How to tap into the Chinese medical travel market

 

As incomes in China have risen in recent years, so too has the amount of international travel undertaken by its 1.4 billion residents. China has been tourism’s top market since 2012, and it will soon be the world’s largest source of international travellers.

Over the first six months of 2018, 80 million worldwide outbound border crossings were made by Chinese passport holders, representing a year-on-year growth rate of 16.4%, according to the  China Outbound Tourism Research Institute (COTRI).

At the beginning of the year, COTRI forecast that 2018 would see a total of 154 million Chinese arrivals in all destinations worldwide, which would represent a 6% year-on-year increase against 2017’s total of 145 million.  Following the robust growth seen between January and June 2018, the end of year forecast has now been revised to 160 million annual border crossings made by mainland Chinese passport holders, consisting of 75 million arrivals to other Greater China destinations (47%) and 85 million in destinations in the rest of the world (53%).

By 2020, it is predicted nearly 190 million Chinese will travel internationally, and they will spend US$350 billion per year.

Main flows to Hong Kong, Thailand, Japan, Vietnam

These latest figures built upon an already successful April-June (Q2) period, during which Chinese nationals made 42 million border crossings around the world, a 15.9% increase on 2017.  During this period 42.4% (17.8 million) of mainland Chinese travellers went to the other Greater China regions, mainly Hong Kong Special Administrative Region (SAR), Macau SAR and Taiwan. For the full first half of 2018, these visits accounted for 45.9% (36.7 million) of the travelling total.

Hong Kong alone saw 11.5 million mainland arrivals in Q2 2018, 1.5 million more than Q2 2017. Macau’s total of mainland visitors grew by 600,000 (+13%).

With 2.1 million and 1.2 million mainland arrivals respectively, Japan and Vietnam both saw year-on-year increases in Chinese visitors of 30% between April and June, establishing themselves as the fourth and fifth most popular outbound destinations for Chinese, by volume of tourists.

Vietnam has, in fact, experienced its most successful half-year period for Chinese outbound tourism to date, with over 2.5 million Chinese arrivals between January-June, accounting for 30% of all international arrivals. This is 36.1% higher than 2017’s equivalent figure of 1.9 million. This remarkable growth will accordingly see Vietnam overtake South Korea, pushing it into the top five most visited outbound destinations among mainland Chinese travellers for H1 2018, behind Hong Kong and Macao in Greater China, Thailand and Japan.

South Korea recorded a significant 52% year-on-year increase in Chinese arrivals following the end of the moratorium on package groups, the origins of which came from the political fallout surrounding Seoul’s hosting of the US THAAD missile system. There is still some way to go to meet previous arrivals levels - the 1.1 million during Q2 2018 is still significantly lower than the 2.1 million seen in Q2 2016.

World Tourism Cities Federation vs UNWTO

China’s interest in global tourism is great enough to have set up the Beijing-based World Tourism Cities Federation (WTCF). This could be a new rival to the World Tourism Organization (UNWTO), as China apparently feels that this United Nations Spain-based subsidiary is too linked to Russia, the US and Europe.

WTCF says global tourists made 11.9 billion trips last year overall, which generated US$5.3 trillion in tourism dollars and accounted for 6.7% of the worldwide GDP.  It has released a Market Research Report on Chinese Outbound Tourist (City) Consumption (2017-2018), which systematically analyses the new changes and new trends of China’s outbound tourism market.

WTCF aims to help overseas tourism cities and related tourism institutions understand Chinese outbound tourists. The report explains Chinese outbound tourists’ behaviour and habits and their specific travel requirements.  It also includes suggestions to overseas cities on how improve and strengthen the provision of related tourism products and services, to attract Chinese tourists and achieve organic and healthy development in the global tourism market.

Emerging types of Chinese outbound travellers

The growth of Chinese visitor numbers in eastern and south-eastern Asian destinations serves as both a reflection and consequence of China’s increasing impact globally. Regional governments, such as those of Vietnam, Thailand and South Korea will need to approach the topic of Chinese outbound tourism in a holistic manner that balances key economic, political and domestic social factors.

With rising disposable incomes, more of these Chinese travellers are eschewing group travel trend of previous years to create their own trips. Chinese international travel has tripled in the last 10 years to 130 million trips in 2017, with affluent, increasingly adventurous consumers setting the pace of travel retail, hotels and hospitality. Singles, younger generations, and those from smaller cities are traveling, making China a powerful, and moving, target.

A recent survey by J. Walter Thompson Intelligence found there are 12 emerging types of Chinese travellers, including tourists traveling in multigenerational groups, those who enjoy trying novel cuisine, business people, young women who like to travel solo or with their friends, adventurous sport-loving travellers, and medical tourists.

Ctrip dominates travel online

How do these Chinese adventurers across all ages and demographics book their travel? Increasingly, it’s online. Destinations aiming to attract Chinese travellers must think about China’s domestic online marketplaces, rather than solely relying on their existing distribution channels.

A common mistake made by businesses targeting the Chinese customer is to assume that they use the same social media channels as most customers in America, Asia and Europe. However, as revealed in another recent IMTJ article on Chinese buying habits, 48% of international travellers and 30% of overseas Chinese residents have said they rely on WeChat and Weibo before making purchases of international goods and services.

While consumers in Europe, the US or other parts of Asia are used to Google and Facebook, it’s Baidu, China's biggest search engine that has extensive reach across the Chinese internet sector. Other Chinese companies, such as Tencent and Alibaba, have evolved into much more complex platforms than Facebook, Amazon and Alphabet. In a recent speech former Google CEO, Eric Schmidt went so far as predicting that the internet, as we know it, will split in two within the next decade, with one side led by China.

In the rapidly expanding world of international outbound travel from China, Shanghai-based Ctrip, China's largest travel company, is a major player. Many destinations however still do not consider it as an obvious distribution partner.

In the first three months of 2018, Ctrip earned US$170 million, 19 times more than its earnings during the first quarter of 2017. It plans to expand its overseas revenue from 2% to at least 20% in the next five years, especially by moving into such Asian markets such as South Korea and Japan, as well as the UK and US.

In other countries, people tend to use a combination of smartphones, tablets and computers to research their travel, but most often they complete their bookings on a computer. Generally, only about 6% book on a mobile phone. In contrast, the Chinese are heavy mobile device users, with 25% of travellers completing their bookings on a smartphone, according to Worldpay.

The Ctrip mobile app, recently rebranded as Trip.com, has been downloaded more than one billion times. Travellers using the app can book 800,000 hotels in more than 5,000 cities. The app also offers real-time flight tracking and reservations within China. Available in Chinese, English and seven other languages, the app does not only offer bookings. Users can also post and read 30 million hotel, flight, train and other reviews.

Medical tourism potential

There is currently very little on Trip.com on health or medical tourism. The Chinese middle classes are however seeking international treatment to keep themselves healthy. It is only a fraction of the total number of outbound Chinese tourists, but it has massive purchasing power.

So, who is going to work with this organisation to pick up on this huge missed opportunity?

The staggering rise of Chinese outbound numbers must presumably include an uplift in outbound medical tourists. The question is (always): how many? The rise has been so rapid that historic China-specific data is not enough. Another problem is that if Chinese nationality alone is used to count medical tourists or, more broadly international patients, then it is almost impossible to differentiate between Greater China regions (e.g. Hong Kong, Macau and Taiwan) and mainland patients.

To get more Chinese health and medical tourists, businesses need to understand what they need and how to access them using the online and mobile devices that the Chinese use.

Read the IMTJ Country Profile on China for further details on estimated outbound and inbound medical tourism flows.

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