China's economy has returned to full strength after last year's
economic turbulence and is growing strongly. While outbound travel
had been heavily impacted by other factors, including the Influenza
A H1N1 (Swine Flu) pandemic, the outlook for the next few months is
positive.
Economy
The Chinese Government's hefty spending on economic stimulus,
combined with strong domestic demand, insulated the world's
third-largest economy from the worst impacts of the economic
downturn, with GDP increasing by 8.7 per cent in 2009 according to
the World Bank.
That growth has accelerated, with the economy expanding by 11.9
per cent in the first quarter of 2010. The growth figure was
slightly higher than expected, while consumer price inflation was
surprisingly low at 2.2 per cent.
Foreign investment inflows into China rose during the first
quarter of 2010, indicating strong investor confidence in China's
economic outlook.
In March, China recorded its first monthly trade deficit since May
2004. Imports rose 66 per cent year-on-year during the month while
exports rose 24.3 per cent year-on-year, resulting in a trade
deficit of USD7.2 billion, well above forecasts. The deficit
reflects increasing strength in domestic demand led by aggressive
fiscal and monetary stimulus.
Chinese consumer confidence is expected to continue to grow in the
coming year, which should boost travel to long-haul markets. If the
government is successful in keeping growth at a manageable rate,
China is likely to overtake Japan as the world's second biggest
economy this year.
Key Indicators
Sources:
www.economist.com (GDP Growth)
www.xe.com (Exchange rates)
| Exchange Rate vs NZD |
CNY10 = NZD2.03 (11 May 10) |
| Expected GDP Growth |
+8.2% for 2009
+9.7% for 2010
(Apr 10 est.) |
Outbound Travel
The Chinese outbound market is growing at a phenomenal rate and
is expected to exceed 51 million travellers in 2010, a rise of 7
per cent from 2009.
As the economy continues to grow and private incomes increase,
travelling abroad is becoming a regular part of Chinese life. The
World Tourism Organisation predicts that China will be the
fourth-largest source of outbound tourists by 2020, with a
predicted 100 million travellers per year.
This in turn is creating opportunities for New Zealand tourism.
Arrivals have been unstable over the past 12 months, but the
situation should improve with returning consumer confidence.
Tourism New Zealand has launched fresh campaign activity in market
that is set to boost awareness and understanding of Destination New
Zealand among key target audiences in China, using digital channels
and the assistance of well-known Chinese opinion leaders.
Challenges remain, however. Travel agents are expecting late
bookings for the May to June low season, and tour prices from China
to Europe are currently cheaper than to New Zealand, due to the
strong New Zealand Dollar.
New Zealand is seeing increased interest in incentive travel out
of China. Demand for mono-New Zealand travel is also strong.
Previously, 90 per cent of Chinese visitors to New Zealand also
visited Australia, but this proportion declined to 77 per cent in
2009.
The Shanghai World Expo in 2010 (May to October) is another
opportunity to further build brand and country awareness for New
Zealand, but the event may have a negative impact on outbound
travel during these months.
Airline Update
Air New Zealand launched a free independent travel (FIT) package
in Shanghai and Beijing to stimulate bookings after the Chinese New
Year. The Beijing fare of RMB7,680 includes fuel surcharges and two
nights accommodation in New Zealand. The Shanghai fare is RMB6,999.
Both packages were launched in conjunction with www.ctrip.com, and
are valid for return travel to New Zealand from March to the end of
June.
Air New Zealand and Qantas both reported very good passenger
numbers in March compared to the same time last year.
Air New Zealand has recruited a Product Development Manager in
China to develop mono-New Zealand products to suit the independent
travel market in China. There is also a focus on niche sectors such
as ski, golf, spa and incentive travel.
The Australian and Chinese Governments have agreed to increase
air capacity between the two nations by 70 per cent as they edge
closer to an open skies pact. The new agreement saw airlines in
China and Australia increase the number of seats they can offer per
week by 2,000, to 10,500 in February 2010. This will increase by
another 4,000 from November. Brisbane will be allocated 2,000 of
the extra seats.
Emirates will expand its services to New Zealand to capture the
growing Chinese market. A380 flights to Beijing will start on 1
August, and Shanghai services will begin on 1 January 2011.
Emirates currently operates the super jumbo to Auckland.
Competitor Activity
In June 2010 the Australian government announced it will invest
an additional AD30 million this year to market Australia to the
Chinese travel market, and hold a forum on Chinese tourism. China
is expected to emerge as Australia's number one source market for
international visitors in the next few years.
On 1 March 2010 Tourism Australia, Singapore Airlines and
Tourism Western Australia launched a co-branded campaign to target
first time experience seekers. The promotion appeared in
newspapers, outdoor billboards and online.
The Queensland Government announced in January 2010 that it
would commit more than AUD1 million to growing the China market.
China is the state's fifth-largest market, with 142,000 Chinese
visiting in the year to September 2009.
To promote Queensland during the Shanghai Expo, Tourism
Queensland has developed the Shanghai-Queensland Week. Held in
June, this will launch a new wave of promotional events in China in
2010. Working with airlines and travel agencies, the strategy is to
increase the number of direct flights between China and
Queensland.
As a result of the US gaining Approved Destination Status (ADS)
from October 2009, tour groups (GITs) from 12 Chinese provinces and
regions can visit the US. Canada gained ADS status in December
2009. More than 134 countries (including New Zealand) now have
approved destination status and can capitalise on China's
fast-growing outbound travel market.