RVC China and India EN - ORHMA > Home Files/GovtRelations/Tourism/Rendevous China... · Canada has...
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Beijing - 18mShanghai – 17.5mGuangdong - 86.5m Guangzhou – 12mShenzhen – 8m
Hebei 68m Jiangsu 75m
Source: China Statistical Yearbook; IMF; THE BEIJING AXIS Analysis
Hong Kong SAR
GDP Comparisons- China Provinces v Countries
Guangdong – IndonesiaShandong – NorwayJiangsu – AustriaZhejiang – VenezuelaHenan – UAEHebei – ColumbiaShanghai – RomaniaLiaoning – SingaporeSichuan – UkraineHubei – EgyptHunan – AlgeriaFujian – KuwaitBeijing – HungaryAnhui – New ZealandHeilongjiang - Peru
The Canadian Embassy in Beijing, acting as the lead for theCanadian Government is engaged in active and frequent dialogue with the China National Tourism Administration
Negotiations are based on the shorter US style agreement
The Embassy feels confident that the ADS agreement will besigned within the next 2 months and before Hu Jing Tao’s visit to Canada for the G20 Summit in Toronto
Key agents are provisionally planning groups of up to 1000 to coincide with this visit
Once the agreement is signed CTC and Canadian Partners can commence the advertising and promotion of Canada as a leisure destination. It will also permit Chinese tour operators to advertise and promote Canadian experiences to the Chinese consumer.
With ADS, Canada will be placed on a level playing field but wewill be behind its principal long haul competitor destinations thatalready have significant presence in China and ADS approved forsome time.
The acquisition of sufficient funds in cooperation with our keyProvincial Partners to mount an effective and sustainedadvertising and promotional campaign is crucial to maximize the benefits of ADS and increase export revenues.
Outbound travel from China is still at a relatively early stage.
The granting of ADS does not change the market dynamics and it remainsa constrained developmental market with great potential.
Examples of these restraints: strict visa requirements, mandatorytravel deposits for Chinese groups of up to CAD 12 000+ per person held intrust with travel agents , blocking of web sites and off shore hosted social media sites, government owned and operated travel agencies, censorshipand strict media controls.
• Overall GDP growth in 2009 was 8.7% with 4th quarter growing at 10.7%. Massive government spending and record lending helped the economy rebound – first quarter 2010 at 11.9%.
• China has world’s largest foreign exchange reserves
Forecast Economic Growth:China’s GDP is now projected to grow by 9.5% in 2010
Unemployment Rate: Annual urban unemployment rate 4.2%
Consumer Price Index: Predicted to be around 3% for the full year
Retail sales:China’s retails sales rose 15.6% in 2009 from a year earlier and 17.9% in first quarter 2010 over same period 2009
China EconomyPopulation spread one third urban- two thirds rural
Beijing/Shanghai/Guangzhou and other big cities -average annualsalaries – CAD 4500
Average urban annual salaries – CAD 2500
Average rural annual income – 800 million farmers – 57% of totalpopulation – CAD 800
Gap between rich and poor widening and has widened for the past 10 years
Less than 5% of population hold half the country’s savingsdeposits
Government forecasts 40% of population “middle class” by 2030
2008 – outbound tourists - 46 million
2009- outbound tourists - 47.6 million - (23 million overnight stays)
2010 – outbound tourists – 51 million ( forecast by CNTA)
80% of tourists visit Hong Kong/Taiwan/Macau – long haul market around 5 million
Canada2008 – 159 927 + 5% over 20072009 – 160 833 + .57% - only core market in black for 2009 2006 – 2008 visitor numbers increased by 36%
Conference Board of Canada indicates that ADS will increase visitor numbers by 50% by 2015
Current visitor statistics
Air CapacityPlanned summer peak air capacity shows significant increase and areflection of the potential growth in the market following ADS.
Air Canada – double daily China to Canada – Beijing/Vancouver-Beijing/Toronto. Shanghai/Vancouver and Shanghai Toronto
Air China – from daily Beijing/Vancouver to 10 a week in June.Addition of Beijing/Toronto services in 2011
Hainan Airlines – possible 3 flights week Beijing/Toronto- August 2010
China Eastern- possible daily 2010 summer peak
China Southern – no news as yet
Core marketing program budget CAD 1, 388, 632 plus estimated Partner revenue of CAD 350 000 ( excluding any ADS campaign contributions)
Stimulus Funding CAD 256, 384 – allocated to MICE development
While CTC China has conserved its marketing budget to date in 2010 - it is apparent that additional funds will be needed to launch a robust, fully integrated marketing communications plan
2010 Budget allocations
SWOT - StrengthsCTC has developed strong trade relationships and leadership position
Strong potential exists with key accounts and key preferred agent program for visa issuance
Increased air capacity
Canada is perceived as desirable destination by Chinese
Canada has large Chinese community ( 1.2 million)– tourism infrastructure in many cities
Importance of long haul travel for Chinese is on the rise with Global Tourism Watch results improving from 16% in 2008 to 33% in 2009
SWOT - Strengths
The Chinese outbound market shows continued health with 59% oftravelers saying they will travel more in next 3 years- up from 37% in
2009 over 2008
Canada ranked 5th among top destinations in terms of unaideddestination awareness – which is very positive in view of Canada’slack of ADS
Canada ranked 9th for “unaided advertising awareness” placing it ona higher ranking than competitive destinations such as UK, Italy and Germany- again a significant recall rate as Canada not permitted toadvertise directly to consumers
Canada’s general product strengths include the combination of nature andurban experiences. Niche product strengths include outdoor activities andsoft adventure
SWOT - Strengths
Canada has high appeal as incentive reward destination for Chinese and multinational corporations with distribution networks acrossChina
Good infrastructure to accommodate large incentive groups
CTC’s status as Government Crown Corporation is perceived in the market as a key travel influencer with trade, media an consumer
Canadian Embassy and Consulates cooperative in support of Tourism activities
Next to USA
SWOT - Weaknesses
Canada is one of last countries to receive ADS, putting it at disadvantage with long haul competitors having higher marketawareness and established integrated sales and marketing approach
Cost of air fares and point of sale restrictions due yield managementissues
Strict visa process – not Australia!
Lack of Chinese speaking qualified tour guides in some Canadiancities
Low awareness of activities and what there is to see and do outsidethe key tourism icons in four main Provinces
SWOT - Weaknesses
Canada is perceived as an expensive destination- this perception is magnified when US/Canada joint itineraries are compared
Some traditional media strategies could be constrained by Government censorship and controls
Some market segments may not be promoted or advertised- gay and gambling
There is restrictive media distribution in the on line environment-popular off shore social media sites such as facebook, twitter, youtube and flickr are blocked. Local social media sites are carefully controlled and also experience temporary closure periods
SWOT - Weaknesses
Substantial deposits of up to CAD12 000+ per person need to be deposited with travel agencies prior to departure of ADS leisuregroups
Lack of individual tax rebate or refund program
SWOT - Opportunities
Interest in outdoor and in particular winter activities is growing with recent Chinese successes in speed skating, figure skating and skiing
Although Canada’s competitor destinations have enjoyed ADS for some time, we will be a fresh face in the market. Further, Canada is able to learn from our competitors failings and avoid similar mistakes
Huge potential to develop US/Canada combined tour programs to complement Canada only itineraries. This assisted by ongoing discussions between the US and Canadian Embassies to facilitate visa issuance
Although operating within a restrictive environment there is strong internet use and growth in the number of online users
SWOT - Opportunities
Visiting Friends and Relatives (VFR) visitations and the leveraging of domestic affiliations have potential for viral marketing and word of mouth endorsement
Consumers respond to luxury/status products and unique experiences
When assessing overall perceptions of Canada’s brand image, self expression and authentic experiences are the highest rated elements of the brand (62% - GTW 2009)
Opportunity to maintain historic cooperation in China market with our key Provincial tourism partners to avoid fragmentation of the Canada message
SWOT - Threats
Challenge to control quality of Canadian tour programs, leading to dissatisfied Chinese consumers and negative media exposure
Chinese travelers and Chinese Government extremely sensitive to health concerns
Depreciation of currencies making key competitor countries more attractive destinations
Continued rise in popularity of Asian short haul destinations due to affordability, convenience and relaxing of visa requirements
Competitor destinations may substantially increase funding into the China market as traditional core markets decline
Delivery of a Market Development Strategy linked to the Global Tourism Watch - China Report with a 3 phase development plan:
Phase 1 – Development and Alignment
Phase 2- Building Destination Awareness
Phase 3 – Market Expansion
Market Development Strategy
2010 Plans - Phase 1
Core market funding in 2010 has been conserved in anticipation of the ADS agreement being signed
We will have around CAD 1 million left to add to a requested additional CAD 1 million
By the time ADS is approved and tour itineraries are ready we likely to be in late 2nd quarter of year
The plan will focus on direct to consumer advertising through coop advertising and promotions.
2010 Plans - Phase 1
• Will provide incentives for key account partners to sell Canada
• The criteria for key account status has been established and will be further linked with quality and value of tours offered
• CTC will provide coop funds, promotional and on line exposure on CTC web site only to those partners who are offering value, quality tours to consumers
• CTC will provide official endorsement and recommendation in the ads for tour itineraries that meet our guidelines
The process will provide an obvious call to action, goodmeasurement criteria and results.
Have reached agreement with head of the Visa sectionat the Beijing Embassy.
Agents not on the CTC preferred agent list will receive normal visa application scrutiny and no coop funding or support
Through our media contacts in the key cities we will be able to plant stories and features that will highlight our policy, educate theconsumer and specifically list and name those agencies recommended by the CTC
To avoid double dipping and to obtain maximum benefits from cooppromotional activity, CTC will coordinate with partners.
Canada has a distinct advantage –CTC has had a presence in China for the past 5 years
400 agents and 200 journalists on fams, 1200 front line agents trained, 120 Canadian partners to CTC events in China, 1800 agents in CSP, 5 Showcase Canada B2B, 5 CITM, 2 WTF, 16 key cities covered by trade sales calls and in house training
China Market Development document in translation- will be distributed to all partners shortly
Zero based tours, commission shopping and options