When Joseph Wang co-founded TravelDaily China in 2006, the world was a very different place, and China’s position in the world very different from where it is now.
The Chinese outbound market was only just starting to blip the global radar. A UNWTO report put the number of outbound trips in 2006 at 35 million – its figure for 2016 was 136 million.
Ctrip had been on Nasdaq since 2003 and its net revenues for 2006 were just under $90 million. In 2017 net revenues were $4.1 billion.
The mobile revolution was still being planned. From a global context, smartphones were not that smart in 2006, but that was about to change – the iPhone 1 was launched at the start of 2007.
Having followed the Chinese market for more than ten years, Wang’s insights are worth listening to. In a bigger context, he talked about international brands wanting a piece of the China outbound action need to realise a couple of things. Firstly, that China is not an homogenous market and that people from the big cities travel differently from people in the smaller cities, just like in most major outbound markets.
Millennials are a growing as a proportion of the Chinese population. They are travelling more, they like to book their flight and hotel in advance but want to be able to decide on activities in destination, they are wedded to their smartphone and want to be able to pay for products and service overseas in the same way they transact at home. Just like Millennials in most major outbound markets.
In a more specific context, he suggested WeChat’s Mini Programme could become the most effective channel for international brands to engage with Chinese travellers on-property or in-destination.
For more, watch the tnoozLIVE@ITB video below, followed by the transcript.
NOTE – the transcript has been edited for brevity and clarity.
Martin Cowen: Martin Cowen, commercial editor for Tnooz here with Joseph Wang who’s chief commercial officer for TravelDaily China.
What can travel brands outside of China do to get a piece of the growing outbound market?
Joseph Wang: Okay. There are 400 million Millennials in China itself, a fast growing demographic in the market place and in the work place and they represent a huge dynamic opportunity for travel brands outside of China.
If you want me to give some suggestions for brands to connect with these Millennial first of all, you should know China is a huge country. It’s a combination of more than 30 provinces of different people, different backgrounds, different behaviours online and offline, from first tier one second tier and third tier citites.
So you are talking about the size of the cities. So you have first tier cities which is Shanghai and Beijing.
Guangzhou, Shenzhen are also first tier.
And then the second tier?
Actually, there’s a 1.5 tier.
I wasn’t aware of that! I knew the second and third and fourth tier but now we’ve got 1.5 tier?
1.5 means there’s about 12 cities in China that have grown rapidly in terms of their GDP and are really close to the first tier cities, thanks to financial services or technology industries. Hangzhou, for example it’s the headquarter for Alibaba so they have more Millennials living there and also they have a high penetration for mobile payments, everything. So when Millennials living in Hangzhou want to go outbound, they are definitely different from the people from third tier cities.
So you’re saying that people from the first tiers cities you mentioned are a different market completely from the third and fourth tier cities and even from the 1.5 tier city?
What I mean is you cannot have just one marketing cohort. In China it’s pretty complicated and needs a variety of strategies.
China is still an emerging market, even Beijing and Shanghai are changing quickly. You will see some innovations such as bike sharing. Mobile payments remain popular in China now especially the first and second tier cities.
Let’s just think about the first tier, the major metropolitan areas in China. Where are they traveling to when they go outside of China? What destinations are appealing to these Chinese Millennials?
I think the Chinese people, especially in the first tier cities, are more aware of the purpose for their travel. They are more experienced, they know what they are trying to get and they are willing to pay more money or go further afield to get this – they’re looking for a kind of unique experience. Independent travelers or people on family trips want to explore local life.
When you look at second tier or third tier cities, they’re looking for more of a vacation experience – they’ll go to UAE for shopping. It’s quite different.
So you’ve got the first tier city millennials who want to go out and do the experience and live like a local, while travellers from the second tier cities are more traditional.
Millennials living in the first tier city in China are not any different from their Western counterparts. If anything, they are even they are more experienced in using the mobile phones to explore the local life.
So many of the mobile innovations that we see in the West are coming out of China and I think we underestimate just the extent to which Chinese people live their lives through their smartphone.
China now is close to being a cashless society thanks to mobile payments, but one development of note is the Mini Program, powered by WeChat.
And what is this?
It is not an app, it is an ecosystem which enables users to access instantly services, products, hotels, airlines, whatever, without downloading an app. This is a completely new searching behaviour – different from what travelers have been doing for the past 15 years.
With the Mini Programs, Chinese people are able to explore the destinations when they arrive. They book the flight and accommodation before departure but they leave a lot to discover themselves. When they arrive in their destination, they don’t need to download any apps, they can use a Mini Program to explore the services.
It is a kind of offline to online platform.
They work by scanning a QR code at a hotel reception and can instantly access to all the restaurants or shops, shopping malls just around you.
So the hotel itself would have to have the barcode on reception for the WeChat Mini Program users to scan, and then users would get access to the content – local attraction stores, activities, restaurants, in the Mini Program?
Yeah. A QR code, a scan of QR is the main master for this so people are using WeChat to search.
So you can search within WeChat?
Exactly. If you are a tourism bureau so you should definitely look at this opportunity because other search options solve the problem before the customer’s arrival, not in-destination.
WeChat is the leading on this. And it is expanding quickly overseas. VisitBritain is one organisation using it.
Could brands or individual properties take advantage of Mini Programs?
I think this depends on whether you are trying to connect generally with travellers or if you’re trying to provide a service for the travelers. Exploration, searching, shopping, purchasing, anticipation before departure and even in the flight are all different scenarios. Travelers from China have different demands or expectations during the different stages of travel.
So for mini program I think today it’s mainly focused on how to maximize the experience f0r travellers in a new destination. But the market is looking at how Mini Programs could change change the customer behaviours across the whole travel journey
And another great thing about covering the Chinese travel industry is that you have bluechips such as Alibaba, Baidu, Tencent, but also the most incredible startup community. You must come across a whole lot of startups. Are there any you’ve come across recently that are particularly or exciting?
Well, that’s a really great question. China is a technology driven country. What I am interested in at the moment is how the travel booking and searching behaviour has shifted. Booking and searching used to be very difficult for the travelers for the past 12 years but today it’s not a problem at all.
So people can visit 12 sites, or you can get almost everything you want from Ctrip, but today travelers are shifting to activities and we see more innovations in this field. For example, the transportation unit of Ctrip is trying to grab every opportunity within the transportation space – ride-sharing, shuttle buses connecting all the touch point for the customer in the destinations. This is where the big opportunities are for start-ups.
The second opportunity might be in-destination service platforms giving travellers the chance to improve their local experience
Another I’m pretty interested is the inflight shopping experience, because it is relates the overall mobile penetration.
Airlines are trying to improve their customer experience or increase their ancillary revenue. In China people do not have to switch off their mobile phone on a flight because inflight wifi is common. I’m looking at this as a big trend opportunity to create a unique in flight shopping experience. It will be completely different from what you do on the ground at Taobao or Amazon. It’s based on the flight, it’s based on who you are because airlines know who you are, where you’re from and where you’re going, why you’re flying. It is personalized.