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PHILIPPINE MARKETING PLAN FOR CHINA

PHILIPPINE MARKETING PLAN FOR CHINA. Outline of Presentation. Background on China Outbound Travel from China 10-year Chinese Outbound Travel Market China Outbound vis-à-vis East Asian Countries Destinations of Chinese Tourists Travel Preferences Arrangements Sources of Information

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PHILIPPINE MARKETING PLAN FOR CHINA

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  1. PHILIPPINE MARKETING PLAN FOR CHINA

  2. Outline of Presentation • Background on China • Outbound Travel from China • 10-year Chinese Outbound Travel Market • China Outbound vis-à-vis East Asian Countries • Destinations of Chinese Tourists • Travel Preferences • Arrangements • Sources of Information • Profile of Outbound Chinese Traveler • Demographic Profile • Travel Profile • Growth trend • Factors fueling outbound travel growth • Chinese Tourists to the Philippines • 10-year Visitor Arrivals from China • Profile of Chinese Visitors • Flight frequencies between the Philippines and China

  3. Outline of Presentation • Competitive Analysis • Arrivals from China to ASEAN Countries • Air Seats Capacity between China and ASEAN Countries • Comparative Profile of Chinese Visitors in the Philippines and Thailand • Tour Products and Packages • Marketing Strategy and Tools • Issues and Action Plan • Philippine Tourism Marketing Plan for China • Objectives • Strategies • Marketing Tools • Work and Financial Plans • Communication Plan • Monitoring and Evaluation

  4. Background

  5. Demographic • Population • 1.298 Billion as of July 2004 • 15 – 64 years account for 70% of the population • 56 ethnic groups with the Han as the largest group accounting for approximately 91% of the population • Mandarin is the standard dialect widely spoken and understood with Cantonese commonly used in the province of Guangdong • Fourth largest country in the world with 9.3 million sq. km. land area • 23 provinces, 5 autonomous regions and 4 municipalities • Major business centers are Beijing, Shanghai, and Guangzhou

  6. Economic Growth 1999 2000 2001 2002 2003 Gross Domestic Product (%) 7.1 8.0 7.3 7.0 7.4 GDP per capita Current Price in Yuan 6,551 7,086 7,651 8,214 9,073 Current Price in US$ 789 853 921 990 1,093 % 6.2 7.3 6.8 6.5 6.9 Source: Asian Development Bank Outlook 2003 Report

  7. Family Income and Outbound Travel Plans Family Monthly One Journey Two Journeys Three Journeys Income Less than US$ 180 25% US$ 180 – US$ 360 55% 2% US$ 361 – US$ 550 70% 9% More than US$ 550 34% 58% 3% Source: SSIC 2000: Survey of Five Cities

  8. Outbound Travel from China

  9. Top Tourist Destinations, 2003 Visitor Volume Visitor Receipts ( in Million) (in US$ Billion) France 75.0 36.6 Spain 52.5 41.7 United States 40.4 65.1 Italy 39.6 31.2 China 33.0 17.4 United Kingdom 24.8 19.4 Austria 19.1 13.6 Mexico 18.7 n/a Germany 18.4 19.1 Canada 17.5 n/a

  10. Chinese Outbound Travel(in Thousand) Growth Rate 21% 37% 16% 13% 7% 3% 32% 38% 21% (.002%)

  11. China Outbound Travel vs. Outbound Travel from East Asia (2003) Country Volume China 20,200,000 Japan 13,296,330 Korea 7,086,323 Taiwan 5,923,072 Hong Kong 8,380,467* *exclude outbound to Mainland China

  12. China Outbound Market • Total Outbound to Asia in 2002 – 14,271,519 (which includes outbound travel to Special Administrative Regions) • By 2020, WTO predicts China will have more than 100 million outbound travelers Source: WTO Report

  13. Destinations of Chinese Tourists Destinations 2001 2000 Growth Rate Hong Kong SAR 4,448,583 4,142,191 7% Macao SAR 3,005,733 1,644,421 82% Thailand 695,372 707,456 (1%) Vietnam 672,372 n/a n/a Russia 606,102 n/a n/a Republic of Korea 482,308 400,958 20% Malaysia 453,206 n/a n/a Japan 391,384 595,660 (34%) Australia 171,900 126,852 36%

  14. Preferences of Chinese Travelers • Extremely price – conscious • Price is a major consideration • Tour cost has to be cheap • Mass market and not high-end nor deluxe • No optional tours but would not mind paying extra to go shopping or take part in activities not included in the package. Extra cost must not be too high • 3-star accommodation • Demand compliance with tour description • Information in Chinese language • Word-of-mouth communication from friends and relatives is still an important information source

  15. Preferences of Chinese Travelers • Multi/Single-destination tied with varied interesting spots • Beautiful scenery • Shop authentic but cheap souvenirs for neighbors, colleagues, etc. • Relaxation, knowledge and experience different culture • Taste different food • Give status in the community

  16. Sources of Information Travel Agents 38% Books/ Newspapers/ TV 33% Word of Mouth 18% Brochures/ Flyers 7% Internet 2% Source: PATA China Outbound Travel Study, 1994

  17. Travel Arrangements for Pleasure Travelers Source: PATA China Outbound Travel Study, 1994

  18. Readership of Different Types of Magazines Type of Magazine Pleasure Traveler Business Traveler Major news magazines 50% 61% Digest magazines 44% 46% General interest magazines 44% 35% Film/TV magazines 34% 18% Travel magazines 24% 13% Professional magazines 24% 45% Sports magazines 22% 27% Source: PATA China Outbound Travel Study, 1994

  19. Demographic Profile of Chinese Traveler Sex Male 71% Female 29% Age 30 or younger 27% 31 – 50 49% 51 and older 22% Education No higher education 20% Less than4 years 27% 4 years and more 52% Position Top/Senior 33% Middle-level 50% Other 15% Monthly household income Less than1600 yuan 30% 1601 – 2400 yuan 32% More than 2401 yuan 34% Marital Status Married 78% Non-married 20% Source: PATA China Outbound Travel Study, 1994

  20. Travel Profile of Chinese Tourist Purpose of Visit Business (64%) Visiting partners 24% Conventions 12% Exchange tours 10% Sports/ Cultural 2% Others 13% Pleasure (39%) Sightseeing 19% Visiting relatives 16% Visiting friends 2% Sports/ Cultural 2% Frequency of travel 1 trip 59% 2 trips 19% 3 or more trips 20% Length of most recent trips One week or less 19% 8 to 21 days 54% More than three weeks 26% Traveled Alone 21% With others (78%) Delegation 16% Company Trip 40% Package Tour 14% Spouse/Children 6% Source: PATA China Outbound Travel Study, 1994

  21. Most Popular Items Chinese Buy When Traveling Abroad Items Pleasure Traveler Business Traveler Food/ candy/ chocolate 57% 50% Liquor/ Tabaco 34% 36% Women’s clothing 36% 17% Souvenir 30% 20% Men’s clothing 31% 17% Jewelry 25% 19% Electronics 18% 20% Leather goods 17% 12% Source: PATA China Outbound Travel Study, 1994

  22. Market Segment 59% 41% 1992 46% 54% 2000 Business Purpose Pleasure Purpose Source: PATA China Outbound Travel Study, 1994

  23. Chinese Travel Outlook Type of travelers Pleasure 54% Business (46%) Economic 48% Non-economic 40% Frequency of travel Once 38% Twice 46% Frequent 70% City Beijing 61% Shanghai 39% Guangzhou 38% Place of work Foreign-invested/foreign owned enterprises 51% State enterprises 48% Academic/ research 48% Government 41% Other non-profit orgs 33% Have relatives living abroad Yes 48% No 26% Source: PATA China Outbound Travel Study, 1994

  24. Major Sources of Outbound Travel Beijing Shanghai Guangdong (Peking) Population 13 M 16 M 72.70 M Urban Population 4.7 M 7.5 M 2.6 M (Guangzhou) Per Capita Income US$ 13,471 US$ 13,602 US$ 2,029 Capital of Industrial/ Political/Economic China Financial/ Technological/ Commercial Cultural Center Center Places of interests Shops 83% 85% 93% Historical sites 65% 75% 66% Theme parks 46% 45% 58% Museums 41% 35% 41% Casino/ Bar 13% 9% 15%

  25. Chinese Travel Outlook • Rising rapidly and will be first tourist source nation by 2020 • Major visitor-generating market for ASEAN destinations • 7th largest tourism spender in the world • Global trend for short - haul travel • Workers enjoy seven-day holidays on May 1 (International Workers Day) and October (National Day) for a total of 14 days yearly

  26. Factors Fuelling Outbound Travel Growth • Growing gross national income which is number six (6) in the world • Growing disposable income with household savings in urban and rural areas exceeding 10 trillion RMB. GDP per capita is expected to reach US$ 1,000 • Shifting consumption pattern from dressing warmly and eating one’s fill, to living a well-off life

  27. Factors Fuelling Outbound Travel Growth • Outbound travel restriction are being relaxed • Exit clearance has been lifted since 01 February 2002, However, Chinese traveling abroad must obtain or hold a valid visa issued by a foreign government before they are allowed to exit China • Chinese tourists can take between US$ 3,000 – US$ 5,000 on a trip abroad • Outbound tourists can also buy foreign currency themselves rather than thru travel agency • More travel agencies are being allowed to operate outbound tours • Simplification of passport application procedures

  28. Factors Fuelling Outbound Travel Growth • Improving air capacity infrastructure. By 2019, China is projected to have 22,000 passenger airplanes which is more than 10 times the world’s total • Increasing number of destinations being granted ADS from 4 in 1992 (Thailand, Malaysia, Singapore and Philippines) to 73 in September 2004 • Outbound tour is no longer a once-in-a-lifetime event. Repeat outbound travel is becoming common. • Middle-class families are becoming main force. Middle-aged travelers and educated young adults with high incomes comprise a big proportion of outbound tourists

  29. List of ADS Countries Year Countries 1983 Hong Kong, Macau 1988 Thailand 1990 Singapore, Malaysia 1992 Philippines 1999 Australia, New Zealand, Republic of Korea 2000 Japan, Vietnam, Cambodia, Myanmar, Brunei 2002 Nepal, Indonesia, Malta, Turkey, Egypt 2003 Germany, India, Maldives, Sri Lanka, South Africa Croatia, Hungary, Pakistan, Cuba 2004 Austria, Belgium, Cyprus, Denmark, Estonia, Finland France, Greece, Italy, Latvia, Lithuania, Luxembourg Netherlands, Poland, Portugal, Ireland, Slovakia, Slovenia, Spain, Sweden, Norway, Iceland, Switzerland, Liechtenstein, Romania, Zimbabwe, Brazil, Tanzania, Russia, Ethiopia

  30. Chinese Passport and Visa • Before • Chinese citizens wishing to travel overseas need to apply for a passport which is valid only for the journey applied • Invitation from foreign country is required • For ADS countries, invitation is not required but the number of Chinese citizens visiting said countries is established through “quota system” for authorized travel agents only allowed to sell outbound tours • Exit clearance is required

  31. Chinese Passport and Visa • After • July 2000: Chinese citizens can obtain passport without an invitation letter from foreign country but requirement to obtain “permission” /exit permit or visa for each journey remains • February 2002: Exit clearance has been lifted, however, valid visa from foreign country to be visited must be secured before Chinese tourists are allowed to exit China

  32. Chinese Tourists to the Philippines

  33. Arrivals from China to the Philippines1993 - 2003 32,039 27,803 24,252 21,220 19,093 18,937 15,757 14,724 9,259 8,606 7,011 % increase/ decrease 32% -7% 83% 21% 27% -13% -31% 29% 47% 15.2% Source: A/D Cards

  34. Profile of Visitors from China to the Philippines, 2003 Sex Male 61.61% Female 33.45% Age 25 – 34 years old 25.22% 35 – 44 years old 31.51% 45 – 54 years old 17.37% Occupation Professional/ Managerial/ Administrative 24.57% Clerical/ Sales Services 1.23% Housewife 4.54% Student/ Minor 4.51% Not Stated 60.09% Purpose of Visit Holiday 40.69% Business 8.83% VFR 8.21% Convention 1.19% Official Mission 0.26% Not Stated 37.52% Activities Shopping 94.80% Sightseeing 10.30% Sports 1.90% Conference 1.30% Others 1.30% Beach Holiday 0.60% Incentive Travel 0.60%

  35. Profile of Visitors from China to the Philippines, 2003 Type of Accommodation Hotel 16.07% Apartel/ Rented Homes 3.76% Homes of Relatives/ Friends 5.63% Not Stated 74.55% Travel Arrangements Package 32.27% Independent 17.86% Not Stated 49.87% Frequency of Visit First Visit 32.92% Repeat Visit 20.79% Not Stated 46.29% Average Daily Expenditure (in US$) Accommodation 20.06 Shopping 11.35 Food/ Beverage 9.72 Local Transport 3.19 Entertainment/ Recreation 2.93 Guided Tour 0.19 Miscellaneous 8.77 US$ 56.21 Average Length of Stay 11.10 nights Visitor Receipts US$ 19,900 M

  36. Profile of Visitors from China to the Philippines, 2003 Things like most about the Philippines Warm, hospitable and kind people 37.60% Beautiful scenery/ nice beaches 20.70% Good climate 14.10% Good food/ liquor/ fruits 8.50 Things dislike most about the Philippines Heavy traffic 36.20% Air/ water pollution/ dirty environment/ bad roads 32.10% Crime incidents/ poor peace and order 23.30% Widespread poverty beggars 4.80% Cheating, reckless/ dishonest taxi drivers 2.60%

  37. Flight Frequencies between Philippines and China(as of October 2004) • China Southern Airline (96,252) > Peking (Beijing) – Xiamen – Manila (Daily) > Canton (Guangzhou) – Laoag (Wed, Fri, Sun) > Shanghai – Laoag (Fri, Sun) • Philippines Airlines (117,832) > Shanghai - Manila (Daily) > Xiamen - Manila (4 times) • Cebu Pacific (38,688) > Canton (Guangzhou) – Subic – Manila (Fri, Sun) > Manila – Xiamen (Sun) Based on CAB Summer Schedule Entitlements 624,000 Utilized entitlements 214,084

  38. Visas Issued by Philippine Consulate General January – September 2004 Type of Visa Beijing Shanghai Total Pleasure Individuals 4,597 Tour groups 2,399 Business 1,523 Official 6 Crew members 96 Student 1 Total 4,836 8,622 13,458

  39. Strengths - natural scenery (beaches, etc.) - friendly to Chinese (Chinese heritage of Filipinos) - different culture - variety of seafood (for southern Chinese) and sunny island resorts (for northerners) - proximity to China - English-language facility Weaknesses - lack of information on Philippine destinations (consumers and tour operators) - pricing (high price and not one price) - negative image re: security problems - no variety in tour offerings - lack of infrastructure development - lack of professional Mandarin-speaking tour guides - aside from Manila, no direct flights from China to Cebu and Davao - fragmented private sector Strengths, Weaknesses, Opportunities and Threats (SWOT) of the Philippines as a destinationfor Chinese tourists

  40. Opportunities - compared to Bali and Phuket, several Chinese tour operators prefer Boracay - China is a seller’s market, so with enough local advertising and information to operators and consumers , Philippine tour packages can be pushed more - China is used to charters - good relationship established between DOT and CNTA and local officials - large portion of outbound market are first-timers out of China - Future events in China require them to learn English fast (i.e., 2008 Olympics) Threats - More countries granted Approved Destination Status (ADS) as of 2003 especially in Europe - terrorism and security problems - aggressive marketing and sufficient budget Strengths, Weaknesses, Opportunities and Threats (SWOT) of the Philippines as a destinationfor Chinese tourists

  41. Approved Destination Status (ADS) According to the China National Tourism Administration (CNTA), several countries who have been granted ADS , have not been successful in getting substantial share of the Chinese outbound market due to : • no advertising for tour offerings in publications of travel agencies • high price is a major obstacle • no brochures and lack of communications making it difficult for Chinese travel agencies to promote new destinations • more professional tour guides required

  42. COMPETITORS’ PACKAGES • Thailand - Beijing-Phuket, 6 days – 5 nites, with airfare 3980 RMB or $ 485. - Beijing-Bangkok-Pattaya (full board), 6 days-5 nites, 4480 RMB or $ 545 or $691 during high season (May and Oct) • Thailand spent $200,000 in advertising in China during 1st year of operation • Philippines - Beijing-Manila-Cebu, 6 days-5 nites, 5980 RMB or $ 728.

  43. MAP OF ASIA China Vietnam Philippines Singapore Thailand Indonesia Malaysia

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