58% Estimated GDP per capita (2012) $9,095 USD. 5% GDP growth (2011) 9.3% 20% GDP growth (2012) 7.7% 23% Forecasted GDP growth (2013) 7.

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1 China JUNE 2014 Overview China was British Columbia s (BC) second largest international market in terms of direct customs entries in 2013; up two spots from BC accounted for nearly 6 of China s direct custom entries to Canada. In 2013, China was the largest Asia/Pacific market for both BC and Canada. China accounted for 23% of BC s Asia/Pacific entries and 2 of Canada s Asia/Pacific market share in These proportions increased when compared to The market at a glance Top countries to BC (2013) USA overnight 1 South Korea 7 China 2 Hong Kong 8 United Kingdom 3 Mexico 9 Australia 4 India 10 Japan 5 Philippines 11 Germany 6 Taiwan 12 Source: Statistics Canada Outbound departures from China (2012) 45.6 million Population (2012) 1.35 billion Direct customs entries to BC (2013) 203,100 Unemployment rate (2012) 4.1% BC s share of Canada s Chinese custom entries (2013) China as a share of BC s total international customs entries (2013) Asia/Pacific as a share of BC s total international customs entries (2013) China as a share of BC s Asia/Pacific customs entries (2013) 58% Estimated GDP per capita (2012) $9,095 USD 5% GDP growth (2011) 9.3% 2 GDP growth (2012) 7.7% 23% Forecasted GDP growth (2013) 7.7% Sources: Canadian Tourism Commission, International Monetary Fund (World Economic Outlook Database, October 2013), OECD, Statistics Canada, Tourism Economics Chinese overseas travellers Over 45 million outbound departures from China occurred in 2012, roughly a 13% year-over-year growth. It is predicted that outbound travel from China will continue to grow rapidly. In 2013, over 350,000 Chinese visited Canada of which 58% entered directly through BC. Between 2004 and 2013, Chinese visitors to Canada increased 246% and Chinese visitors to BC grew 155%; largely due to the granting of the ADS (Approved Destination Status) in June 2010 allowing marketing agencies and the travel trade to actively market Canada directly to Chinese consumers. In 2013, annual inbound air capacity into Vancouver International Airport (YVR) from China was 5% of total capacity to YVR. Total inbound air capacity from China increased 125% between 2009 and 2013, with air capacity at 559,531 in This reflects non-stop, one direction flights for all passengers (travellers/non-travellers) into YVR. 400, , , ,000 0 Chinese overnight customs entries ( ) Rest of Canada BC Sources: Canadian Tourism Commission, Statistics Canada, Vancouver International Airport

2 The Chinese traveller in Canada 1 Visitor characteristics In 2012, the proportion of male and female visitors to Canada was evenly split, 5 for each group. Since 2009, the number of male travellers from China increased 5% and female travellers decreased by 5%. Almost half of Chinese visitors to Canada travelled alone. The party size for Chinese visitors has remained relatively stable since There was a slight increase for those travelling alone, up two percentage points and a decrease for parties of two, down two points in Travel party size (2012) 3 or more 24% 2 people 1 person 45% Data sources for Chinese travellers in Canada The International Travel Survey (ITS) is an ongoing survey conducted by Statistics Canada in partnership with the Canadian Tourism Commission and some provinces, including BC. The survey contains questions designed to collect data on the characteristics of travellers. In general, the average age of a Chinese visitor to Canada has gone down since 2009 (increase of those 45 years and younger). Over of Chinese visitors were under the age of 35 and another 4 were between the ages of 35 to 54. Since 2009, the proportion of visitors aged 45 to 54 decreased 1, while visitors aged 35 to 44 increased 6% and those aged 65 plus increased 7%. Trip characteristics In 2012, Chinese travellers to Canada (who also visited BC) spent on average 31 nights in Canada and 23 nights in BC. The average trip length to Canada and BC has remained stable since Leisure travellers spent on average 14 nights in Canada and eight nights in BC. Visitors by age group 2 1 < Average trip length (nights) In Canada In BC The ITS provides statistics on the volume and demographics of international travellers and on characteristics of their trips such as activities, expenditures, places visited, accommodations and length of stay. The data in this section is based on the 2012 ITS results and on those who entered Canada from mainland China and who spent at least one night in BC. Comparisons to the 2009 ITS results are discussed where available. For more information, please visit On average, Chinese visitors to Canada stayed longer in 2012 when compared to Over 4 of Chinese visitors stayed 1 to 3 weeks. Nearly one-quarter of Chinese visitors stayed 7 to 13 nights. Trip length of one to three nights decreased 9% while those staying 14 to 20 nights increased 9% (including educational stays). 2 Visitors by trip length in nights 25% 2 15% Visitors to Canada by month (2012) In 2012, July and October were the most popular months for travel to Canada (22%). Smaller peaks in travel occurred in January (Chinese New Year) and between May and June % Jan Mar May Jul Sep Nov 1 Some totals may not sum to 10 due to rounding.

3 The Chinese traveller in Canada Activities and transportation Chinese leisure (holiday/vacation) travellers to Canada tripled since Travel in all other categories (visiting friends or relatives, business and other ) decreased during this time. All business travel purposes within this category decreased (meetings, conference/convention and other work), with other work decreasing 13% since Sightseeing and shopping were the most popular activities for Chinese travellers (84% and 88% in 2009, 92% and 84% in 2012), with sightseeing increasing 8% since Visiting a national or provincial park increased almost 2 from Other activities, like visiting a historic site or casino, saw an increased participation rate while participation in sports or other outdoor activities decreased. Spending and perceived value On average, Chinese travellers spent $2,555 per party during their visit to Canada in Total trip and per night expenditures declined, both over 1 since Travel basics (accommodation, transportation and food and beverage) accounted for two-thirds of expenditures, up 11% since In 2012, travel parties spent more on accommodation and less on other expenditures. Expenditures by travel party Expenditure type Accommodation 22% 33% Transportation 1 15% Food and beverage 25% 19% Recreation/entertainment 8% 8% Other costs 36% 24% Total spend by party $2,870 $2, % 5 75% % VFR Business Primary trip purpose 13% 41% 23% 5% Other activities while in Canada 25% Trip activities* Friends or relatives 71% 68% National or provincial park 34% 53% Zoo, aquarium, garden 36% 37% Historic site 26% 32% Museum or art gallery 26% 29% Sport or outdoor activity 2 14% Casino 7% 12% Festival or fair 13% 11% Theme or amusement park 13% 11% *Other than shopping and sightseeing Overall, Chinese visitors were satisfied with transportation services, accommodation services and local hospitality. In 2012, at least four-fifths of visitors rated these aspects as good. Between 2009 and 2012, satisfaction levels have increased at least ten percentage points for accommodation services and variety of activities to see and do. 22% Holiday/Vacation Other Chinese travellers were less satisfied in terms of value for money when compared to other trip experiences. In 2009 and 2012, most travellers gave an average rating. One-quarter continued to view this trip experience in Canada as poor value for money in However, the proportion of travellers who perceive this trip experience as good increased 1 from Chinese visitors to Canada used a wide range of transportation options. Nearly two-thirds travelled by private automobile. Although travel by private automobile is the most popular mode of transportation, this proportion decreased over 1 since Travel by plane, bus, train, boat and metro, subway or taxi increased in 2012, with travel by plane increasing over 2. Transportation while in Canada Transport method Private automobile 73% 62% Metro, subway, taxi 39% 47% Plane 24% 45% Bus 25% 37% *Boat 18% 29% Rented automobile 9% 9% Train 1% 5% Private boat 1% Private plane 1% *Includes cruise, ferries, etc. Trip experiences in Canada Satisfaction with Transportation services Good 75% 84% Average 22% 13% Poor 3% 3% Accommodation services Good 72% 83% Average 18% 14% Poor 9% 2% Hospitality of local people Good 89% 88% Average 11% 1 Poor 2% Value for your money Good 18% 28% Average 45% 47% Poor 36% 25% Variety of things to see and do Good 57% 72% Average 36% 24% Poor 7% 5% Party spend by night $95 $84

4 China s economic profile In 2013, China stood as the second-largest economy in the world, after the US (measured on a purchasing power parity (PPP) basis). However, the Chinese government faces numerous economic challenges, including reducing its high domestic savings rate, facilitating higher-wage job opportunities for the aspiring middle class (including rural migrants and increasing numbers of college graduates), reducing corruption and other economic crimes and containing environmental damage and social strife related to the economy's rapid transformation. Efforts to curb inflation in 2011 also contributed to slower GDP growth in 2012 and The government said there is flexibility in its 7.5% annual growth target for 2014, a rate which is still highly enviable by most countries. China's Yuan slipped somewhat against the dollar in early 2014 and forecasters expect the Yuan to trend slightly downward in the short-term through The new government of President Xi Jinping has signaled a greater willingness to undertake reforms that focus on China's long-term economic health, including giving the market a more decisive role in allocating resources. According to the 2014 Credit Suisse Emerging Consumer Survey, the overall robust nature of the Chinese consumer ranks the highest among 10 countries based on the following four key factors; personal finances, inflation expectations, income expectations and time for a major purchase. This survey was conducted before the recent announcement of policy reforms in China, which arguably can only reinforce this picture on a long-term view. Sources: Bank of Canada, Canadian Tourism Commission, CIA World Factbook, Credit Suisse, The Economic Times, Wall St Journal Source: Bank of Canada Competition for Canada and BC Canada s top competitors for the Chinese visitor in the long-haul outbound travel market are the United States (US), the United Kingdom (UK), France Germany, Australia and New Zealand. The market outlook for long-haul travel from China was particularly strong in With relaxed travel restrictions, personal wealth increases, growth of passport ownership, less restrictive visa requirements and more destinations obtaining Approved Destination Status (ADS), interest in long-haul travel is growing within the Chinese population. For Chinese travellers considering a leisure trip in 2012, Canada ranked fifth in unaided destination awareness; the US and Australia retained the top two spots. Canada ranked sixth in aided awareness, with 36% indicating knowledge of Canadian holiday opportunities. Australia maintains the top spot, which can likely be attributed to longstanding ADS status and extensive marketing efforts in China. Only 13% of Chinese long-haul travellers report a prior pleasure trip to Canada, with 21% having occurred in past three years. Although interest to visit Canada and other competitive markets continues to grow substantially, Canada remains in sixth spot for interest levels. In 2012, BC remained the preferred destination among Chinese considering travel to Canada, slightly ahead of Ontario. The interests of Chinese travellers appear to be changing. Seeing beautiful scenery is still the most important destination attribute while the importance of skiing, snowboarding and other winter activities has declined from previous years. Canada is perceived to be the strongest in beautiful scenery and is seen as the top destination for winter activities. Shopping, exploring nature with nearby amenities, experiencing local flavor, viewing wildlife and national parks and seeing historical and cultural attractions continue to be popular travel activities among Chinese visitors. Australia dominates the top spots for many of these activities, primarily related to beautiful scenery, nature and outdoor activities. France dominates all culinary measures while the US takes the top destination spot for national parks and entertainment. Source: Canadian Tourism Commission

5 Emerging trends in travel Outbound travel from China has been growing rapidly in recent years (average of 19% annually since 2000) fuelled by economic growth, an expanding middle class, less restrictive travel policies and a desire to see the world. By the turn of the decade, China is forecast to become the number one tourism generating market, with 100 million outbound trips and expenditures of $590 billion. Chinese National Holidays New Year s Day January 1 January 1 Spring Festival Golden Week February 9-15 February 1-6 Chinese New Year February 10 January 31 Tomb Sweeping Day April 4-6 April 5-7 Labour Day (May Day) April 29-May1 May 1-3 Dragon Boat Festival June May 31-June 2 Mid-Autumn Festival Sept19-21 Sept 6-8 National Day October 1 October 1 National Day Golden Week October 2-7 October 2-7 What is ADS? Sources: timeanddate.com The Approved Destination Status (ADS) is a bilateral agreement between the Chinese Government and the government of a requesting country. ADS allows for Chinese citizens to travel to a destination in group package tours authorized by the China National Tourism Administration (CNTA). 146 countries currently have ADS agreements with China. An ADS agreement facilitates increased tourism business by allowing liberalization in three critical areas: Chinese citizens can more readily travel to Canada for leisure purposes Canada can actively market its tourism products in China Chinese travel agents can organize, advertise and promote leisure travel packages to Canada for their clients Canada was granted ADS in December 2009 and a memorandum governing ADS was reached in June For more information, please visit the Canadian Tourism Commission corporate website (encorporate.canada.travel) and go to Markets. For more information, please contact: Destination British Columbia Research, Planning & Evaluation Website: Thirty-eight million Chinese held passports in 2012, with ownership rates increasing by 2 per year. An estimated 5 of the population of China s Tier 1 cities (Beijing, Shanghai, Guangzhou, and Shenzhen) are now classified as middle class according to the Economic Intelligence Unit. Future travel propensity will be affected by demographics, as China's population ages more rapidly than it is getting rich. The younger, more educated generation of Chinese will be expected to sustain the country's economic life as workers and as consumers. The greatest challenge for Canada will be competing against established and emerging destinations for the lucrative Chinese market. According to the Canadian Tourism Commission s 2012 Global Tourism Watch, cost is the top perceived barrier to visiting Canada. Chinese travellers product interests continue to centre on scenic beauty, nature experiences close to cities, cultural and urban activities and unique and local experiences; however, there has been a shift, with a slight drop over 2011 in interests for winter experiences (i.e., ski and snowboard vacations). In addition to economic, marketing and competitive factors, other potential determinants of long-haul travel from China include expanding air service and airport construction; growing online booking capabilities; high demand for international education and English language training, particularly for young people from wealthy families; and relaxation of visa requirements for many favoured destinations. Among those Chinese considering a trip to Canada, travel guides and books, television shows on Canada and word of mouth recommendations from friends/family are key information sources. Travel agents still play a major role in this market. Access to the worldwide web has grown throughout China. Nationally, internet penetration is 36%, but is much higher (approximately 7) in urban areas. The trend towards researching and now booking travel online is expanding quickly, with an estimated 25% of travel now being booked online. Advice via social networks, web advertising, and travel review sites is growing in popularity both among travellers generally and those particularly interested in visiting Canada. Post-trip sharing is heavily focused on in-person interactions, with approximately 6 sharing experiences via social networks. Blogging and posting to travel review sites are also popular. Sources: Canadian Tourism Commission (Global Tourism Watch), China Connect, China Economic Quarterly, Credit Suisse (c) 2014 Destination BC Corp. All rights reserved. DESTINATION BRITISH COLUMBIA is an Official Mark of Destination BC Corp.

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