Correcting the tourism trade balance

Exclusive Interview: James Jianzhang Liang, Co-founder and Chairman, Ctrip.

James Jianzhang Liang is back at ITB China this year, where he addressed a “standing room only” conference on innovating in dealing with demographics; but also made some hard-hitting points about China’s tourism trade deficit. We asked him to tell us more.

Much of China’s trade surplus in physical goods is being offset by a deficit in tourism. The trade surplus in goods amounts to US$400bn, but the trade deficit in tourism is around US$200bn. On a global perspective, when one talks about trade, and the contribution of tourism to different nations’ economies, Chinese outbound tourists are major contributors. China has a huge potential to develop inbound business, but there is a continuing trend for outbound tourism to outgrow inbound by a big margin, and this could eventually lead to an overall trade deficit, which would have a very important impact on the economy.

PAYMENT FOR GOODS AND SERVICES IS BECOMING A MAJOR ISSUE FOR FOREIGN VISITORS TO CHINA

What do you suggest should be done to rectify this?

Ctrip cannot fix this problem alone. There are a lot of issues that need to be dealt with. The facilitation of visas is one area where things could be further improved. We can help to some extent when it comes to helping people with their applications and so on. But payment for goods and services is becoming a major issue for foreign visitors to China, as China has gotten rid of cash, and most Chinese people pay with their phones. The issue arises where foreigners cannot link their bank cards to China’s mobile payment systems. There are some regulatory issues, and the Chinese financial regulators need to be more relaxed in this area, in order to allow tourists to have more access to electronic payment systems here. While some merchants accept cards like Visa or Mastercard, more and more only take cash or mobile payment. We believe that if operators like ourselves, or WeChat Pay, can be linked to foreign bank cards, this could greatly facilitate travel for overseas visitors.

You’re talking about a deficit, and in your presentation, you showed examples of other countries that had issues in this respect. Where is China situated on that sliding scale?

In terms of absolute trade deficit in tourism, China’s deficit is bigger than all the others combined. In terms of percentage of GDP, China is ranked 11th, behind some of the countries that have internal problems, like Sudan or the Palestinian territories, because not many people want to go there. But there are also some rich oil producing countries like Kuwait that have a tourism trade deficit. Even some nations like Norway have a percentage deficit that is higher than China. But overall, most countries are in a better situation than us when it comes to the tourism balance of trade in terms of percentage GDP.

What percentage of GDP is made up of inbound tourists to China?

It’s 1.7% net in China. One can compare that to Thailand, where it’s 10% net.

Should China be doing more external promotion to arrive at this point?

Yes. There is a problem to be solved, but there is also a perception issue. So, work needs to be done on promotion, spending more on social media and other advertising means, to promote destinations here.

You’ve been very involved with ITB China since the start. Why is this show so important for you?

I believe ITB China is the biggest trade show for the tourism industry in China, and it’s also here where our headquarters are! This is where most of the activity comes from, as this is the biggest source region in China for outbound tourists. That means all our partners and friends come here, and it’s a great opportunity to meet and do business. Messe Berlin have been running major trade events for many years, and they have been able to replicate this success very well in China.


Photo: James Jianzhang Liang, Co-founder and Chairman, Ctrip