China Daily Asia Weekly: Sunrise industry on the move(图文)

Tourism in China could reap rewards for investors if service and infrastructure are improved
China’s tourism industry is booming, presenting tremendous opportunities for private companies to invest and take advantage of the soaring demand from Chinese tourists, both at home and abroad.
“Tourism assets are the new wealth that Chinese companies should invest in, after traditional industries such as mining and real estates,” said Wang Ping, chairman of the China Chamber of Tourism and vice chairman of the Global Tourism Economy Forum.
“It’s time to change people’s idea of future wealth,” she continued, arguing that tourism assets are likely to appreciate over time, and also that the sector has less of a detrimental impact on the environment than other industries in China.
Wang was speaking at the China Daily Asia Leadership Roundtable, one of the sessions held as part of the second Global Tourism Economy Forum in Macao on Sept 19.
The roundtable gathered a range of Chinese entrepreneurs from the private sector who have invested in tourism or are interested in investing in the industry. These included representatives from some of China’s major conglomerates, in a sure sign that the travel industry is attracting serious investors with deep pockets.
It is hardly surprising that interest in the sector is on the up, as statistics suggest that recent fast growth is set to continue. According to data from the China Chamber of Tourism, Chinese people traveled 3 billion times in 2012. The number is expected to increase to 4.5 billion times this year.
More than 86 million Chinese people went overseas last year. China also has the world’s biggest purchasing power in terms of overseas tourism spending.
“The data from this year means, on average, every Chinese travels three times a year,” Wang said, adding that the private sector should seize this great opportunity to invest.
Wang’s comments were echoed by Fu Jun, chairman of the board of directors and president of Macrolink Group Ltd, a private conglomerate of real estate, mining, finance, chemicals, petroleum and beverages.
“The tourism industry offers possibilities for China’s private sector to upgrade and transform because it is a big market,” Fu said.
“The development speed of China’s tourism infrastructure is much slower than its demand,” he said, adding that there is plenty of space for private companies to invest since the country’s 12th Five-Year Plan (2011-2015) requires 12 percent annual growth in tourism.
The Hunan-based group bought two wineries in Bordeaux last month, and is planning to launch a new tourism business in Beijing. It is also considering investing in tourism resources in South Korea, Malaysia, Kenya and Mauritius, where Chinese tourists are already showing an interest.
In the domestic arena, Fu said his company is planning to build three resorts and 10 five-star hotels in the near future.
“Two of the three resort areas will be in Hunan,” he said. “One is in Suiyan county, a place with a 1 million square-meter primary forest. The other is the Tonggu ancient town near Hunan’s capital city Changsha; we are going to rebuild the town and make it into a resort destination.”
For both projects, the group plans to invest around 10 billion yuan ($1.63 billion).
Fu further explained that the company has a resort project in Qinghai province’s Guide county, where the Ming Dynasty’s first emperor, Zhu Yuanzhang, once put his troops.
He said that his company is eager to figure out how to build infrastructure appropriate to these beautiful places.
“We have started some talks with international hotel brands, such as Sheraton and Marriott,” Fu said. “I believe tourism is the future direction for China’s private companies’ development.”
Zheng Yuewen is chairman of the China International Chamber of Commerce for the Private Sector, and also founder and chairman of the Creat Group, a conglomerate with interests in sectors including finance, healthcare and agriculture.
He noted that China’s private companies have begun to invest in overseas tourism and cultural assets, with recent high-profile cases including Dalian Wanda Group’s purchase of the US cinema chain AMC and Fosun Group’s purchase of hotel and resort chain Club Mediterranee, better known as Club Med.
“Both deals involved a big amount of money,” he said. “In fact, I think in many places, Chinese investments have been much bigger than foreign companies in recent years.”
He gives an example of Chinese companies’ investments in Northeast China’s Changbai Mountain, where infrastructure was previously poor.
“Within three years, we have seen 30 billion yuan invested and five five-star hotels built, as well as 48 skiing areas,” Zheng said. “My company has a skiing area in Changchun also, but that is not one of our major businesses.”
Zheng’s company bought Japanese high-class golf equipment brand Honma in 2010, and also owns a golf course in Tokyo.
“China’s private companies are eyeing the world’s tourism assets,” Zheng asserted. He also provided an insight into what his firm is looking for when it invests overseas.
“We are interested in two kinds of countries. First, they must have mature infrastructure, but have not yet been well publicized in China. Second, they should have special cultural characteristics.”
Zheng said that tourism’s development in China is based on the fact that Chinese people have more leisure time and money than in the past.
“Along with the increasing number of middle class people, the demand in tourism will keep growing,” he predicted.
But it is not an entirely rosy picture. Experts at the event also warned that there will be difficulties on the way as the sector continues to grow.
Peter Wong, chairman of the MK Corporation Ltd and vice chairman of the Global Tourism Economy Forum, said despite all the achievements to date, China’s tourism sector still has a long way to go.
“The industry has structural problems,” Wong said, quoting a report published by the World Travel & Tourism Council (WTTC) in 2004.
“In many other Asian countries, they have a ministry of tourism. However, in China, we only have a tourism bureau, which means we have difficulties in dealing with affairs involving other government departments.”
Wong said that in the nine years since this report was published, few changes have been made. He called for a ministry of tourism to coordinate every perspective of the industry.
“China’s tourism industry has been included in the government annual report since 1996, and the private sector has only been in the industry since 2002,” Wong said.
“We hope that, through the push by the private sector, China could have a ministry-level tourism administrator in future to coordinate the interest of tourism, transportation and cultural heritage administration.”
As a delegate of the National People’s Congress over the last five years, Wong said he has been calling for a tourism ministry for a long time.
“Tourism has six ‘E’s: Education, entertainment, economy, employment, ecology, and exchange,” he said. “The concept of tourism is much wider than before.”
Wong explained that tourism has enjoyed increased focus from the Chinese government in recent years. It is officially supported by the 12th Five-Year Plan (2011-2015), and cooperation with neighboring countries is a highlighted topic, given that China’s neighbors are striving to develop their own tourism industries as well.
According to the WTTC’s 2004 China report, 80 percent of tourism income came from cultural heritage attractions. Wong said that China is rich in such sites, but many of them have just started to be developed for the tourist market.
“There will be a lot of opportunities in China’s tourism industry to attract foreigner investors as well,” he said, advising that overseas investors will need to move fast as domestic capital is already rushing into tourism assets.
However, Yang Bin, professor and senior associate dean of the School of Economics and Management at Tsinghua University in Beijing, sounded a note of caution for domestic investors.
“Many tourism projects can be soulless. This kind of investment could easily become a simple property project,” Yang said, advising that Chinese companies should pay attention whether they are buying the “hardware” or the “software” of the tourism assets.
“Buying only the ‘hardware’ could lead to assets depreciating in the future because tourism is an industry that is highly dependent on the experience it brings to the customers,” he said.
Yang also expressed concern about the relatively low quality of service in China’s tourism industry, saying that the industry will grow only if its personnel improve in quality and put their hearts into their jobs.
“For customers, good tourism service provides not only a trip, but also a journey,” Yang said, adding that cultural uniqueness is more important than products in this business.
Ultimately, experts concurred that the future for China’s travel sector seems bright, with plenty of scope for improvement and investment.
“Tourism in China is still a sunrise industry. The places with the best views are short of infrastructure,” said Fu from Macrolink. “It is a sustainable business and it has great potential for development.”
benyue@chinadailyhk.com