In order to get a true insider’s, take on how to assess current market conditions in China, the world’s largest country source market for international tourists, we caught up a few days ago with Daniel Shen, one of savviest minds in the U.S. inbound tour and travel industry when it has to do with Chinese travelers. Shen is chairman and founder of the East West Marketing Corp., which is headquartered not far from Los Angeles, and who has been in the business of helping a number of U.S. clients sell and promote their destinations, travel products and experiences to Chinese buyers.
Unlike most reps who more or less joined the migration to the market following the Authorized Destination Status designation given the U.S. by the Chinese Government in late 2007, Shen has been working it for almost 30 years. When INBOUND’s editor first met and spoke with Shen in the late 1990s while working for another outlet, the Chinese market at the time comprised Taiwan and expatriate communities, so to speak, of Chinese living in Thailand, Indonesia, Malaysia and elsewhere in Asia. He had just launched his East West Marketing Corp. which has grown to be such an institutional presence in the industry that he sells out his annual group sales mission to China/Taiwan—this October will be its 23rd edition.
We caught Daniel at a good time to discuss the market. Before we talked, he just had accompanied a Travel South USA delegation mission to China and while they were there, the G-20 Summit, hosted by Japan took place in Osaka, where events turned out to be decidedly upbeat for the tour and travel industry. Following is the result of our conversation, condensed and/or excerpted.
About the Decline in Visitor Numbers—It’s All about the Context: Last year, visitor numbers from China to the USA were down, year-on-year, by 5.7 percent (from 3.17 million to 2.99 million), according to the U.S. National Travel & Tourism Office (NTTO). This was the first year-on-year decline since the Chinese government gave the United States Approved Destination Status. As well, visitor numbers from China this year through May were down by about 3 percent versus last year. So, we asked Shen: What happened?
“It’s mostly about the trade war between the U.S. and China,” he responded, adding, “Actually, everybody is aware of it …” But he was quick to point out that, even with a 5.7 percent decline, year-on-year, vs. 2017: “Remember, 3 million Chinese did visit.” He noted, too, that 5.7 percent equated to less than 200,000 fewer visitors—not a dire number. Of course, other than that, online sales are growing rapidly and, moreover, nowadays, there is greater movement to FITs, with more personal tailor-made itineraries than joining a tour group.
“Luckily, China is a big market. We’re talking about a 1.4 billion population. Even 3 million is a very small number compared with the global outbound from China (which the World Tourism Organization has placed at about 150 million visitors.). So, the numbers are there. We’ve just got to put a little more effort from the tourism side … and the government.”
An Interregnum in the Trade War? Realizing that the Travel South USA sales mission took place just as the G-20 Summit was taking place, “everyone was hesitant and hoping that during the G-20, there would be a more friendly climate during their meeting. Then, the G-20 took place. And on June 29th, Chinese President Xi Jinping and U.S. President Donald Trump announced that the U.S. and China had agreed to reopen trade talks, new tariffs suspended.
Said Shen: “They (Xi and Trump) shook hands and made friendly comments, and people saw this in the newspaper and on television. It was a good sign. Everybody was relieved and was optimistic about the rest of the year, and for the year to come. Hopefully, the ongoing negotiations and meetings on trade will come out nicely.”
What about Those Ominous Sounding Warnings Telling the Chinese Not to Visit the USA?
Early last month, the Chinese government issued a warning to Chinese travelers visiting the United States to watch out for harassment on the part of law enforcement officials in the U.S. The president of US Travel, Roger Dow, tried to put this action into perspective by saying “China has done this about every six months. About six months ago, they issued a warning for the U.S. because of crime and high health care costs.” He added, “We’re watching it. We’re monitoring it. We letting everyone know with a very loud voice that travel should not be used as a weapon.”
More or less, Shen agrees with Dow and is even a tad more cynical about the real intentions of the Chinese government.
“This type of a travel warning is very standard, very common,” Shen said, pointing out that, “it was exactly the same travel warning that was issued last year. Even the wording—every word—is the same thing. Nothing has changed. Exactly the same … To us, it’s no big deal. It’s a regular practice. Last year, nobody mentioned it. Nobody paid attention to it. Because nothing happened. Everything was the same as before.”
“This year, everybody is mentioning it because of the trade war,” he observed, adding, “Everybody will link these two together, and take it seriously. But, after all, this is a travel warning. The situation is different than it was with South Korea. (In that matter, in the spring of 2017, the Chinese government specifically forbade travel agents and tour operators to sell leisure travel to South Korea in order to protest Seoul’s decision to allow the building of a U.S. missile defense system in the country. Inbound travel from China—its largest source market—plummeted by more than half. China lifted its ban in August of 2018.) Nothing has been really affected by this warning.”
To illustrate his point, Shen related an account from an acquaintance who had noticed that, after the most recent warning, one major online travel agency removed U.S. packages from its offerings but, “in a couple of days, they put them back.”
Visa Application Rejections—the Real Culprit in Declining Visitor Numbers: Explained Shen: “This is in the newspapers and on the television, along with the trade war, every day So, people are reading it and seeing it—even those people who don’t travel to the U.S. It makes people feel like the U.S. is not so friendly anymore, it seems like there is a war going on every day. And the visa rejection is so high. It affects people’s intentions, their feelings about the U.S. Which is bad.”
The trigger for a rejection following a visa application interview by someone in a U.S. Consular office has to do with a question asked right up front: “Have you been to the USA before?” Forget the remaining part of the questions in the interview. If you say “no,” it means “no visa.” That’s what Daniel Shen has been told.
As he puts it, “If you’re a first-time traveler coming to the U.S. you will normally be rejected. That’s understandable. They require all the new applicants to travel to another country first. That is, they require all the new applicants to travel somewhere outside of China previously. Either to Asia, to Europe, to Australia, New Zealand—whatever. First you do some traveling, a couple of times, outside the country. And then, you’ll be able to apply for a U.S. Visa.”
“If a person has never traveled outside of China and, suddenly, the U.S. consular office asks questions about travel, they just want to know if you have any travel experience outside of China, especially long-haul. If you’ve done that before, it means you are a regular traveler. Your interest, your hobby is traveling—which is fine,” Shen said. “And then, they’ll ask the other questions: how many days you intend to stay there, who will support you, etc. Those questions will follow. But the first question will be: “Have you traveled abroad previously?”
(Editor’s note: It’s possible that there are other reasons or the State Department’s approach in its visa application interview process. If an applicant does not tell the truth about visiting the U.S. before, that is a matter than can quickly be verified. If not, the applicant is lying, which is certain to merit a rejection. Also, because a U.S. visa for Chinese travelers is valid for 10 years—part of a reciprocal visa policy measure China and the U.S. agreed to in November 2014—the State Department has been stingier about granting visas.)
The rejection policy has wreaked havoc on the way the tour and travel industry does business. How? Explained Shen: “Almost every Chinese travel agent will come up to you—the first question they have is ‘We would love to go to the U.S. And thank you for coming here for the promotion and for the updates and the information. But the only problem is, we’ve already sent in the visa application, we’ve been turned down. What can we do?’ They always urge us to talk to the U.S. consulate, the visa section. Or even the commercial service about this. This is the major problem that the agents in China are facing. Because the rejection rate is sometimes as high as 40 percent or 50 percent in some cities.”
40-50 Percent? How? “For example,” Shen said, “a request for a group of 30 is sent in. If you turn down 15 of them or even 12 them, this group definitely cannot materialize because the total structure has been damaged—the initial quotation, the pricing—everything is different if you turn down so many people. This makes the numbers go down.”
Will People Still Visit the USA? They will do so, Shen noted, because “the people traveling to the U.S. have many reasons, they’re not just taking tours. No matter what, if you have to come, you have to come. Like a student. Like family travel. Like visiting relatives, or visiting their kid who’s studying in the states. Or meetings, or conventions or business discussions. “
What Should We Do to Change the Visa Rejection Situation? Shen told us, “I would advise, if it’s possible, that the consular offices or commercial services, maybe, could call for a seminar or a meeting in the major cities. Perhaps they could discuss the issue and give advice, and learn, in real time, what is happening from the travel agent, what do they do when they encounter this problem, why they are encountering this problem what types of groups are affected, what kinds of people are submitting an application and are being rejected. Maybe they could solve or find out what’s happening if they meet face-to-face.”
Chinese Students Might Soon Give us an Early Indicator for 2019, 2020: Right now, July, Shen said, it is peak season for Chinese travelers—especially for students. Often, entire families travel with students who are attending school in another country to inspect the college and its campus. Then, the student will return to begin studies, often escorted by family.
The importance of the student market cannot be overstated. According to the Institute of International Education (IIE), almost 1.1 million students from abroad attended universities and schools in the United States during the 2017-2018 school year. Chinese students comprised one-third (33.2 percent) of the total, or 363,341 students. IIE numbers for the current school year will come out in November. There has been a scattering of anecdotal accounts that student enrollment has declined and could decline further in the coming school year.
Chen told us that students traveling during the summer usually are punctual about visa applications but that, because of rejections, “We’re not as optimistic about the student numbers as we were last year.”
To conclude, Shen would urge all relevant travel industry friends, DMOs or tour suppliers to put out messages via their reps in China or, through their own channel, that the U.S. is welcoming you, in order to rebuild and create a strong, friendly atmosphere and a wonderful travel destination—the USA.