Why Chinese tourists snub Thailand

[reader]

From The Thaiger

Thailand, hopeful for a Chinese tourism resurgence post-pandemic, faces an unexpected plot twist as a surge of Taiwanese visitors, in particular, reshapes the narrative. Saichon Chounchou now handles a 20-person group of Taiwanese tourists.

“Now my clients are Taiwanese. They are regular clients and generate revenue for many local communities as opposed to many Chinese on a zero-dollar tour.”

Zero-dollar tourism, a longstanding bane in Thailand, involves Chinese tour companies steering visitors exclusively to Chinese-run establishments, depriving local businesses of potential earnings. In contrast, Saichon’s Taiwanese group opts for opulence, staying in a five-star hotel for five days at a whopping 100,000 baht per person.

Government data shows that the Taiwanese influx is no fluke, with approximately 585,000 Taiwanese visitors to Thailand in the first 10 months of this year. With a new visa-free policy for Taiwanese visitors, this number is expected to soar. However, Thailand’s overall tourism revival post-Covid is unfolding more gradually than anticipated.

With Bangkok aspiring to host 28 million international visitors this year, compared to the pre-pandemic high of 40 million in 2019, the projections seem optimistic. Saichon’s observations echo the sentiment.

“Chinese tourists are concerned about safety in Thailand, and the Thai government just can’t crack the code of why Chinese have not come as much as before.”

The shift in tourism dynamics isn’t merely a case of preference but is entangled with safety concerns, economic factors, and even negative narratives circulating on Chinese social media platforms. Reports of safety concerns and unmet expectations have prompted Thai officials to engage in damage control.

While Prime Minister Srettha Thavisin’s push for visa-free entry for Chinese nationals was a bold move, it hasn’t yielded the anticipated results. Projections of four to four and a half million Chinese arrivals this year have been revised to a more modest three and a half million by year-end, reported Benar News.

As Thailand grapples with this tourism rollercoaster, the spotlight is turning towards other potential markets. India, with its burgeoning tourism numbers, has become a beacon of hope, said tour guide Patcharee.

“If the free visas didn’t work for the Chinese, it worked for the Indians

Despite the uncertainties, industry experts like Bill Barnett, managing director of C9 Hotelworks, affirm Thailand’s enduring appeal.

“Absolutely, this is the start of a new cycle, and Thailand remains a favoured global destination.”

 

 

[Moses]

1 hour ago, reader said:

Zero-dollar tourism, a longstanding bane in Thailand, involves Chinese tour companies steering visitors exclusively to Chinese-run establishments, depriving local businesses of potential earnings.

This is pure rasist conclusion: "Chinese-run establishments" ordinary Thai companies with Thai staff (because non-Thais cannot legally work in tourism), and paying taxes in Thailand. That is, these are exactly the same companies as companies where the owners are not Chinese.

[macaroni21]

This article reveals the superficial quality of tourism planning and management in Thailand. Just let me pick on a few logical fallacies.

Indian mass tourism cannot replace Chinese mass tourism. Although both countries have the same population size, China's per capital GDP is US$12,500, whereas India's is US$2,300. Travel is not one of life's necessities, and a population needs to have sufficient disposable income to become a tourist export market. It is not a linear equation either where the Chinese have five times as much capability of being a tourist simply because their per capita GDP is five times India's. They're probably 10-15 times more able to travel abroad; at US$2,300, the vast majority of Indians just cannot afford the luxury of any foreign travel.

As the anecdote about Taiwanese tourists suggests, Thailand may be better off promoting itself to Japan, Korea and Australia as regional markets - countries with the income similar or higher than the Taiwanese.

In any case, haven't there been concerns about mass tourism and its impact on the environment? Shouldn't priority be given to higher-spending tourists rather than more headcount? Or is the KPI of tourism officials purely that of headcount?

Of course, the trouble is also that Thailand has not truly developed its tourist infrastructure to serve higher spending tourists. Hundreds of Thais do menial low-skill jobs, unable to speak English or other languages even when working in the tourism sector, so there is that other problem - these workers can only serve low-end tourists. This raises the question of whether, even if they promoted the country to the richer Asian countries, the infrastructure can cope.

For a glimpse of the impact of mass Indian tourism, look at Pattaya. I saw loads of them just hanging around the streets. They cannot afford to patronise the restaurants or cafes or anywhere that requires payment. They walk up and down Beach Road and Walking Street, and don't go in to any establishment (with one exception) Even the numerous Indian restaurants meant to serve them remain empty. Instead, they can be found in 7-11's buying bread and asking why 7-11 doesn't sell butter. (I'm not kidding, I and many others were held up at the cashier line because of this.)

The exception is foot massage. 200 baht for an hour of foot massage they can afford. But as I overheard one masseuse tell a farang visitor (maybe he's an expat who lives in Pattaya, because they seemed to know each other well), "They so many, we work no stop. One come, another come, but they no tip."

 

[macaroni21]

One group of high-spending tourists Thailand needs to encourage would of course be us. Infrastructure development could take this form:

1.  Work visas liberally available to Laos, Cambodians, Burmese and Vietnamese who work in the tourism or entertainment sector.

2. Grants for such businesses to take on management and marketing consultants so as to upgrade their business models.

3. Business redevelopment grants for gogo bars and massage parlours, and similar establishments, to enable better premises, training for show performances, etc.

4. Build affordable hostels for the upcountry and foreigner boys who work in this sector.

5. Grants for these boys to take English or other language courses.

...yes I know I am dreaming.🤣

[reader]

Sure, you're dreaming, Mac. But at least you're having pleasant ones. 🙂

[PeterRS]

2 hours ago, reader said:

Sure, you're dreaming, Mac. But at least you're having pleasant ones. 🙂

With few exceptions I usually agree with most of @macaroni21's posts which are well thought out with considered arguments. But the first one above seems to me to have many flaws.

1. When it comes to tourism to Thailand, frankly the average wage of a country basicallly means virtually nothing. Of the vast number of Chinese tourists who used to visit Thailand, it is fact that the majority were on these cheap zero-dollar packages, travelled around in groups and stayed in cheap hotels. Sure they pumped cash into the local economy, but on a per capita basis it was not high. Naturally there were some wealthy Chinese who were on individual packages. Some even purchased apartments and generally spent a great deal more in the up-market shopping malls.

But the situation now has changed very dramatically. Within China, there has been considerable negative publicity given to the murder of four citizens and wounding of others in Siam Paragon in October. One Chinese tourist was killed. According to the Bangkok Post, 60,000 Chinese then immediately cancelled their trips to Thailand. Chinese put a big premium on safety and Thailand generally had the reputation as a very safe destination. That has all quickly changed. The Chinese are avid social media readers and that frequently exerts a great deal of influence, especially in the rural areas whose population tended to feed into the zero-dollar tour market. The Paragon murder was very high on the list of posts on several major sites. Now hoteliers and tourism entrepreneurs in Chiang Mai have called for the government to enact stricter gun controls. For along with the murder in Paragon, the Chinese media has been giving a surprised public the facts about the huge number of guns in private hands in this country (some 10 million), by far the highest of any country in S.E. Asia. Suddenly Thailand seems a less attractive destination for many Chinese. And as the article on the OP states, making entry to the country easier will do precisely nothing to change that perception.

Then there is the present economic situation in China which is very bad and due to get much worse. Youth Unemployment figures are so disastrous China has stopped updating them. In the 16-24 yo bracket, the numbers were 21% earlier this year - and that was before this year's roughly 10 million university graduates were added in the summer. These young people were not on any list of regular travellers pre-covid. But now they are increasingly having to depend on family members to keep them financially afloat while they try to find jobs that no longer exist. These were kids born during the one-child policy. So naturally lower-, middle- and upper-class families must help.  Many family budgets are now stretched as never before in recent years.

Yet it is the economic woes of the property market - an industry which used to employ huge numbers and was one of the key drivers of China's economic growth as it amounted to approximately 29% of GDP according to the National Bureau of Economic Research - that are now so massive that all the main 30 - 40 developers have defaulted on their local and overseas debts. Worse, though, many millions of individuals who paid for apartments have discovered they are still incomplete because the developers have no cash. In China roughly 90% of properties are bought during construction. Throw in all the losses from this for all manner of contractors and the ending of the vast amounts of cash developers pumped into local authorities and you have what is already a near-perfect storm. It is estimated that local governments alone are now sitting on US$12.6 trillion of debt according to the IMF. No one yet knows what the central government will do. But the total amount of accumulated debt threatens the wealth of tens of millions - if not many more - of Chinese who no longer have the sort of cash reserves to travel as in pre-covid years.

2. I have absolutely no idea how the Indian economy compares. But from what I see in Bangkok, there are many more wealthy Indian tourists now than I have ever seen before. Go to Central Chidlom as I do weekly and you alweys see many Indian couples with several large shopping bags between them. Even though the average wage may be a fraction of that in China, it has to be a fact that there is a sector of rich and very rich Indians around the country who have both a desire and now an opportunity to travel. They also have money to spend. My guess is that like the Taiwanese mentioned in the OP, this group is certainly not going to stay in cheap hotels. They will opt for 4- and 5-star hotels. THAI alone now flies from 7 Indian gateways, with additional flights from 4 of them over the holiday period. These flights all seem to be on wide-body aircraft. And that's only THAI. Naturally in terms of numbers, there is no chance of India overtaking the numbers which used to come regularly to Thailand from China. But in terms of average spend, I am more than reasonably certain the average Indian will spend vastly more than the average Chinese.

3. I absolutely cannot agree that Thailand does not have the infrastructure for high spending tourists. I do wonder where @macaroni21 gets that idea. It's true that outside the main tourist hubs, the hotels may not have similar 5-star offerings. But the number of high quality hotels in the main destinations is certainly very high. And the manager of no 5-star hotel would ever consider employing staff unqualified for such a position. In fact, it is the quality of the staff in Thailand's top hotels that for decades has made them the envy of many in other countries. So the suggestion about too many low-paid unskilled workers simply does not come into the equation!

4. Ah! Pattaya! I wondered if that was what your post was basically about. As has been stated in posts on several forums, Pattaya is not a destination for high spending tourists. Yes, some may go to the Hiton or the Dusit, but for those seeking some time at a beach I am more than certain the travel agencies catering to these high spending tourists will be proposing Hua Hin, Phuket, Krabi or more out of the way destinations like Khao Lak rather than Pattaya. All have 5-star and luxury hotels. There is very little in Pattaya to attract high spending tourists. And mass market is definitely not what the Thailand government is concentrating on. 

5. I believe @macaroni21 is being extremely unfair on Taiwanese tourists. In a Paper issued in September last year, HSBC estimated that as a proportion of the population the number of millionaires in Taiwan would be the fourth highest in Australasia, reaching over 10% by 2030. Nearly 25 years ago I was engaged by the Hong Kong Tourist Association to work on an event project specifically targetted at the Taiwan market. Even in those days when the average wage in Taiwan was a great deal less than today, there were still many high spenders. For just one event promoted in Taipei by three travel agencies, roughly 10,000 visitors arrived from Taiwan over a week and spent more than the average tourist spend (which in Hong Kong was already quite high), with many staying in the 3-selected 5-star hotels - the Mandarin, Peninsula and Island Shangri-La. 

6. Just to repeat, high-end spenders have absolutely nothing to do with mass markets. They are a niche group which in many developing countries is getting considerably larger. @macaroni21 suggests concentrating on richer Asian markets, markets like Japan and Korea. The problem there is that in both countries you have a population where the work ethic is so strong the vast majority only receive what to us would be very short holiday periods. If you want a large regular flow of tourists from either country, it's not going to happen until the Japanese, as an example, start to give employees more than the short May Golden Week, August Obon Week and a week or so around New Year off. There will still be more regular rich Japanese toursts. but just because the Japanese are wealthier certainly does not mean they are going to do much for the Thailand tourism economy.

[10tazione]

22 hours ago, Moses said:

This is pure rasist conclusion: "Chinese-run establishments" ordinary Thai companies with Thai staff (because non-Thais cannot legally work in tourism), and paying taxes in Thailand. That is, these are exactly the same companies as companies where the owners are not Chinese.

A very simple conclusion. To really judge whats going on and wether  the complaints are justified or not, we would need a lot more information.
It is easy to transfer profits from one country to another one. How much taxes do "Chinese-run establishments" pay? Are they legal establishments? Do they employ people legally? And of course to be fair, we would need the same answers for "non Chinese-run establishments" and then compare. I guess it is not easy to get all the answers needed.

[macaroni21]

In response to @PeterRS,

1. 

19 hours ago, PeterRS said:

When it comes to tourism to Thailand, frankly the average wage of a country basicallly means virtually nothing.

That defies logic. Of course disposable income is a factor. It will not be the only factor. Other factors like distance, cultural affinity, bragging value play a part. But if a country is poor and the vast majority of its people do not have enough disposable income to travel, then it cannot be much of a market for inbound toruists to Thailand. Consider this: we've all probably seen more Singaporeans in Thailand than Filipinos even though they're about the same distance away, and even though the population of the Philippines is 20x that of Singapore. Or this: If disposable income doesn't matter there should be more Egyptian tourists in Thailand than Brits (Egypt has a larger population).

More importantly, I was referring to potential rather than the actual situation with respect to Chinese tourists in this and next year. I agree that China's economy is going through a rough patch, and these cycles tend to last 3 - 5 years if managed properly by the authorities (which is not a sure thing). I was reacting to this statement in the news report that @reader cited from the Thaiger: 

On 12/15/2023 at 8:11 PM, reader said:

As Thailand grapples with this tourism rollercoaster, the spotlight is turning towards other potential markets. India, with its burgeoning tourism numbers, has become a beacon of hope,

I am saying that's too superficial a hope. India's potential certainly can be tapped, but to think that its potential is anywhere as large as China's (in the short to medium term) is to ignore economic reality. The main issue is the disposable income of Indians. That was why I cited the per capita GDP. Of course in any country, there are the rich and the poor, but they are generally distributed as a curve around the per capita GDP. India's curve is centred around US$2,300, while China's is centred around $12,500.

Here's a schematic showing what that means in terms of disposable income for luxuries such as foreign travel:

 

Generally, only the fraction of a country's population with income above US$8,000 or $10,000 can afford to travel by air (I'm not referring to ferries or land transport). Because India's average is so low, its relevant fraction (the numbers on the right-hand side of the curve) is small relative to China's. More crucially, for independent travel (which usually comes with more spending in the host country) I think affordability comes into view only if the disposable income is about US$16,000. This implies that a $1,000 holiday in Thailand (perhaps $400 for flight alone) will eat up nearly a month's income for someone in the $16,000 bracket. So India's potential is smaller yet.

If at all Thailand gets the volume they're hoping for from India, they will be at the cheap packaged tour end of the spectrum. In terms of value to Thailand's economy, this may be no different from the zero-packages people complain about.

Consider also that Thailand's GDP per capita is about US$7,000, or three times higher than India's. That will tend to mean that Indians, even if they can afford to travel, are likely to find Thailand an expensive destination compared to their home countries. This is going to put a limit to how long they can afford to stay in Thailand or the kinds of places they are prepared to pay admission for.

2. 

19 hours ago, PeterRS said:

there are many more wealthy Indian tourists now than I have ever seen before. Go to Central Chidlom as I do weekly and you alweys see many Indian couples with several large shopping bags between them.

This needs to be interpreted with great care. I agree there are now more wealthy Indian tourists than ever because India's economy has grown. Thailand has become more accessible through better connectivity, the privatisation of India's airlines, etc. But the fact that they shop like crazy is in fact an indicator that supports what I am saying. Why don't we see the Chinese shopping to the same extent, even when they can afford to? Why don't we see the rich Japanese or Germans do the same? Because they can get all that stuff in their home countries. I don't know if you have seen the urban centres of second-tier Chinese cities lately, such as Chongqing and Dalian. The famous brand names like Dior and Balenciaga all have huge stores there now, not just in Shanghai and Beijing. The rich Indians shop more visibly in Bangkok because they don't have easy access to "international" goods the way the Chinese, Europeans, Japanese and Koreans do -- which only speaks to the relative disposable income of the Chinese that has motivated the brands to set up there.

In short, there are potential rich Indians, but their numbers will be much smaller than rich Chinese. At every level, midprice independent travellers or cheap packaged mass travellers, the potential Indian market is smaller than the Chinese.

3. Re high end tourism, I should have been clearer. Of course I agree that Thailand has this segment. My point is that this segment is very hard to develop and grow in terms of infrastructure. It needs quality manpower, linguistically agile and skilled. It needs environmental awareness (we were just mentioning pollution in Bangkok). Given Thailand's education system, there are severe constraints. The alternative, converting the existing service providers at the low end of the market to high end is a bit of a pipe-dream. What I was trying to say is that even if by some magic Thailand attracts rapidly growing numbers of high end tourists, Thailand will struggle to have enough infrastucture to cope.

4. Pattaya = mass market. Point taken. 

20 hours ago, PeterRS said:

And mass market is definitely not what the Thailand government is concentrating on. 

Agree. But what I am saying is that if they're looking at India as their next big market, then it is going to be mostly (by a long way) mass market, low end. My point is that this only shows several logical inconsistencies with current planning.

6. Insufficient holiday time for the Japanese, I take your point. I wonder if it's also true of Koreans. So then, Taiwanese and Australians should be favoured over Indians as marketing targets.

Finally, the effort to open the Indian market (valuable though it may be) should not overshadow a needed affort to address the concerns of Chinese tourists, otherwise they may never return even when their economy improves. Safety is obviously an issue, though as we all know, it's overblown by sensationalistic media. Surely, countering such media protrayals is do-able? Better yet, do something about safety in Thailand itself. The locals will benefit. 

[vinapu]

On 12/15/2023 at 9:55 AM, macaroni21 said:

 Travel is not one of life's necessities,

 

 ???? where you got that from?

[fedssocr]

Apparently Kazakhstan is big market now which I think is a bit surprising. 

[alvnv]

26 minutes ago, fedssocr said:

Apparently Kazakhstan is big market now which I think is a bit surprising. 

Borat would be very happy 

[macaroni21]

39 minutes ago, fedssocr said:

Apparently Kazakhstan is big market now which I think is a bit surprising. 

I was surpised too when I saw that statistic some years ago, but after a moment's reflection, it seemed perfectly logical. Half of Kazahstan's population is ethnic Russian, and ethnic or not, Russian is widely spoken in the country. Given the infux of Russian tourists to Thailand for the past decade, I would assume that Russian media (probably much consumed in Kazakhstan) has a lot of content about Phuket and Pattaya. Kazakhstan too has bitter winters.

Oh, and did I mention its GDP per capita is about US$10,000, close to Russia's and China's?

[macaroni21]

1 hour ago, vinapu said:

 ???? where you got that from?

You may be confusing travel with another irresistible, pleasurable activity....