EXECUTIVE SUMMARY... 4 What We Learned... 4 How To Move Forward... 4

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2 CONTENTS EXECUTIVE SUMMARY... 4 What We Learned... 4 How To Move Forward... 4 GATEWAY TO CHINA: TIAC S TRADE MISSION PROGRAM... 5 Recap Of Trade Mission... 5 Participants... 6 SECTION 1: OPPORTUNITIES IN CHINA... 7 Wanderlust: Opportunity In The Chinese Market... 7 Free And Independent Travellers (FIT)... 8 Chinese Cities: Untapped Opportunities In Tier 2 And Tier 1 Beijing, Shanghai, Guangzhou... 9 Tier 2 & 3 - Shenzhen, Suzhou, Ningbo, Dalian, Dongguan, etc... 9 SECTION 2: DOING BUSINESS IN CHINA Understanding How Canadian And Chinese Tourism Organizations Work...11 CNTA Mandate...11 Canadian Interaction With The CNTA...12 Doing Business With China: ADS Program In Context Of Canadian Tourism...13 Opportunities For RTOs And Their Canadian Partners...13 Concentration Of ADS Groups In Specific Provinces...14 Cultural Differences And Impact On Business Development...15 Business Etiquette...15 Table Etiquette...15 Communicating...16 Expectations: Chinese Attractions...16 Tour Guide Training Standards And Organization...17 The New Chinese Tourism Law And Impacts...17 How The China Tourism Law Affects Operators, Accommodations And Attractions...17 What Does The New China Tourism Law Mean For Canada?

3 SECTION 3: LESSONS LEARNED AND POLICY RECOMMENDATIONS Marketing Funding To Explore Smaller Cities...22 Access...22 Qualified Tour Guides...22 Dispute Resolution Mechanism With Chinese OTOs...23 RTOs Responsibility To Communicate Absconders And Immigration Fraud...23 APPENDIX List Of Countries And Respective Chinese Cities Opened To ADS Business...24 CTC 2013 Preferred Agent List...25 Gateway To China: Contact List...26 Additional Travel Tips...27 ACKNOWLEDGEMENTS

4 EXECUTIVE SUMMARY With help from DFATD s Global Opportunities for Associations contribution program, TIAC led a tourism trade mission to China featuring meetings, workshops and events with Chinese officials in Shanghai and Ningbo. Delegates also participated in the Canadian Tourism Commission s (CTC) Showcase Asia in Hangzhou. 1 Not only was the trade mission a great success for the 9 Canadian businesses that participated, TIAC was able to gather useful information for anyone looking to expand their tourism business into China. WHAT WE LEARNED In addition to understanding the basics of doing business in China such as etiquette and organizational structures, we met many new contacts at various levels of the Chinese tourism industry. In preparation for and during our mission, it became clear that in addition to partnering with the CTC, it is important to foster close ties with officials from the Chinese government who have a major influence on the outbound tourism market in China. In particular, understanding the role and working with the Chinese National Tourism Administration allowed for a smoother navigation through Chinese administrative processes. Just before our visit in October the new Chinese tourism law was enacted which, under the ADS MOU, actually exposes Canadian Receptive Tour Operators to risk of financial penalties. Understandably many of the delegations conversations with their counterparts in China were surrounding this new law. Even though Canada has a great reputation and businesses are rarely fraudulent in their practices, it is advisable to read through our summary of how the new law affects Canadian businesses. HOW TO MOVE FORWARD There is a great appetite for Chinese travel to Canada and with economic and legal conditions constantly improving, this market is full of potential especially in the meetings and incentive segments. There were, however, a number of concerns raised by Chinese tourism professionals on barriers to travel to Canada. In Section Three suggestions on how to raise awareness, open access and improve our products are discussed. 1 Paid for by delegates outside of Global Opportunities for Associations contribution program. 4

5 GATEWAY TO CHINA: TIAC S TRADE MISSION PROGRAM Internationally, the tourism industry is booming and there are unprecedented opportunities for economic growth, especially in emerging markets such as China. With recent growth rates as high as 15%, China has overtaken Germany as Canada s 4th largest international market for travel and tourism. The tourism industry is interested in strengthening business with China: according to a recent TIAC/Nanos industry survey China ranked second after the USA for marketing and growth priorities. TIAC is building on the foundation created by the ADS (which facilitates travel to Canada for Chinese citizens) to help the industry. In 2013, TIAC was approved for a contribution program under the Global Opportunities for Associations (GOA) program (through the Department of Foreign Affairs, Trade and Development, DFATD) designed to help Canada s export industries increase their sector s export readiness. Under the federal fund-matching program, TIAC led a tourism trade mission to China featuring meetings, workshops and events with Chinese officials in Shanghai and Ningbo. Delegates also participated in the Canadian Tourism Commission s (CTC) Showcase Asia in Hangzhou.. The trade mission was from October 12-21, RECAP OF TRADE MISSION October 13, 2013 Mission launched by Foreign Affairs Minister John Baird and Canadian Consul General in Shanghai, Rick Savone at the Jazz Bar in the Fairmont Peace Hotel, Shanghai. October 14, 2013 Meeting with Shanghai Tourism officials (outbound operators). Each delegate introduced their product, followed by a round-table discussion on issues such as visas and aviation costs and an in-depth discussion on the new Chinese law on group tours abroad. In the afternoon, delegates attended Sellers briefing at Showcase Asia in Hangzhou. October 14 to 18, 2013 Delegates exhibited on the marketplace floor as part of Showcase Asia 2013 which brought tourism buyers from India, Japan, Korea and China to meet with over 85 Canadian tourism companies (attractions, hotels, airlines). October 16, 2013 TIAC hosted a dinner for all ADS sellers at Showcase Asia. October 17, 2013 David Goldstein, President & CEO of TIAC, gave a speech at Zhejiang Provincial Tourism Organization event. David Goldstein and delegates conducted media interviews with Chinese travel media October 19, 2013 Social lunch with senior officials from Ningbo Tourism followed by an evening meeting with other Ningbo Tourism officials (including outbound operators). Each delegate introduced their product, followed by a roundtable on issues such as visas and aviation costs and networking. For a list of contacts made during Ningbo and Shanghai round-tables please see the appendix. 5

6 PARTICIPANTS A highlight of the mission was the diversity of companies that would not otherwise come together allowing participants to network and learn from each other. Attractions: Doug McCandless, Director of Sales, Capilano Suspension Bridge Park Paulo O Connor, Director, Sales and Operations, Prince of Wales Whale Watching Annick Robichaud, Admissions and Tour Group Manager, Hopewell Rocks Jack Robinson, COO, CN Tower Del Rollo, Director of Eastern Estates and Industry Relations, Inniskillin Winery (Constellation Group) ADS (Approved Destination Status) Tour Group Operators: Eddy Hua, Director, Canada Inter-Mile Travel Mariam Li, Principal Consultant, Canada Swan Travel Victor Pun, Managing Director, Winners Vacation Andy Xie, Westar Travel This report will cover the valuable insights and information gathered during the trade mission including: Section One: Opportunities A deeper look at how the Chinese travel, trends and untapped opportunities Section Two: Doing Business in China An overview of some of the practicalities of doing business in China including how tourism fits into Chinese government bureaucracy, the best way to enter the market and an overview of how the new Chinese Tourism law may affect your business. Section Three: Lessons Learned and Policy Recommendations This section covers the intelligence we gathered during meetings with Chinese officials and recommended policy changes. 6

7 SECTION 1: OPPORTUNITIES IN CHINA WANDERLUST: OPPORTUNITY IN THE CHINESE MARKET After owning a luxury home, a fancy car, and giving their children a western education, outbound tourism is on the must-to-do list for an increasing number of individuals in China. A good measure of the health of the tourism industry is travel during the Chinese Spring Festival, a week-long national holiday and therefore the busiest travel time in China. This year more than 70 percent of Chinese who planned on travelling during this period planned on visiting overseas locations. With 35.4% of travellers visiting Hong Kong, Macao or Taiwan and another 39.3% planning overseas trips, this is first time that Chinese international travel has surpassed trips to its special administrative regions. 2 Helped by a strong economy, favourable visa policies from other countries such France who can guarantee a visa within 48 our and the appreciation of the RMB, the Chinese currency, outbound travel has been very popular for the mainland Chinese. Other drivers of outbound travel are the record high levels of pollution in many cities as well as the increased domestic travel that overcrowds almost every tourism hot spot in China. Globally, Chinese tourists are the fastest growing group of outbound travellers. In 2012, the Chinese took over 80 million outbound and 2.9 billion domestic trips. 3 China has overtaken USA and Germany as the world s number one source of tourists. The Chinese market has proven potential for Canada: visitors increased by 15.5%, in 2012 with each visitor spending on average $1,777 per trip. 4 The future growth potential of this market is positive. A 2011 study by the Canadian Tourism Commission stated that 56% of Chinese travellers would definitely or very likely visit Canada in the next two years. 5 Furthermore, the Chinese government has recently published a plan called Outlines of the Chinese Citizens Travel Initiatives which aims to improve China s travel and tourism infrastructure and offers incentives to travel domestically and abroad. The plan calls for a 10% increase in inbound and outbound travel for This initiative was backed by legislation passed in October which guarantees citizens right to travel. The opening of the ADS market in 2010 was a significant milestone for Canadian tourism in the Chinese market, after three years of learning about and investing in the market, it has never been a better time for the industry to make another big step forward. While encouraging for Canada, we are not attracting Chinese visitors as well as our competitors. For example, the USA saw almost double our growth (35%) in 2012 to reach 1.4 million visitors (compared to for Canada). The Canadian tourism industry faces fierce competition in China. There is a Chinese saying: As distance tests a horse s strength, so does time reveal a person s real character which is evident in the importance of long term business relationships to the Chinese. These trusted relationships won t be resolved in one mission or several meetings it will take time and effort. In partnership with the CTC, TIAC will continue to support industry as it enters into the Chinese market and the industry. 2 Forbes Asia, Nine Important Developments in China s Outbound Tourism 2013, Retrieved at: profdrwolfganggarlt/2014/01/01/nine-important-developments-in-chinas-outbound-tourism-2013/ 3 UNWTO (2013), UNWTO and China Strengthen Cooperation, Press Release Jan 21, Canadian Tourism Commission (2013), Year in Review, 2012 Edition. 5 Canadian Tourism Commission (2012), Global Tourism Watch, 2011 Edition. 7

8 MEETINGS, INCENTIVE, CONVENTIONS AND EVENTS (MICE) TIAC s recent trade mission to China strengthened our understanding of this market. We learnt that the Meetings, Incentive, Conventions and Events (MICE) segment of the Chinese market presents lucrative opportunities. During TIAC s trade mission, we heard from many Chinese stakeholders that MICE travel, particularly incentive travel, was a growing market opportunity. A survey by Insignia commissioned by the CTC supports this view stating that there has been a 300% increase in MICE travel to Canada from China compared to This market segment is now worth around $28 million. The survey found high levels of interest in Canada: 45% of meeting and convention planners and 38% of incentive planners would like to plan a trip to Canada in the next year. In fact, among MICE destinations outside the Asia region, Canada was considered the most attractive. Achieving ADS status has helped Canada s attractiveness for this type of travel as Chinese group travel must use ADS-approved RTOs. 6 The study also identified a number of barriers to tapping into this market including a lack of familiarity with potential Canadian meeting venues. The study found that the best way to approach Chinese buyers is through one-on-one meetings and business lunches. Canada would be remiss to not capitalize on these opportunities to welcome more Chinese travellers. FREE AND INDEPENDENT TRAVELLERS (FIT) During our trade mission many Chinese officials we met with noted the increase in Free and Independent Travellers (FIT).As Chinese individuals and companies increase their wealth, become more sophisticated in online research, and master the English language, more and more will begin to explore destinations on their own. Compared to destinations with a similar price range and culture, Canada s large Chinese population (Chinese speaking staff) and culturally sensitive service facilities (Chinese restaurants and grocery stores, Chinese TV channel and newspaper, banking in Chinese and etc.) will make it an ideal destination for FIT and MICE tourism. Ctrip.com International, the largest online travel agency in China, reports that more than 60 percent of its outbound clients during the 2014 Spring Festival arranged them independently. 6 Insignia, 2012 China MICE Market Study. 8

9 CHINESE CITIES: UNTAPPED OPPORTUNITIES IN TIER 2 AND 3 At 1.35 billion citizens, China is the most populated country on the planet and many of these people live in cities. Cities can be unofficially divided into different tiers based on their population infrastructure and investment. Understanding city categorization is essential for Canadian tourism businesses hoping to attract more Chinese visitors. As the market for Chinese visitors matures, Tier 2 and Tier 3 markets will become more important. TIER 1 BEIJING, SHANGHAI, GUANGZHOU Research by McKinsey & Company estimates that 30% of wealthy Chinese households (average annual income is about CDN $80,000) live in Tier 1 cities. 7 However the next generation of wealthy consumers are forecast to come largely from smaller cities. The research estimates that three-quarters of the growth in the wealthy consumer segment will come from consumers who do not currently live in the four biggest cities (Beijing, Shanghai, Guangzhou and Shenzhen). It also anticipates that China will have more than 4 million wealthy households by 2015, making it the world s fourth largest country in terms of wealthy households after the US, Japan and the UK. Currently, a disproportionate number of wealthy households are found in China s biggest and most economically developed cities. In order to sustain overall growth it is clearly important to continue to be active in these cities. However, the industry should be prepared to market to the next wave of wealthy Chinese from smaller cities. TIER 2 & 3 - SHENZHEN, SUZHOU, NINGBO, DALIAN, DONGGUAN, ETC. The Chinese government has invested heavily in infrastructure investment in roads and airports, improvements to railroads and city utilities in Tier 2 & 3 cities. This has enabled these cities to modernize quickly even by western standards. The rise of these cities creates a new, wealthy group of travellers who are looking for interesting destinations to visit. CASE STUDY: NINGBO During TIAC s tourism trade mission, the delegation visited Ningbo, a second-tier harbour city in Zhengjiang province, with a population of 7 million people. It is part of China s Golden Industrial Triangle also encompassing Shanghai and Hangzhou and is considered one of the richer cities in China. In 2012, Forbes China named Ningbo one of the top ten cities for business. The Ningbo-Zhoushan Port is one of the busiest ports in China. With infrastructure improvements like a new subway system and a fresh emphasis on design, along with manufacturing and logistics capabilities, Ningbo is well-poised to become an important financial centre. Ningbo is also connected to major transport networks: the Hangzhou Bay Bridge, the world s longest trans-oceanic bridge, cuts the distance from Ningbo to Shanghai from 304 km to 179 km, and shortens the drive to less than 2 hours. With short travel times to one of China s main air hubs, Shanghai (2.5 hours by bullet train, 40 minutes by air and 2 hours by car) Ningbo is very wellpositioned for outbound travel. 7 McKinsey & Company (2009) Insights China: The coming of age China s new class of wealthy consumers. 9

10 TIAC Trade Mission 2013: Feedback From Ningbo OTOs The Ningbo OTOs we met expressed a thirst for Canadian tourism products. They are eager to work with their Canadian counterparts to promote Canada to their customers. As a bustling business centre, Ningbo OTOs also indicated that they are looking forward to developing the Canadian market as a destination for Ningbo s Meeting, Convention and Incentive Travel business. However, there are setbacks and the OTOs summarized the barriers they face in selling travel to Canada: Lack of awareness: Ningbo OTOs expressed a strong desire for more destination information and promotional material to help them package Canadian products for their clients. It should be noted that during the round-table discussion, TIAC made clear the budget constraints that prevent the CTC from launching a full scale campaign in Ningbo. However, a first step was made by connecting the OTOs with Canadian s and attractions. We also gave the OTOs contact information for key CTC officials in China. Canadian Visa Requirements and Process: OTOs and their clients know that the Canadian visa application process is among the most difficult and complicated in the world. The Canadian refusal rate is higher than for American visas and many OTOs and customers do not want to take the risk of trying. More collaboration with Canadian counterparts: OTOs emphasized the importance of strong relationships with destination operators in order to build quality itineraries. Before the trade mission, they had no access to or knowledge of TIAC s list of qualified RTOs in Canada. TIAC and Ningbo Tourism (a DMO including OTOs) have since exchanged lists of operators. TIAC s trade mission shows the strong potential this market holds for the industry. In fact, there are many other tier 2 cities which offer similar opportunities. 10

11 SECTION 2: DOING BUSINESS IN CHINA UNDERSTANDING HOW CANADIAN AND CHINESE TOURISM ORGANIZATIONS WORK One of the most confusing aspects of entering the Chinese market for Canadian tourism businesses is understanding the organization structure of the industry in China. Canadians used to our capitalist economy may be confused by how and to what extent the Chinese government is involved in tourism especially outbound travel. CNTA MANDATE In China, the China National Tourism Administration (CNTA) is the government agency in charge of tourism and is directly affiliated with the State Council - the chief administrative authority of the People s Republic of China. 8 It is firmly in charge of the national tourism industry in almost every aspect. Here is an extract from its mandate: To develop policies, programs and standards, draft relevant laws and regulations and supervise the implementation, as well as guide regional tourism; Develop and implement strategies for domestic, inbound and outbound tourism; Promote China to the world and manage its oversee tourism offices; Develop and protect Chinese tourism resources and provide guidance and supervision to key tourism regions including quality assurance and emergency management; Release tourism statistics and trade information; Responsibilities around outbound tourism: Establish and implement policies on outbound tourism and border tourism; Examine and approve foreign travel agencies establishment in China; Deal with outbound tourism and border tourism issues and complaints; Responsible for education and training in the tourism sector including qualification and ranking systems for sector employees. It is worth noting that the CNTA is also in charge of the China Travel & Tourism Press, China Tourism Management Institute and China National Tourism Institute. It also has responsibility for the following industry associations: China Tourism Association, China Association of Travel Services, China Tourist Hotels Association, China Tourism Automobile and Cruise Association and China Association of Tourism Journals. 8 CNTA in Brief, accessed at: 11

12 CANADIAN INTERACTION WITH THE CNTA The CNTA is the ultimate body in Chinese tourism. In addition to the powers described above, it has authority over various provincial tourism organizations, destination organizations, attractions and everything else that is tourism-related. China is well-known for its highly centralized political system. At each provincial and municipal level, there is also a tourism administration that functions much like the CNTA but on a local scale. However, policies set and laws proposed by the CNTA still provide the direction for the industry. In contrast to the organizational structure in China, the Canadian Tourism Commission (CTC) is the Canadian government agency whose mandate is marketing Canada to the world. While it works in collaboration with the Canadian private sector, international travel trade, meeting professionals, and provincial, territorial and municipal governments, it certainly does not regulate nor manage the tourism sector as the CNTA does. The difference in mandate and jurisdiction does not only create confusion for the Chinese travel professionals but also complicates cross country relationships. For example, in Canada, each province, municipality or region may have its own regulations and requirements for tour operators, transportation and tour guide training and recognition. For example, the provinces regulate the consumer protection aspect of the tourism industry (for example provincially registered travel agents) but service standards (employee training and tour guide training and accreditation) are the responsibility of the local DMOs or associations or the business itself. 12

13 DOING BUSINESS WITH CHINA: ADS PROGRAM IN CONTEXT OF CANADIAN TOURISM Canada signed the agreement with China on approved destination status (ADS) in This MOU is an important instrument in Canada s overall trade strategy. The MOU was signed between China and Canada s Department of International Trade and TIAC was tasked with executing the program on the government s behalf. In 2011, after conducting extensive interviews with the accredited RTOs and industry stakeholders, as well as extensive research of global best practices, TIAC changed the Accreditation program to a Registration program. This shift streamlined the administration process as well lowered the operation costs, resulting in a lower registration and renewal fee for the RTOs. Canada was one of the last in the world to gain approved-destination-status from China and therefore was late to the market. 9 On a positive note, the late start meant Canada was able to learn from other countries mistakes. For example, Canada s great reputation is in part due to our vigilance in ensuring the ADS market does not offer zero fee tours that are supported by coerced shopping tours which was a problem in other ADS destinations. The ADS registered receptive tour operator program set up by TIAC works very closely with the CTC and other industry partners to ensure that Canada meets its obligation as an approved destination for the Chinese citizens. Currently, there are 48 registered RTOs in Canada from four provinces: Alberta, British Colombia, Ontario and Quebec. For registration requirements and a full list of the TIAC registered RTOs please visit OPPORTUNITIES FOR RTOs AND THEIR CANADIAN PARTNERS Overall, registered RTOs feel the program is effective. Not only does the program provide a platform for discussing ADS issues and information sharing, it also helps RTOs promote their businesses via a list published on the CNTA website that is accessed by Chinese OTOs. This credibility will help the Canadian RTOs to advance in other markets such as FIT, business and MICE travel. The CNTA website can be found here: The CTC runs a preferred agent program in conjunction with the Canadian Embassy to maintain a high level of visa acceptance. 10 An effective way for destinations and attractions to reach the Chinese market is by working closely with Canadian RTOs. RTOs are always looking for new, exciting activities and attractions to add to their itineraries. A list of RTOs can be found here: 9 For a list of countries and their ADS MOU dates please see the Appendix. 10 For a list of CTC s preferred agents please see appendix. 13

14 CONCENTRATION OF ADS GROUPS IN SPECIFIC PROVINCES Currently ADS tourists are primarily visiting Alberta, Ontario, BC and Quebec, which is also where all the registered ADS RTOs are concentrated. However, Canada has great products in other provinces to offer that can help renew the brand and add excitement to existing itineraries. Unfortunately, without an effective local RTO, it will be more difficult to attract Chinese OTOs who are very dependent on the local RTOs, who speak the language and share the same business culture. Destinations and attractions outside the four most popular provinces are encouraged to form relationships with RTOs to attract more Chinese visitors to their areas and help the RTOs expand their product offerings. Challenges: Decreased Chinese Governmental Travel Spending Another new development in the business/ government outbound travel in China may make the ADS market even more important for Canada. Recently, the Chinese Finance Ministry and Foreign Affairs Department passed a new joint regulation on business and government outbound travel which demonstrates the strong determination of the new Chinese leadership on cutting corruption and abusing public funds. After the central government s regulations, several provinces in China have already followed suit by setting up their own regulations and clarifications. For example, Shangdong province rules included rules regarding taking family, length of visit and numbers of countries. The TIAC ADS tour operators this year have already reported a decline in governmental travel from China. With further cracking down on government officials travel and spending, this sector of the market is not expected to be a growth point for the RTOs. TIAC should work with the CNTA and the CTC Beijing office to further promote the service of ADS registered tour operators to the Chinese OTOs as the ADS market will remain as one of the driving forces in the Canadian tourism sector. 14

15 CULTURAL DIFFERENCES AND IMPACT ON BUSINESS DEVELOPMENT Canada and China differ in many ways. Confucius says: Knowing yourself and your counterpart, you will never lose a battle. On the surface, tourism is all about enjoyment and experience, but it is also an important export sector. Although Chinese travellers, like many global consumers, are familiar with international brands and influenced by Western culture, they still have their own culture and behaviour patterns that result in different approaches to inter-cultural communication, social interaction, service delivery as well as how business is won and transacted. Understanding these differences will further increase Canada s ability to deliver extraordinary service. The TIAC trade mission to China familiarized delegates with the basics of doing business with Chinese counterparts. During pre-trip briefings, TIAC educated delegates on basic Chinese business etiquette such as (for TIAC s best China travel tips see the appendix): BUSINESS ETIQUETTE Greetings tend to be formal and the highest person in the hierarchy is always greeted first. Handshake is the most common form of greetings. For the Chinese it is best to use the title and the family name (e.g. President Wang). It is better to have one side of your business card translated into Chinese. Hold the card in both hands when offering it, Chinese side facing the recipient. Use both hands when receiving a card as well. Read it before putting it to the table next to you or in a business card holder, not in your pants pocket. It is great to prepare some small gifts for your hosts that represent Canada or your company s specific products. TABLE ETIQUETTE Toasting is important in China. At banquets, the host offers the first toast, and the guests follow suit. Good toasts can be to friendship, health, prosperity and happiness. An ability to use chopsticks will be admired and attempts (regardless of how successful) will be appreciated. Do not place the chopsticks parallel on top of your bowl or sticking your chopsticks straight up in your rice bowl because they are considered bad luck. Do not be offended if a Chinese person makes slurping or belching sounds, it merely indicates that they are enjoying their food. Develop and follow a seating plan is important. 15

16 COMMUNICATING English Chinese Pin Yin Spelling Intuitive/Phonetic Pronunciation Hello Ni/hao Nee how Yes Shi/de Shih Duh No Bu/shi/de Boo Shih Duh Please Qing Qing Thank you Xie/xie Sheh Sheh Sorry Dui/bu/qi Dawy Boo Chee Good bye Zai/jian Zai Jyan Welcome Huan/ying Hwon Yin Good Hao How In order to improve their product for the Chinese market, delegates also had first-hand experience in the marketplace so they could understand the Chinese tourism industry as well as Chinese traveller expectations (through understanding the Chinese domestic tourism industry): EXPECTATIONS: CHINESE ATTRACTIONS The attractions in China are rated from A to AAAAA and range from traditional historical sites, natural scenery, resorts, theme parks, and museums and to sophisticated programming developed by the DMO (for example Impression West Lake an light and dance spectacle presented on a stage just below the surface of the water). Categories are based on cultural significance, access (transportation and tours), safety and cleanliness. Chinese attractions aim to present a complete and interactive experience that includes dinning, drinking, playing and enjoying to appeal to Chinese tourist demand for thrilling activities and breath-taking sights. As Chinese tourists are becoming more sophisticated, their travel demands are moving further away from merely taking pictures of the great landmarks and more toward specialized trips such as cultural tourism, health, spa, education tourism etc. Quality culinary experiences are also important components for many attractions. Simple cafeterias are very seldom seen at attractions, instead, tourists can choose between different restaurants within or around an attraction. Souvenir shopping is also vital component of any attractions. 16

17 TOUR GUIDE TRAINING STANDARDS AND ORGANIZATION The CNTA regulates the tour guide market in China. There are three levels of tour guide: basic, intermediate and senior. To be qualified for each level, one must past a national standardized exam. Guides are trained in both Chinese and foreign languages. The CNTA, in conjuncture with regional tourism organizations, is working on developing a national standard for tour guide professionals. Chinese visitors are very sensitive to tour guide qualification and certification when travelling in Canada. In Canada, tour guide certification and management is mainly left to provinces and municipalities which can cause difficulties for Canadian operators who want to present themselves to the Chinese government as a legitimate service provider. However, some DMOs are addressing this issue with a pilot project for training Chinese-speaking tour guides. THE NEW CHINESE TOURISM LAW AND IMPACTS One of the most important issues discussed by the ADS tour operators and destinations on the TIAC trade mission was the new Chinese Tourism Law. As the law came into effect on October 1, 2013, just 12 days before TIAC s mission arrived in China, it was top of mind for all participants both Chinese and Canadian. The ADS tour operators, travel agencies and attractions in Canada were already feeling the impact due to mass confusion over the rules, adjudication process and consequences or penalties. HOW THE CHINA TOURISM LAW AFFECTS OPERATORS, ACCOMMODATIONS AND ATTRACTIONS 11 We have indicated which aspects of the law that may have direct implication on Canadian operations below with added intelligence and clarification gained from discussions with the Chinese officials in China as well as observations from TIAC s ADS RTOs. Please note that while most of the analysis is aimed at Canadian RTOs, hotels and attractions might find themselves inadvertently implicated. We recommend that attractions and hotels dealing with or wishing to deal with ADS Operators familiarize themselves with the new law. During TIAC s discussions with the Chinese tourism officials they emphasized the fact that while the creation of the law was a result of bad practice in some international destinations, Canada was never a concern. As a destination, Canada has enjoyed a reputation as a high-end attraction with excellent service standards. In fact, in 2013 Canada was named as the most satisfactory outbound destination for Chinese tourists. 12 Nevertheless, it is useful for all tourism operators to have a solid understanding of their responsibilities to avoid conflict. 11 Tourism Law of the People s Republic of China (Full Text), accessed at: html 12 China National Tourist Institute, accessed at 17

18 Impact On Canadian Business All tourism activities in Canada by Chinese tourists will be impacted by this law. Operator Responsibilities To Chinese Tourists Tourists must be given a clear and detailed itinerary of their trip covering travel routes, attractions and accommodations. Attractions And Hotel Impact Attractions or hotels that are interested in attracting Chinese tourists should work closely with the ADS to build their products into the itinerary. Any changes due to unexpected situations must be explained to the tour leader in advance or immediately. RTOs must also carry proper insurance. Currently, TIAC s ADS program requires the RTOs to carry at least $1 million in general liability insurance. It is equally important for RTOs to make sure their Chinese clients have proper medical insurance coverage. RTOs should inform tourists about the potential dangers associated with certain activities and demand tourists to declare their health issues to avoid potential liability. Attractions should be proactive in advising RTOs of any potential danger. Working Within The ADS Registration Program And With Chinese Counterparts This chapter is extremely important for the Canadian RTOs as a complaint by a Chinese tourist for a mistake made by the OTO could still affect the RTO at great cost. Working With The Right OTOs Due to the lack of an effective and legitimate channel of resolving the dispute in the early phase of the law implementation stage, TIAC advises its RTOs to select their OTO partners carefully to ensure they are authorized to conduct outbound business. For a complete list of the 2151 Chinese OTOs (updated on Dec 24, 2013), please visit CNTA s website The CTC also has its 2013 preferred agent list with its trusted partners. Please find the list in the appendix. Importance Of Participating In The Inbound Tour Operator Registration Program Article 34 underlines the importance of the TIAC s Canada-China Inbound Tour Operator Registration Program. Chinese OTOs could be sued by Chinese tourists if their Canadian ITO is not a registered ADS RTO. It also prohibits Canadian RTOs from subcontract non-registered RTOs to serve their Chinese clients. (For provinces, cities, or regions without TIAC registered RTOs, it could be an obstacle for attracting and servicing the Chinese tourists.) 18

19 Shopping There have been horrible instances in other countries where the RTO forces the travellers to shop or shop only at specific stores where they would get a commission sometimes with the threat of violence. This phenomenon arose out of the free or very cheap vacations that were being sold to Chinese tourists where the costs were underwritten by profit won by the retailers. Forced shopping happens rarely if ever in Canada so this article has caused confusion for RTOs. As Chinese tourists are generally enthusiastic consumers who sincerely want to shop during their vacations, Canadian RTOs would build in optional shopping activities to the itinerary. These shopping trips are usually as innocent as pointing out where to get maple syrup or brining the group to a market/attraction like Granville Island in Vancouver. This caused a major dilemma: RTOs who refuse to accommodate any shopping requests for fear of breaking the law they will face perhaps a worse fate in angry and disappointed clients. Generally, if a group requests an unscheduled shopping trip, the guide can simply collect signed consent from the clients. However this may cause issues as there have been instances where RTOs with signed consent forms have been accused by OTOs for taking tourist on an unscheduled and were fined. This reinforces the importance of a solid relationship with your Chinese OTO so you can more easily resolve any disputes between the RTOs and the Chinese tourists. Chinese OTO Accompaniment On Trips To Canada Article 36 states that Chinese OTOs must send a representative on the trips they sell which may cause some conflict with RTOs as they do not want the OTO representative to replace the roles of the Canadian tour guides in Canada. 19

20 Tour Guide Responsibility For Clients Behaviour Article 41 states that OTOs are responsible for ensuring their clients comport themselves in a safe and civilized way. Tour guides are expected to stop unacceptable behaviour of their clients. While the rules are for the Chinese guides, the Canadian RTOs should also be aware of and follow these requirements and make sure that their guides do not become scapegoats when incidents happen. Tipping While not a part of the Chinese service economy, tipping is a common practice in Canada and should be explicitly covered in contracts with OTOs. Absconders Should a tourist abscond, the Canadian RTOs should make a report to the Chinese OTOs immediately. Tourism Service Contract Impact: There are 18 articles in this chapter detailing how tourism service contracts should be written and interpreted. While the law is for the Chinese OTO, Canadian RTOs should ensure their contracts with the Chinese OTOs are consistent with the contract their OTOs sign with their consumers in terms of itineraries, rules and expectations. Any discrepancy may be blamed on the RTO resulting in inconvenience or even loss of income. It is recommended that the RTOs remind the OTOs to ask tourists to purchase travel insurance before coming to Canada. Settlement Of Tourism Disputes And Legal Responsibility These two chapters cover the legal consequences of violating the rights and interests of tourists. It is important to note that the law does not specify how disputes with foreign RTOs will be handled. It states that local people s governments above the county level shall designate or establish a unified authority to accept tourism complaints, settle it in a timely manner or transfer it to a competent department for settlement. As of writing this body has yet to be established in Canada. Recently there have been several incidents where complaints have been filed against Canadian RTOs resulting in compensation being made to the OTOs. The, lack of a Canadian organization in a position to help mediate the disputes to protect the interests of Canadian RTOs could result in unfair judgements being passed. We therefore advise that contracts are clear and that RTOs work to establish long-term relationships with written 20

21 WHAT DOES THE NEW CHINA TOURISM LAW MEAN FOR CANADA? After our discussions with Chinese tourism officials and outbound tour operators during our trade mission, we feel strongly that the law benefits destinations like Canada. Chinese tourists have become used to extremely cheap package tours which are usually low quality and subsidized by a focus on shopping rather than experiences. These expectations have forced Canadian tour operators to undersell Canada and avoid some worthwhile (but somewhat expensive) activities and attractions. For example, it is common for a tour to stop in front of the CN Tower to take pictures but not ride to the observation deck for the full experience. With the implementation of the new law and its focus on ensuring Chinese tourists get quality tours, Canadian tour operators can offer better tours at fair prices. The focus on quality also helps Canada to continue building its brand as a high-end destination for affluent travellers. Maintaining this brand image will further pave the way for a stronger free and independent (FIT) and meeting, convention and incentive travel (MICE) market. 21

22 SECTION 3: LESSONS LEARNED AND POLICY RECOMMENDATIONS The growth opportunity for China is enormous and Canada must seize this opportunity because if we do not there are hundreds of countries who will. For years, China has an open-door policy with 116 ADS destinations around the world meaning its citizens have more choice and are becoming more sophisticated tourists increasing their demands from destinations and service providers. During our trade mission, interviews with both Canadian and Chinese ADS operators and subsequent research we have compiled a list of lessons learned and policy recommendations: MARKETING FUNDING TO EXPLORE SMALLER CITIES Improved promotions will foster a heightened brand image for destinations, resulting in lasting memories and word-of mouth reviews that cultivates in more visits. Many stakeholders we meet in China told us they were thirsty for more information on Canada. Unfortunately budget cuts to the CTC forced them to adopt a strategy which focuses mainly on Shanghai and Beijing. Indeed, as Tier 1 cities have a larger targeted customer base and offer desired return on investment they are the most efficient markets for CTC to focus their limited resources. However, we should not underestimate the potential of tier 2 and 3 cities where the wealth is growing fast. An adequately-funded CTC would allow for a greater presence of the Canada brand in these burgeoning markets. In collaboration with the CTC s marketing support and TIAC-run trade missions, Canadian tourism businesses will be able to enter the Tier 2 and 3 City markets without their message being as easily diluted as it would be in Tier 1 cities. ACCESS Canada is known globally for having one of the most cumbersome and difficult visa application processes in the world. During our trade mission we heard many complaints about the visa process and access to VACs. In the long term, the Canada s visa process requires some fundamental changes. In the meantime, we recommend that more VACs be opened in the strategic markets of Tier 2 and 3 cities. TIAC has long advocated reforming the visa system and a more in-depth discussion can be found here: tiac.travel/_library/tiac_publications/2013_progress_report_visitor_visa_web.pdf. QUALIFIED TOUR GUIDES Lack of qualified tour guides have been a major concern in the industry. The RTOs got feedback from the Chinese tourists that better tour guides would often improve their experience in Canada. Due to the significant cultural and language divide between the two countries, tour guides are a vital part of the Canadian brand delivery. The nature of the seasonal work makes the recruitment of qualified individuals very difficult. 22

23 DISPUTE RESOLUTION MECHANISM WITH CHINESE OTOs While the new Chinese tourism law imposes some much needed regulations, it is important to note that the law does not clearly specify how disputes with foreign RTOs will be handled. In China, the local people s governments (above the county level) shall designate or establish an authority to accept tourism complaints, settle it in a timely manner or transfer it to a competent department for settlement. Unfortunately, there is no Canadian body that can act as a mediator. Recently there have been several incidents where complaints have been filed against Canadian RTOs without any recourse, these RTOs end up compensating being the OTOs even when they may not be at fault. The lack of a Canadian organization in a position to help mediate the disputes to protect the interests of Canadian RTOs could further downgrade the RTOs rights and ability to clear their names, especially when the OTOs are holding their service payment. Payment Collection From The Chinese OTOs The ADS payment arrangements are cumbersome as tourists pay the Chinese OTO a set fee and the OTO pays the Canadian RTOs once services have been delivered often as long as two or three months later. The long payment cycle raises the risk of unfavourable currency fluctuation but it also adds stress to their cash flow management. The delay in payment puts the RTOs in a disadvantaged position, especially if there is any disputes between the ITOs and tourists. After the tourism law came in effect and focused on protection of the tourists rights, without any mechanism to fairly hear the stories from both sides, the Canadian RTOs have seen an unnecessary loss due to the unfair process. RTOs RESPONSIBILITY TO COMMUNICATE ABSCONDERS AND IMMIGRATION FRAUD The new law also requires Chinese tour operators to immediately report any illegal activity or circumstance, such as outbound tourists staying abroad illegally. However, in Canada, there is no difference between an ADS visa and a regular visitor visa. Even if outbound tourists who travel in a group are not allowed to leave or separate from the group without permission from the Chinese government s perspective, it is legal for the ADS tourists to stay longer in Canada as long as they stay within the permitted time frame in their visa. The Canadian RTOs must be aware of this issue and make sure to have clear communication with their respective OTOs. It has been reported that some Chinese OTOs have forged invitation letters from Canadian registered RTOs to get Canadian visas for their tour groups. Some Chinese OTOs have also asked for invitation letters from registered RTOs for visa application purposes, however, once the visas were issued, the OTOs did not give the tour groups to the issuing RTOs but instead to other non-registered or even American RTOs to organize the trip. The RTOs have asked for better border control and communication among the visa department, the border service agency and the registered RTOs. 23

24 APPENDIX LIST OF COUNTRIES AND RESPECTIVE CHINESE CITIES OPENED TO ADS BUSINESS Country Starting Time Current Opened Cities and Provinces 1 Canada 2010 Fully open to Business 2 United States Beijing, Shanghai, Guangdong, Tianjing, Zhengjiang, Jiangsu, Hunan, Hunbei, Hebei Shangxi, Liaoning, Jinlin, Helongjiang, Anhui, Shangdong, Guangxi, Hainan, Chongqing, Sichuang, Yunnan, Shangxi 2011 Inner Mongolia, Ningxia, Fujiang 2012 Henan, Jiangxi, Guizhong 3 Australia 1999 Beijing, Shanghai, Guangzhou 2004 Tiangjing, Hebei, Shangdong, Jiangsu, Zhengjiang, Chongqing 2006 Fully opened to the ADS business 4 New Zealand 1999 Beijing, Shanghai, Guangzhou 2004 Tiangjing, Hebei, Shangdong, Jiangsu, Zhengjiang, Chongqing 2006 Fully opened to the ADS business 5 Germany 2003 Fully opened to the ADS business 6 Europe Union 2004 Fully opened to the ADS business 7 England 2005 Fully opened to the ADS business 8 France 2004 Fully opened to the ADS business 24

25 CTC 2013 PREFERRED AGENT LIST ADSP Travel Agent List City 公司 Campany 姓名 Name epartme Title Tel Mobile Beijing 中青旅出境旅游公司 China CYTS Outbound Travel Service Ms 张惠玲 ZHANG, Hui Ling Beijing 北京安捷之旅 Beijing ANZ Holiday International Travel Servic Mr 彭淼 PENG, Miao Deputy General Beijing 中国旅行社总社 ( 北京 ) 有限公司出 China Travel Service Head Office (Beijing) Co.,Mr 徐伟 XU, Wei General Manage xuwei@ctsho.com Beijing 北京神舟国际旅行社集团有限公司出境 BTG International Travel & Tours BTG OutboudMr 李爽 LI, Shuang General Manage lishuang@btgtravel.com Mr 夏羿 XIA, Yi Deputy General xiayi@btgtravel.com Beijing 北京凯撒国际旅行社有限责任公司 Beijing CAISSA International Travel Service Co Ms 张蕤 ZHANG, Rui Vice President zhangrui@caissa.com.cn Beijing 北京环球行国际旅行社有限责任公司 Total Travel International Travel Service Co. LtdMr 王苏琪 WANG, Su Qi General Manage wangsuqi@ttsbj.com Mr 党若予 DANG, Shuyu dangruoyu@hotmail.com Beijing 中国康辉旅行社集团有限责任公司 China Comfort Travel Group Co., Ltd Ms 张庆珠 ZHANG, Qing Zhu Director of Mark zhangqingzhu@cct.cn Beijing 中信旅游总公司 CITIC Travel Co., Ltd. Ms 齐英明 QI, Ying Ming 出境游 Manager qyingming@263.net Beijing 中国国际旅行社总社有限公司 China International Travel Service Limited,HeadMs 王茜 WANG,Qian 出境旅游 Deputy General wangqian@cits.com.cn Beijing 华远国际旅游有限公司 Hua Yuan International Travel Co., Ltd. Mr. 王卿耀 ONG, Tony General Manage tony@byecity.com Beijing 北京众信国际旅行社股份有限公司 Beijing Utour International Travel Service Co., LMr 李萌 LI, Meng Deputy General ext 298 limeng@utourworld.com Mr 郑培 ZHENG, PEI 美洲部 Manager zhengpei@utourworld.com Beijing 北京新视野国际旅行社有限公司 Modern Horzon International Travel Service Co Ms 王智慧 WANG, Zhi Hui Manager wisdom@shangshangyou.co Beijing Mr. 康凯 KANG, Kevin Director of Mark kevinkai.kang@gmail.com Beijing 北京汉唐经典国际商务旅行社有限公司 Dynasty Tours Ms 刘丽丽 LIU, Lili 出境部 Manager / lily.liu@chinadynasty.cn Ms. 李雅洁 LI, Judy 出境部 Deputy Manage x815 judy.li@chinadynasty.cn City 公司 Campany 姓名 Name Tel Mobile Shanghai 上海中旅国际旅行社有限公司 Shanghai China Travel International Ltd Mr 王巍 WANG, Wei wangw@ctish.cn Shanghai 上海国旅国际旅行社有限公司 Shanghai China International Travel Service LtdMr 侯沧舟 HOU, Cang Zhou houcz@scits.com Shanghai 上海中国青年旅行社 Shanghai CYTS Tours Corporation Ms 姚珏 YAO, Jue yaojue@scyts.com Shanghai 上海锦江旅游有限公司出境中心 Shanghai Jinjiang Tours Co., Ltd Ms 吴江 WU, Jiang General Manage sh_jenny89@hotmail.com Shanghai 上海春秋 Shanghai Spring Mr 殷辉 YIN, Hui carlyinh@gmail.com Shanghai 上海商务国际旅游社有限公司 Shanghai Business International Travel ServiceMs 国利 GUO,Li General Manage wangsuqi@ttsbj.com Shanghai 上海航空国际旅游 ( 集团 ) 有限公司 Shannghai Airlines Tours International (Group) Mr 朱德明 Zhu, Diamond 美洲中心 Manager shanghaisatrip@hotmail.com Shanghai 北京携程国际旅行社有限公司 Beijing Ctrip International Travel Service Co., LtMs 齐艳 QI, Yan yyin@ctrip.com Shanghai 上海中信国际旅行社有限公司 CITIC Travel (Shanghai) Co., Ltd Mr 罗良刚 LUO, Liang Gang luolg@shcitictravel.com.cn Hangzhou 浙江省中青国际旅游有限公司 Zhejiang CYTS International Trvel Co., Ltd Ms 倪娜 NI, Na Deputy General nina7676@21cn.com Hangzhou 中国杭州海外旅游有限公司 China Hangzhou OTC Travel Int'l Ltd. Ms 赵筠筠 ZHAO, Jun Jun junjun365@hotmail.com Nanjing 途牛旅游网 Tuniu.com Mr 应剑峰 YING, Jian Feng ext 6652 yingjianfeng@tuniu.com City 公司 Campany 姓名 Name Tel Mobile Guangzhou 广之旅国际旅行社股份有限公司 GZL International Travel Service Ltd Ms 江南 JIANG, Nan OutbouGeneral manage jenny@gzl.com.cn Guangzhou 广东省中国旅行社股份有限公司 Guangdong China Travel Service Co., Ltd. Ms 邓敏怡 DENG,Minyi meimeideng@hotmail.com Guangzhou 广东天天假期国际旅行社 Guangdong Tiantian Holiday International TraveMr 秦天宇 QIN, Tian Yu General manage arthurchin@dista.com.cn Guangzhou 成功之旅 Success Way International Inc. Ms 吴燕清 WU, Yan Qing General manage crystalwu889@hotmail.com Guangzhou 广东南湖国际旅行社有限责任公司 Guangdong Nanhu International Travel Service Ms 霍丽霞 HUO, Li Xia 出境旅游 Reginal Manage huolixia@nanhutravel.com Shenzhen 深圳招商国际旅游有限公司 China Merchants International Travel ShenzhenMs 吴小燕 WU, Xiao Yan kingswaynm@gmail.com