The Visit California China Office Monthly Activity Report
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1 The Visit California China Office Monthly Activity Report July 2013 Prepared by AVIAREPS Marketing Garden China I. INDUSTRY UPDATE Economy Chinese consumers, particularly those with bankcards, showed weaker buying confidence last month, partly due to the unfavorable economic climate. The Bankcard Consumer Confidence Index (BCCI), compiled by Xinhua News Agency and national bankcard association China UnionPay, dropped 0.87 points to hit points in June, marking the third consecutive month of decline. The index was down 1.11 points on a year-to-year basis. The National Bureau of Statistics (NBS) estimated China's GDP growth at 7.5% for the second quarter, down from 7.7% in the January-March period. China has targeted 7.5% economic growth and 3.5% inflation this year. However, growth is expected to slide further as credit tightening and overcapacity continue to weigh on the economy. The consumer price index (CPI), a main gauge of inflation, grew to 2.7% year-on-year in June. The final accounts of China's central government departments for 2012 show less money was spent on official expenses. Spending on overseas trips and official vehicles and receptions stood at 7.43 billion yuan ($1.2 billion), representing a decrease of 559 million yuan from the budgeted figure. Spending on government-funded overseas trips was down 200 million yuan to 1.95 billion yuan, The Ministry of Commerce reported a surprising year-on-year increase of 20.12% in foreign direct investment in China in June, the highest in more than two years despite the economic slowdown. FDI in China s non-financial sectors reached US$14.39 billion in June, the largest 1
2 expansion since March 2011 and also the fifth consecutive monthly increase since February. FDI in the first half totaled US$62 billion, up 4.9% year-on-year. The Hurun Luxury Consumer Price Index grew only 1.52% in China last year, the smallest gain in seven years. The slump was across the board, affecting luxury property, vehicles, watches and jewelry, tobacco and alcohol, education and tourism. The Chinese currency Renminbi, or the yuan, gained 30 basis points to against the U.S. dollar on July 22. Outbound Travel Market The new China Tourism Law to regulate the tourism market, safeguard tourists' rights and interests, ensure reasonable use of resources, and foster the industry's sustainable and healthy growth will be come into effect from October 1, The new law outlines measures to address key problems -- unfair competition, wanton price hikes, and forced goods purchases -- which have plagued the travel industry and aroused strong public discontent in China. The law includes provisions to counter the rampant practice of zero- or negative-fare tours in destinations which refers to tour services sold by travel agents at or below cost in order to attract travelers who are later forced to purchase goods or tip agents during their tour. Travel agencies may not sell services at unreasonably low prices to attract tourists or seek illegitimate profits by arranging for tourists to purchase goods at designated stores or any paid travel sessions other than those listed in contracts. The law stipulates that fixed-price tour contracts should clearly list tour itineraries, content and duration of each travel session, and conditions for transportation, hotel and dining services. Arizona Tourism Bureau announced it had established a representative office in Beijing for media promotion, marketing and trade relations in China. Its tourism focus will be on the U.S. state's natural wonders, national parks, outdoor sports, self-drive routes and Native American culture. 2
3 China National Tourism Administration reported that nearly 38 million Chinese traveled overseas in the first five months of 2013, up 17.3%; the number of inbound tourists was million, a decrease of 4.06%. The U.S. Consul General in Chengdu, Mr. Peter Haymond, revealed the United States is working with China on issuing prolonged visas to Chinese citizens. The initiative involves the U.S. allowing two- or three-year multiple non-immigrant visas. The United States Consulate General in China issued over 1.3 million tourist, business and student visas in 2012, up 25% compared to MasterCard's Consumer Purchasing Priorities report for travel shows an increasing number of Chinese people choose outbound travel for their vacation; 74% of respondents from mainland China in the past 12 months had at least one outbound travel experience compared to 33% the previous period. The report showed Chinese outbound travel per capita consumption was an average 22,980 yuan (US$3,743), and a credit card was their preferred payment method. A quarter of their spending was on shopping, ahead of traffic (21%) and accommodation (19%). Competitive Environment Asia ranks second to Europe as a source of tourists to Germany with a 2012 market share of 10.5%. Overnight stays by Chinese in Germany were nearly 1.6 million in 2012, followed by Japanese at 1.3 million. The biggest revenue from tax-free goods in Germany came from China, with a share of 32%. The German National Tourist Board is investing in online travel agencies due to the potential for growth in online platforms in China Tourism Australia and Air China signed a three-year agreement to work together to promote travel between Australia and China. The two parties will cooperate on advertising, PR and events to attract the China market 'down-under.' The deal would also 'further foster Air China's network expansion into Australia'. China is Australia's fastest growing international inbound market. The rise of China as New Zealand s second-largest tourism market, and the way Chinese visitors spend their money, is changing the Kiwi tourism industry. China overtook Britain last year to be 3
4 second to Australia in NZ's inbound visitor market and also produced dramatic contrasts in credit card spending. Chinese tourists last year spent NZ$651 million (US$ million) which was more than any other country except Australia. Consumer Trends WTO research shows that, as China's outbound tourist numbers increased to 83 million in 2012, it led the rankings for expenditure with US$102 billion. According to Chinese Luxury Traveler 2013, France and the U.S. are the most popular international travel destinations among Chinese luxury consumers, followed by Singapore, Switzerland, Britain and Italy. A Global Refund report indicated that Chinese travelers purchase a quarter of all duty free goods globally. Chinese property buyers spent $12.3 billion on U.S. real estate in the 12 months ending March 31, accounting for 18% of US$68.2 billion that foreigners spent on homes in the U.S. The Chinese ranked second only to Canada. The median price of homes purchased by Chinese was US$425,000, much higher than that of other foreign buyers whose median was US$276,000. The China Internet Network Information Center reported the nation's population of Internet users has grown to 591 million, driven by a 20% rise over the past year in web-surfing from smart phones and other wireless devices. The end-of-june figures represent a 10% rise in total Internet use over a year earlier. The number of wireless users rose to 464 million. The latest growth raised the percentage of China's Internet-user population to 44%. Travel Trends The China National Tourism Administration released the following list of 2012's Top 10 China travel agencies: 1. China CYTS Tours Holding Co., Ltd. 2. Shanghai Spring International 3. China Travel Service Head Office 4
5 4. China International Travel Service Head Office 5. Guangdong China Travel Service Co., Ltd. 6. China Comfort Travel Group Co., Ltd. 7. Shanghai Jin Jiang Tours Co., Ltd. 8. GZL International Travel Service Ltd. 9. Hunan CYTS International Travel Service 10. Shanghai Airlines Tours International (Group) Co., Ltd. Caissa Travel released three Antarctic charter itineraries with January departures, allowing tourists to enjoy a special Spring Festival in the Antarctic. The 2014 itineraries are: 16-day Cross the Antarctic tour, 24-day Antarctic, Argentina and Brazil tour, and 32-day Antarctic and four South American countries tour. Travel is aboard the cruise vessel 'Ocean Diamond' which will take passengers to the heart of Antarctica and its natural wonders. Ctrip has developed an emergency aid network for each product line, with a global rescue system providing 24/7 service. Clients can contact Ctrip anytime, anywhere, during their trip. The 24/7 service applies to search, bookings, tickets, booking amendments, emergency aid, flight change advice, complaint handling, etc. Ctrip has opened a 24-hour service hotline in China, Bali, Siem Reap, Sabah, Phnom Penh, Hanoi, Ho Chi Minh City, Singapore, New Zealand, Australia, Chiang Mai, Phuket, Japan and South Korea. 17U.cn announced it had quit the domestic group tour business to concentrate on outbound products, particularly cruises. The operator had big success with its maiden charter voyages, with vacation business volume jumping 300% in the first five months of 2013 compared with the same period last year. Media Trends 5
6 Online consumer sales giant Alibaba has invested in popular tourism website qyer.com. The Hangzhou-based company said its customer-to-customer platform, Taobao.com, will help qyer.com promote, book and customize tourism packages. An increasing number of Chinese tourists are buying tailored services and sharing travel information through social media sites. China's online tourism market saw turnover reach 253 billion yuan (US$41 billion) in 2012, representing about 10% of the entire industry. Airlift Air New Zealand announced it will use its Boeing 787 Dreamliner on the long-haul destinations of Shanghai and Tokyo as well as mid-haul routes to Perth, Honolulu and Papeete. Hong Kong Airlines announced its new bi-weekly direct flight from Hong Kong to the Maldives city of Male will start on July 10. Maldives tourism industry reported visits by nearly 230,000 Chinese tourists in 2012, an increase of 15.6% on last year. Delta Air Lines held its Shanghai-Seattle maiden flight ceremony for the daily Boeing ER service starts from June 17. China Southern Airline's new direct service between Guangzhou and Moscow will depart for the Russian capital every Wednesday, Friday and Sunday. An introductory roundtrip ticket cost 6,650 yuan (US$1,084). Hainan Airline is launching bi-weekly flights between Beijing and Chicago. Starting from September 3, they will leave every Tuesday and Sunday and tickets are on sale for 3,800 yuan (US$619.4). II. ACTIVITY UPDATE A. Travel Trade Marketing A-1. Major Sales Calls 6
7 VC China conducted CA destination training at Happy Vacations Inc s Shanghai office for its 20 staff, including operational, group leisure, MICE and sales teams. The training covered staff in both the Shanghai and East China markets. Happy Vacations Inc has an office in NYC and management is planning to open a new outlet in LA to strengthen its California market presence. VC China is working closely with Happy Vacations on CA products and further cooperation. VC China had a meeting with Ms. Chris Du, Director of HH Travel s America Division Product Center. HH Travel is a high-end leisure tour operator that provides personalized luxury travel services for Chinese guests visiting global destinations. Its CA products are four West Coast cities for 10 days and West Coast food and wine trips that cover LA, SF and Napa Valley. HH Travel is interested in learning about more California luxury products, hotels, restaurants and activities so VC China shared relevant information to encourage it to develop additional CA packages. VC China held a meeting with Gavin Lyu, Account Manager of C.U. Golf, a newly-founded subsidiary of CYTS MICE. C.U. Golf specializes in organizing golf tournaments and trips around the world for Chinese companies and upscale clients. VC China discussed future 7
8 cooperation opportunities and shared California golf destination information and materials, as follows, to guide the agent: 1) 6 VC EN Visitor Guides 2) 50 VC CN Maps 3) 5 Half Moon Bay Golf Links Flyers 4) 6 Palm Springs Visitor Guides 5) 1 Central Coast Visitor Guide 6) 5 VC Road Trip Guides VC China made a sales call on UTour Shanghai s new office to meet America Department members. UTour Shanghai is a new, fast-growing wholesaler set up in Shanghai to cover the East China region market and operate independently of sister company UTour Beijing. VC China shared and updated staff on CA tourism resources and encouraged the tour operator to develop more CA products for Shanghai and East China markets. VC China had a meeting with Ms. Zhang Shi Jing, Vice President of CTI MICE which is preparing a bid for Amway China to have a 15,000-staff convention in SF in May Amway China has already sent a team to meet San Francisco Travel Association and do site inspections at hotels and venues. VC China fully supports this group and is sharing destination information with the tour operator. VC China provided support for Shanghai East Tour to launch its 12-day West Coast Tour products on Oriental CJ, a Shanghai TV shopping channel. Shanghai East Tour plans to send 200 Chinese guests from November 2013 to January 2014 in waves of two pax groups each month. The TV commercial will be broadcast once a month at night during the travel period. VC China shared CA videos and high resolution pictures with the tour operator to support the promotion. To support V-Tour America Inc s promotion and sale of CA tour packages in the Hangzhou market, VC China provided the following material: 1) 200 VC CN Maps 2) 100 Disneyland Park Luggage tags 3) 50 SF pens 4) 50 Orange Country spectacle cleaning cloths 8
9 VC China visited two leading Shanghai agents, JinJiang Tours and Shanghai CITS, to check the promotional collateral they were displaying of competitor destinations. We found most competitor destinations are using flyers to reach Chinese consumers in agent s shops. VC China developed a plan for FY13/14 Chinese collateral which involves both maps and posters. VC China provided destination advice for FIT guest requests from both Chengdu and Guangzhou. We answered questions posed by a Chengdu family-of-three planning a fly+drive visit to California from July 25 to August 13. VC China mailed VC Chinese maps, Visitor Guide and Road Trip Brochure to the guests to help plan their travel VC China shared the new website of Haiyi Hotels Worldwide in San Francisco with the China team and included it in the travel trade e-newsletter for Chinese agents. VC China team provided the POV report on cooperation with rental car agencies/hotel chains in China. 9
10 VC China completed FY12/13 China budget tracking and reconciliation and clarified outstanding invoices. VC China shared Napa Valley destination information received from IPW with the China team. A-2. Travel Trade Shows/Events Both VC Shanghai and Beijing office participated in the WebEx training for sites involved in the 2013 China Mission. VC China consolidated the China information and updated the Mission Microsite content. VC China followed up with China Mission hotels in Guangzhou, Hangzhou and Shanghai, updating booking dates and function spaces according to HQ s Mission itinerary revision involving staying in Shanghai for two nights instead of Hangzhou VC China attended the Hyatt Hotel & Resort Global Expo in Shanghai for meetings with the sales director of SF Bay Area and the sales team from St. Regis Monarch Beach. VC China discussed future cooperation opportunities in China with the CA hotel partners. VC China attended the U.S. Independence Day celebration reception with CA partners at the U.S. Consulate Shanghai. ************************************************************************** B.VC Beijing Office 10
11 B-1. Hotels and Airlines B-2, Major Sales Calls VC Beijing visited CITS Overseas Travel for a meeting with Zheng Yao, General Manager of the America Center. VC Beijing outlined CA s new tourism resources and had extensive discussion about product design and the Beijing market. Mr. Zheng expressed appreciation of VC Beijing s on-going support in the market and will continue to push a major focus on California-related products in his business. VC China invited Mr. Zheng to attend the 2013 China Mission in Guangzhou, Hangzhou and Shanghai in mid-october if he is available. Wang Qian, America Department director, and her senior operator, Ms. He Yang, also attended the meeting. VC Beijing visited Jennifer Ma, Deputy GM of Grand China MICE in Beijing. As one of the industry s brightest stars in the China Market, Grand China MICE had an impressive performance last year. VC China outlined the tremendous California MICE resources during the meeting and emphasized its willingness to fully support the operator in project bidding as well as group operations. VC Beijing encouraged Jennifer Ma to introduce California to most of their clients and help them to experience the U.S. sunshine state any time of the year. She will authorize her Shanghai colleague to participate in the VC China Mission in mid-october in Shanghai. VC China made sales calls to Mr. Zhang Liyan and his team at key tour partner Huayuan International Travel. Huayuan launched 8-10 USA products this summer and early fall on its B2C website Byecity.com. VC Beijing worked with the agent to ensure all the products were California-related and also helped it to develope two California-only products. VC Beijing expressed strong appreciation for the cooperation and support of Huayuan and looks forward to creating more high quality products with it in the future. VC China held a meeting with Ms. Cong Ling, Deputy Manager of CTS HQ s America Department. CTS is one of the top three nationally-owned travel enterprises in China and VC China encouraged Ms. Cong to join the Chinese New Year project in VC China gave Ms. Cong a briefing about the past two years CNY groups, sharing feedback from guests, participating travel agencies, and CA industry partners. Ms. Cong s colleague, General Manager Mr. Xu Wei, attended the meeting and expressed strong interest in cooperating with VC China 11
12 on branded projects in China. CTS HQ will look closer into joining the CNY campaign and will try their best to take part. VC China had a meeting with Jessica Zhang, Market Manager of CYTS MICE, to provide an update on the 2013 Orange County Sales Mission which will be held in Beijing at the end of October. VC Beijing visited Global Travel International for a meeting with General Manager Mrs. Karen Wang who visited the California booth at IPW in June in Las Vegas. Mrs. Wang was so impressed after her discussions with VC China and other CA partners about the strength of California products in the Chinese outbound market that she decided to cooperate with VC Beijing to promote the destination. VC Beijing will now work closely to support Mrs. Wang s efforts. VC China made a sales call on Ctrip.com to meet Ms. Zhang Qing, Product Manager of the America and East Asia Department. Ctrip.com has just launched its North America business in the China market and its HQ in Shanghai participated in last year s CNY project. VC China has closely monitored Ctrip.com s development and will further discuss tour group promotion in combination with the unique strength of its online platform resources. VC China will also initiate talks with the agent about CA theme park and attraction promotions. Visit California Beijing met Elizabeth Shen, MICE Operations Director of Jettour Beijing, who sought support in the form of promotional materials for the agent s road shows all over China as well as for CA product promotion. VC Beijing committed to provide Ms. Zheng with CA posters and Chinese maps; all the collateral will be sent to key tour operators before October. B-3, Marketing Activities / Events VC Beijing updated the 2013 VC China Mission Microsite up to July 31 with all the latest details. All delegates can find an introduction and general information on the site, including required submission list and shipping details. Deadlines have been posted and answers to common questions are in the Q&A section. Please click chinamission2013.visitcalifornia.com for more details. VC Beijing helped O.C. China Office confirm its 2013 sales mission venue in October. VC Beijing contacted the U.S. Consulate Beijing for venue booking and provided a briefing about 12
13 the event. The consulate committed to support O.C. China Office to help it deliver a successful outcome for China tour partners and media VC Beijing team joined the U.S. Consulate Beijing s Independence Day celebration with more than 500 guests, including municipal leaders, diplomats of other countries, major travel agencies, clients and media partners. It also distributed destination promotional material and contributed to sponsorship of the event by providing VC Chinese maps; the VC China logo was displayed onsite. B. Public Relations C-1. Media Monitoring (clippings and publicity calendar) Visit California China office secured 27 items of PR coverage during June with an estimated total circulation of 26,250,000 and estimated advertising value of US$714,000 C-2. Press Releases Distribution Visit California China office distributed two press releases (below) to key media representatives in China, and followed up to ensure coverage What s new in California/Summer of Fun Ultimate Playground for Families C-3. China E-Newsletter Visit California China s June E-Newsletter contained the following content specially prepared for Chinese media. 13
14 Ultimate Playground for Families California Road Trips C-4. Media Liaisons Visit California China office made 20 press calls to major travel trade, daily newspapers, magazines and portal sites to pitch for California features: 1. Ms. Tao Yuan, WiTrip 2. Mr. Zhang Song, Metropolitan 3. Ms. Yang Qing, Sina.com 4. Mr. Jerry Zhang, Hurun Report 5. Ms. Joan Wu, mg Men s Guide 6. Ms. Season Shen, Grand Hotels 7. Mr. Zhang Jing, Orient Sport 8. Ms. Jin Jing, Sina.com 9. Ms. Doris Yu, Extraordinary Travel 10. Ms. Wang Wen Jia, Fast Company 11. Ms. Jiang Ji Jie, Bentley Life 12. Ms. Yang Li Jia, Life Weekly 13. Mr. Jin Jing, LUXE 14. Ms. Jing Feng, China Southern Gateway 15. Ms. Sophia Li, Architectural Digest 16. Ms. Wang Jian Mei, Top Travel 17. Mr. Wang Li Jun, China News Agency 18. Ms. Katherine Wu, Auto Travel 19. Ms. Delia Wang, Robb Report 20. Ms. Janet Chen, Intelligent Life < END> 14
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