Transcript China

NEW MARKETS & Internet
Most information in this presentation are from ETOA, China Contact, Gullivers
China, ITO (international tourism organisation), Eye for travel research
CHINA
INDIA
RUSSIA
BRAZIL
MEXICO
NEW MARKETS & Internet
Population
CHINA
• 1,314,000,000
INDIA
• 1,129,000,000
RUSSIA
• 145,000,000
BRAZIL
• 187,000,000
MEXICO
• 105,000,000
Compared to
USA
• 302,000,000
JAPAN
• 128,000,000
ICELAND
•
307,000
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2006 World’s Economy GDP in millions, listed by World Bank
WORLD
USA
CHINA
INDIA
RUSSIA
BRAZIL
MEXICO
ICELAND
• 48,244,879
• 13,201,819
• 2,668,071
•
906,268
•
986,940
• 1,067,962
•
838,182
•
15,854
Rank 1
Rank 4
Rank 12
Rank 11
Rank 10
Rank 14
Rank 92
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2050 World’s Economy expectations GDP in millions, listed by Goldman Sachs
WORLD
USA
CHINA
INDIA
RUSSIA
BRAZIL
MEXICO
Comments
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• 36,000,000
• 52,000,000
• 28,000,000
• 6,000,000
• 8,000,000
• 7,700,000
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Rank 2
Rank 1
Rank 3
Rank 7
Rank 5
Rank 6
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Factors to focus on:
Emerging middle class
Household consumption rising
Growth of internet subscribers
Growth of debit & credit cards issued
Travel trends
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China – Population 1,314,000,000
162,000,000 Internet users = 12,3 % Internet penetration
CHINESE ON-LINE MARKET SIZE
Booked travel on
internet
• In 2006 only 2,750,000 Chinese (to compare 4,000,000 Chinese use
the World of Warcraft, the word’s most popular online game and
there are about 17,800,000 fee-paying internet gamers in China)
• Expected 5,700,000 Chinese to book online travel in 2008 and
9,000,000 in 2010
Booked travel on
internet
• In 2006 sales for est. 1,54 billion yuan (GBP 102 Millions)
• Expected sales 6,5 billion yuan by 2010
Compared with the UK online travel market, China’s market is still very small
USA online sales account for 30 % of total tourism industry revenue,
China is less than 1 %
The rest of China’s travel websites, mostly for traditional travel agencies, work as an online brochure.
Actual payment and fulfilment is completed offline in tradtional ways.
NEW MARKETS & Internet
China – Population 1,314,000,000
Reasons why Chinese users do not buy online
• Fraud concerns by both sellers and customers. Fear to be cheated =
internet is “full of traps” and too many false ads.
• Internet has not a good reputation (lack of confidence)
• Uncertainty about security of online shopping: 61,5 %
• Little guarantee of quality and after-sales service: 45,7 %
• Concerns about privacy: 28,2 %
• Insufficient conditions: 23,3 %
• Inconvenient payment methods: 21,7 %
• Delivery delays: 10,7 %
• Uncompetitive pricing: 10,2 %
• Lack of asortment and quantity of goods: 8,3 %
NEW MARKETS & Internet
China – Population 1,314,000,000
Asia Rising
• 22 million additional Chinese middle class consumers per
year, that could be about 500 million middle class by 2015
• In 2004, every US citizen made on average 2.2 air trips per
year. The corresponding figures just 0,02 trips per year for
India and 0,06 for China.
• World of mouth is a part of travel culture in China (Travel
information comes 54% word of mouth, 35 % travel agent,
6 % advertisement and 5 % internet)
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China – Population 1,314,000,000
Inhibitors of outbound On-line Travel
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Visa Restrictions
Limited consular capacity to deal with Visa’s
Lack of passports
Limited Credit Card proliferation
Licence Restrictions
Internet Infrastructure
Technology available is not matched by current infrastructure
Chinese character domains
Inherent distrust of On-line
NEW MARKETS & Internet
China – Population 1,314,000,000
eCommerce in China is still in its infancy
• China lacks an online payment system for handling credit card transactions
in a safe, efficient manner.
• Poor logistic and distribution networks restrict how far apart sellers and
buyers can be.
• These two problems have made cash-on-delivery (COD) the most popular
online payment method (34 %). Only ¼ (26%) of online buyers use
credit/debit cards, while 31 % use bank transfer.
• Tough to deliver physical documents once a sale is made online, slow postal
service or high costs for private express services are still the norm.
• The People’s Bank of China issued a new circular with a requirement that the
value of a single online purchase should not be more than RMB 1000 (USD
123) and that of a daily accumulated purchases should not exceed RMB
5000 (USD 618). This hits the travel industry badly as airline and hotel online
bookings easily exceeds USD 123 per transaction.
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China – Population 1,314,000,000
Chinese outbound travel 2007 (by the Chinese Tourism Administration)
• China’s outbound tourists reached 40,9 million which represents 18,63 %
increase from 34 million in 2006
• 36,3 million Chinese traveled within Asia, which accounts for 91 % of all
outbound travel by Chinese. Most popular: Hong Kong, Thailand, Singapore.
• The remaining 9 % is devided amongst Europe, Americas, Oceania and Africa.
Travel to non-Asian destinations totalled 3,8 million. Europe received 2 million
Chinese visitors in 2007, which is an annual growth of 7,4 %.
• Most popular in Europe are: UK, France, Germany, Italy
• According to Gullivers, Scandinavia is about 2 % of their total sales out of
China. Government & business trips very common, very little leisure travel.
• Brand names are important.
• Price sensitive visa! Tour operators use visa waiting time to renegociate rates.
Clients have take risk of not getting visa and therefore loosing deposit
payments to online sales or travel agent.
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India – Population 1,129,000,000
Internet and online business situation in India:
• Half of all eCommerce in India is eTravel
• 84 % of online buyers have bought travel online, but mostly low
value transactions
• Air + Rail dominance, over 80 % of online market. Very little
international travel online.
• Railway is the leader in internet sales (otherwise big waiting lines
and hard to get tickets)
• Indian want discount!!!! Indians want human contact to negociate a
better deal (tradition & bargaining culture) and therefore internet
not ideal for international travel.
• Online sites used a lot for research and price comparisons; actual
purchase still through trusted travel agent.
• Reward points are important – not offered enough online
NEW MARKETS & Internet
India – Population 1,129,000,000
Internet and online business situation in India:
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Best chance: to sell via large online tour operators/whole sales
Online hotel business – very slow and Indians want brand names!
Language barriers (over 25 languages and dialects)
Internet penetration largely restricted to urban markets
Low speed dial-up connections slowing growth
Credit card penetration still low
Reluctance and security issues to use credit cards for online
payments
• How big is the international market? 7 Mio international travellers in
2007, and 50 Mio international travellers expected by 2020.
• Most popular international travel: Singapore, Switzerland, USA
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Russia – Population 145,000,000
Internet and online business situation in Russia:
• 40 million internet users expected in 2008
• 2007-2009 up to 95 % more credit cards, 7 % more debit cards and
145 % more pre-paid cards issued = ability to transact online
• Outbound travel: a strong desire to see the world. 10-15 % growing
per year to 2012. Most popular leisure destinations: Turkey, China,
Egypt, Finland, Ukraine, Italy, Spain, Germany, Greece, UAE, Thailand
• Problems: Passport – lengthy and relatively expensive, visas and
language.
• Hotels booked on internet: 2 % of total volume
• Tour Packages sold online: 4 % of total volume
• Russian Online Tour Operators sell 45 % airlines, 25 % hotel, 25 %
tour packages, 5 % ground services
NEW MARKETS & Internet
Russia – Population 145,000,000
Marketing tactics & challenges in Russia:
• Price cuts and special offers - mainstream
• Quality of service & choice – 4 & 5 star level
• Internet advertizing growing 150-200 % per year while traditional
media channels 30-35 % growth
• Low brand awarness – many intermediaries are developing their
own brands.
• Advertizing costs are high. Travel trade shows and travel magazins
still popular and effective.
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Brazil – Population 187,000,000
Internet and online business situation in Brazil:
• 43 million internet users in 2006
• In 2006 outbound tourism grew over 23 % from 2005, but domestic
travel is 10 times more than outbound volumes.
• In 2006: 6,8 million international trips. The tourism industry still in
its infancy and far from reaching its potential.
• In 2007 internet shopping grew 57 % from 2006, online tourism
shopping grew 12 % to USD 400 millions.
• Excellent banking and financial system, 79 million credit cards in
2006 and Brazilians are big users of plastic.
• Big potential for online travel. Huge demand. Quick adopters of new
technology and payment systems well developed, but inventory is
lacking online.
NEW MARKETS & Internet
Renato Gruenenfelder
Fosshotels & Inns of Iceland
Thank you
Danke schön
Takk fyrir mig
Gracias
Obrigado