, Guangzhou, Xi’an, Harbin and Kunming also registered big dips. However, airports less exposed to traffic to/from Shanghai, such as Nanjing, Hangzhou, Xiamen and Qingdao, recorded much lower capacity drops.
This follows a shaping trend: China’s airport landscape continues to fragment. As Forward Keys / Dragon Trail Interactive commented in the Chinese Tourism - Sentiment and Outlook webinar this week:
“Non-hub airports in China increased 10% shares in seat capacity in 2021. And more revealingly, international traffic concentrated more on tier-2 cities like Xiamen, Chengdu and Hangzhou.”
Chinese airlines are hoping international travel is restored as quickly as possible. This, week, the Chairman of China Eastern Airlines, Liu Shaoyong, commented: “The development of the aviation industry faces various degrees of uncertainty.”
Airline costs continue to rise as the economic utility of their planes decreases. As Dr Zheng Lei, President of The Institute for Aviation Research, commented on this week’s OAG Webinar:
“Chinese airline aircraft utilisation rates are currently at 1.69 hours per day. Before the pandemic, it was over 10 hours per day.”
These are all factors to watch whenever China reopens its airport gates.
Engaging China’s Grounded Travellers
Meantime, travel destinations and service providers are trying to stay top-of-mind with grounded Chinese travellers. Invariably, this is via online engagement. Over the past two years, we’ve seen a proliferation of virtual destination tours, Key Opinion Customer/Leader livestreams and interactive digital tourism experiences.
Monetising these services is tricky. Online travel marketing is saturated, and there is zero guarantee that money invested digitally will deliver a real-world reward in future.
Taking a different approach, O+Mall is an attempt to combine Chinese consumers’ embrace of e-commerce with an on-hold passion for travel and shopping.
The China Outbound Tourism Research Institute (COTRI) has partnered with a Finnish-Chinese company to launch the O+Mall online app selling artisanal products from around the world to homebound Chinese travellers. O+Mall is a Mini Program embedded into the WeChat eco-system, and most products offered are unavailable elsewhere in China.
While large brands sell into China via giant e-marketplaces, like T-Mall, Pinduoduo and JD.com, the cost per sale metrics are out of reach for artisanal producers. Gaining visibility on these apps is impossible without huge and continuous marketing spend.
O+Mall aims to provide a more streamlined, tourism-themed retail mix for consumers and vendors.
Launched in April, and managed by a membership scheme, O+Mall manages the sales, marketing and distribution processes for vendors. Product storage is in a bonded warehouse in China to ensure compliance with Chinese import laws and regulations.
“The main target group is affluent Chinese consumers, who travelled in the past internationally, or plan to - or dream about - doing so in the post-pandemic future,” says Prof. Wolfgang Georg Arlt, CEO of COTRI.
In addition to facilitating retail product sales, the app aims to help destinations, attractions and SMEs stay in touch with the Chinese market, both in upper-tier and fast-changing lower-tier cities, and support future tourism exposure and activities.
All products will have a “certificate of regional origin” to ensure their provenance and authenticity for Chinese online shoppers. Small companies can sell local foods and beverages - such as wines, Schnapps and craft beers - and arts and crafts. Then, destinations can add information about tourism in their region for Chinese customers so they are better briefed to travel there in future.
Selling targeted products to Chinese consumers can also set the stage for hosting tourism-themed events.
“In summer 2022, a craft beer festival is planned in several second-tier Chinese cities in partnership with Nuernberg Fair Co., which runs the Craft Beer China Fair in Shanghai,” says Prof. Arlt. “End-users will have the chance to try European craft beers in person from bespoke breweries at the festival, and if they like a product they can buy it again and again on the app.”
While the O+Mall initiative “fits very well with the current situation by going to the customers if the customers cannot come to us,” its utility could diversify once travel from China restarts.
“It will stay a very useful instrument to continue selling unique products, but also to combine online and offline activities in China during consumer fairs,” says Prof. Arlt. “SME brands can also use it for market research based on a clearly defined group of fans of the destination and its regional products.”
April Sees South East Asia Get Upbeat About Travel!
April saw optimism spread across South East Asia’s travel industry. It was a strong month for domestic travel with various public holidays. Singapore, Thailand and Malaysia removed pre-flight and on-arrival testing requirements, and airport departure halls began to look more recognisable. On this week’s The South East Asia Travel Show, we review what might prove to be a pivotal month for the region’s travel recovery - and assess the outlook for the second half of 2022.
Listen to April Sees South East Asia Get Upbeat About Travel, here:
🎧 Website 🎧 Spotify 🎧 Apple Podcasts
Or search for The South East Asia Travel Show on any podcast platform.
And, that’s a wrap for Issue 81.
Until next week, find me on Twitter, LinkedIn, the Asia Travel Re:Set website and The South East Asia Travel Show.
Happy travels,
Gary