23 October 2008

China: Prepare to get your hands dirty

SINGAPORE - Although China continues to be the worldââ¬â¢s most promising market for expansion, penetrating the market remains a hard task for e-service companies.

That was the warning expressed at the Web in Travel (WIT) ââ¬ÅâœMarketing Ideas: Chinaââ¬~ session at ITB Asia.

In China, e-technology often remains in its infancy. ââ¬ÅâœSome 80% of all bookings are still offline for business travellers as they generally only travel with a cell phone,ââ¬~ said Alfred Chang, director of business development for Ctrip, one of Chinaââ¬â¢s largest online companies.

Business travel is characterised by last-minute decisions. This means good opportunities for online booking companies.

A major challenge, however, is the dominance of local Chinese online company Travelsky.com. The reservation system is present in 229 Chinese cities, 79 international ones and connects 5,200 business units through 20,000 terminals located in China.

Speakers said another major hurdle is an extremely fragmented hotel market. According to Chang, only 10% of all hotels in China are part of an international hotel chain.

Less than 5% of all tickets on Chinese airlines are booked online, as websites do not offer the same level of sophistication as their counterparts in the rest of the world.

Group travellers remain of low value as they abide by the motto ââ¬Åâœ10 countries in 9 daysââ¬~. ââ¬ÅâœThose travellers do not care about their experience. They just want to have ââ¬Ëœbeen thereââ¬â¢,ââ¬~ said Chang, who observed that they also travel on very tight budgets.

Independent Chinese travellers spend a lot of time on the internet looking for information, but they are constrained by tight travel budgets. Only vacationers have discretionary spending power and represent an interesting target for e-booking companies, said Chang.

A further hurdle e-companies must deal with is the influence of the Chinese government on travel, said Fritz Demopoulos, CEO of Gunar.com, a major online travel provider.

ââ¬ÅâœThe government can easily discourage travellers to a destination or block travel if necessary,ââ¬~ he said. ââ¬ÅâœIt most recently happened during Beijing Olympics when the government restricted visa issuing as well as MICE activities.ââ¬~

China has the largest number of internet users in the world with 250 million. They also have 600 million mobile phone subscribers. He described the Chinese as web-savvy, as 60% of them use internet for travel research. However, they still feel reluctant to embrace online travel, especially online payments.

Demopoulos added, ââ¬ÅâœIt is easy to lure the Chinese into subscribing to a web provider or to become a client of a credit card company. However, it is hard to make them pay online or use credit cards for e-services.ââ¬~

He concluded: ââ¬ÅâœThere is no secret in coping with the Chinese market. It is fun - but you must get your hands dirty.ââ¬~

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