© — No Il played roles in its growth. This article Case study China’s domestic tourism: impetus, development and trends Zhang Wen i =. Iicaton in China The Inprveeeat af the malo! romney, the pera of haere Soltar, andthe abundant tourisn tesures ave al pa Summaries Chin's domestic tourism before 190 and senses the inherent reasons tr boom throug |. i «=~ =~—_ thts reserved Chin's domestic wursm, that sector of the country’s tourism industry which consists of Chinese citizens traveling within China, has developed Uramatically in recent years. The inherent causes for, and unique conditions generating such a dramatic geowth are linked to the particular patter oof development in China's overall economy. The special features have three main components. First, the priority given to international tourism, that is, receiving inbound tourists, boosted both the inter national and domestic tourism businesses. Second, despite China's being an economically poor country with low tourist consumption levels, the tourism resources are rich, allowing for greater number of Chinese tourists to travel. Third, the improved living standard as the result of a healthy and. stable national economy and a cultural appetite for tourism has contributed to the rapid growth of this industry. It should be noted that the data used in this article exclude statistics relating to Hong Kong and Macao as this study was conducted prior to the resumption of China's sovercignty over these two regions. Similarly, no reference is made t Taiwan's tourism because the basis of statisties differ and ‘comparisons are not possible 565 wut the 1990s. It also forecasts development trends in the next decade, and Lid. All Background of the development China is a vast country rich in tourism resources, Numerous scenic spots and historical sites, long cultural traditions and colorful folk customs provide great potential for developing tourism. However. before the late 1970s, domestic traveling by Chinese citizens was confined to business. trips, visiting relatives and traveling for study or health reasons Because there are no statistics on tourism during this period. we can only speculate as 0 the exact figures. However, if there were any pleasure travel in China, it was in very small numbers. The economic and physical conditions necessary for fa scale tourism in China did not exist. A low living standard, an inadequate supply of commodities, 3 shortage of food and accommodation facilities, and & limited transportation system prevented the growth of such an industry. Therefore, in the early Years after its economic reform and open policy. China adopted the principle of giving priority to attracting international tourists from outside China, in order to inerease state foreign exchange earnings, to balance foreign exchange receipts and spending. tnd to promote international exchange, sO. that a favorable environment could be ereated for the development of its economy and tourism as a whole,China’ domestic oars: W Zhan ‘This practice enabled China's tourism industry 6 develop rapidly from a virtually nonexistent level, ‘The first 10 years of China's economic reform and ‘opening up from 1979 to 1989 was the period when China was implementing systematic reform in all the sectors of its economy. and was laying the founda tion for its modernization programme. During this period, forcign revenue was badly necded to support the economic reform. Therefore, the Chinese government took measures lo attract tourists from ‘other countries. ‘The measures included the following: offering incentives to developers to build hotels of international standards in order to provide accommodations acceptable to inbound tourists; giving pron, to foreigner, in_ hooking. Tights, ing train tickets and arranging for various means Or ansporation, developing specail shaping centers with an abundance of good quality commod- ities for foreign tourists and issuing foreign exchange currency t ensure that foreigners could enjoy this preferential treatment, On. the other hhand, not much attention was given to the develop- ment of domestic tourism (Chinese traveling within China). The improvement of facilities and supplies appropriate for domestic tourists was ignored. AS the lack of adequate passenger transportation was the "bottleneck? in the development of the national economy, demands were far from satisfied, conse {quently curbing the growth of domestic tourism, However, despite these circumstances, domestic tourism was increasing because of the fast growing national economy and the marked improvement in living standards. In 1989 China's national average per capita income reached 189 RMB yuan, an Increase of 3.44 times that of 1979, The average per capita income of big cities and economically developed coastal arcas was even higher: Shanghai, 4501 RMB yuan; Beijing, 3085 RMB yuan. This demonstrates that the welF-offs in the urban and coastal areas were able to afford traveling for pleasure, thus the domestic tourist market began, Table 1 Shows an annual increase rate of domestic outist arrivals, receipts and average expenditure per visitor in the latter half of the 1980s Recognizing that the government was making rapid. progress by 1989 in achieving its. goals of building infrastructure, accumulating foreign capital “able 1 China domestic tour 19KS-19%6 and stabilizing the economy, and realizing the increasing potential of the expanding domestic tourist market. Liu Yi, ExDirector of China National Tourism Administration, ssid, ‘Domestic tourism should now be the foundation of China's, tourism’*. Mr Liu’s words marked the transforma tion of the government’s guiding principles. for tourism development. With the progress of China's economic reform, the tourism industry at the end of the 1980s began to transform to a__market economy operation, Because of China's further reform and open policy China has gradually become a popular tourist country. This trend has sped up the process of a world standard tourism industry in China. Domesti- cally, local governments, industries and businesses have seen the bright future of tourism and invested. in it directly or indirectly, thus pooling diversified inancial resources. Because the government at all levels has attached great importance to the improv ment of infrastructure, investment in it has. increased. Improvements in such areas as transport ation networks, telecommunications, commerce and urban development have laid a solid foundation for the development of tourism, Under these cizeum- stances, different types of travel services, especially those ‘specializing in domestic tourism, have ‘emerged in large numbers, The tourism economy hhas become market-oriented and a competitive pattern has formed within the industry. This buyer's, ‘market of tourism is still taking shape today. China’s tourism at the end of the 1980s can be characterized in the following ways: ‘# government policies shifting from favoring the altraetion of international tourists to the simultan= cous development of oth international and ‘domestic tourism: ‘¢ the economic foundation for further growth of tourism being gradually consolidated, which ‘enabled domestic tourism to begin a large scale of development, sn Ys, Ex Dine spowsh atthe Confrence of Deter of the Laval Tem Boreas 8 ‘9 Chins National Tourior Admamistation, var Se ed Domesicwurit arias MCDM) OMAN)‘ ‘non Dome tort en 80 106 1087 OD MMO 350A TIT! ion Rot 9s) sn eee per vitor 38333926 S8OK W2IE6280 AIT AIT 7TH 2M ANTI 2IRAL_ BSH ‘ih om Tas escpopltion 4) — - an uy ome MI As aa seo Souree Resa 566Development from 1990-1996 Since the reform and open policy of 1979, China's ‘economy has developed at great speed, and has made outstanding achievements, Economic reform has centered on the establishment and perfection of @ socialist market economic system since 1992. Reform has further emancipated social productivity enhanced the function of the market in resource allocation, and vitalized the Chinese economy. In the past 10 years or so, the overall development of the world economy has been at a low level, while China's GNP has increased by 9% per year on average. The consumption level of Chinese citizens has been rising dramatically Adherence to the policy of reform and opening uup has brought China a. steady, sustainable and healthy political and economic environment for development. Domestic tourism in the 19905 has developed at_an unprecedented speed in this, political and coonomic climate, From 1990 to 1995, the average annual domestic tourist arrivals, increased by 17.62%, and the average anu receipts increased by 51.93%, In 1990, domestic tourist arrivals amounted to 280 million: tourist receipts were 17 billion RMB yuan. In 19%6 tourist arrivals reached 640 million, an inerease of 2.286 times compared to those of 1990, Tourist receipts in the same year reached 163% billion RMB yuan, an increase of 9.635 times (sce Table 1). In the early 1990s, China's domestic tourism was still in its infancy: however, the Chinese tourism industry began to give it more attention, while still ‘enlarging its international market shares. Figures in Table 2 show that the number of tourists traveling, ‘on package tours took up only a small percentage of the (otal number of domestic tourists) 2% in. 1993 ind 5.5% in 1995, However, the increasing rate leserves attention, According 10 the China Domestic Tourism Sample Survey. the number of tourists taking part in package tours was 8.2 million in 1993: while 2years later in 1995, the number jumped to 3465" million, representing an annual average increase of 105.56%. Such figures indicate three important developments: # China’s tourist market is developing in a healthy direction: © the three major sectors of the travel industry, namely, transportation, accommodation and travel agency services, have entered a stage of coordi- nated development; and Table2 Percentage of types of domestic tourists Your 198 1994 198 Group vole 20 2 ss Inia ave ox m1 ois Source: Ret, Chins domestic wnrione W Zhang © there is a great potential market for domestic organized tourism. Favorable conditions for growth ‘Though tourism is referred to as a new industry in the Chinese economy because it currently only accounts for a small portion of GNP, its rate of growth is much quicker than the development of the frst and second industries and some of the tradi tional sectors in. tertiary industry. ‘The other meaning of ‘new is rising abruptly China became the fifth international tourist receiving country in the world in 1995, with foreign exchange receipts ranking ninth worldwide”. To acquire this standing in world tourism, China has made unremitting efforts to improve’ its. tourist supplies. the major components of which are food and beverage, accommodation, transportation, ‘communication, sightseeing. entertainment and shopping, Not only hardware, that is, physical condi tions, but also software such as management, service and quality in these seven areas have remarkably developed compared to what they were 17 years ago, although there is much room for improvement according to world standatds In recent years. under the supervision of relevant govemmental departments, service in the food and beverage industry has generally improved, It has to maintain its market shares by good quality, reason- able prices and satisfactory service. Management, product quality and the service level of some enter- prises have already reached an international Standard. Chinese cuisine and local specialties are fone of the appeals to tourist, After > 10 years of effort, the lodging industry in China has not only basically satisfied the needs of international tourists, but increasingly gained the ability to cater to domestic tourists. Apart from an. accommodation shortage in some. popular tourist, destinations at_peak seasons, supply” is_ generally Targer than demand, China now has 3720 hotel acceptable 10 inbound tourists, of which 45 are Star, 1027 are 4-star and 673 3star.' However, luxurious hotels 3-star and above are still not the choice of domestic tourists, as they are usually beyond their price range. in the past 20 years or so China has made great achievements in the modernization of its transporta: tion network, The completed road system in cities alone reached 1.39 hillion m° by the end of 1995, a 00) million m® increase compared to 1990. Many such as the Beijing—Jiujiang-Jiulong. unming and other railway’ project highway and expressway construction between cities and provinces, like the Beijing-Shijiazhuang, WTO 19% sts, 567Chin's dames ruta W Zhang Shanghai-Hangehou expressway projects, among fothers were completed. In addition to the inerease in public buses. several big cities have either built or plan to build subways. All these improvements have played important roles in the nation’s economy. and they are also a direct and important cause for the growth of domestic tourism, Nevertheless, the trans portation capacity is still not satisfactory. and the buasie infrastructure needs further improvement. ‘The Chinese post and telecommunication industry thax made great progress in the past 10 years, Both technology and equipment have reached advanced: world levels, adequately satisfying both the demand, of tourists for communications and the demand of users in China to promptly get information, China is a country of abundant tourism resources. From the beginning of the 19s, the Chinese government has enhanced the strength of invest ‘ment. construction and environmental protection: in other words, China is undertaking a comprehensive improvement of tourist attractions. In October 1992, the first group of 12. state holiday resorts. was approved by the State Council, which served as the beyinning of the large scale exploration and construction of natural, cultural and entertainment tourist areas. Existing tourist attractions were further improved: cultural relies and historical sites ‘were well protected and restored; large comprehen: sive tourist projects and spots were built or are being built! With the surge of domestic tourism, there isa growing number of restaurants, lodges and souvenir shops around tourist attractions. Although the services are of different consumption levels, they are more adaptable to domestic tourists, Great improvements have been made in detailed aspects of tourism. For example, in 1994 the China National Tourism Administration began to. imple- ment “Project Restroom’, aimed at improving the conditions of restrooms ~ a source of many tourists! complaints ~ in major tourist areas and along major tourist routes, and raising, within 3 years, the cond tion to the standard at least of that found in 2-star hotels. However, pollution and damage to tourist resources, cultural: relics. and historical sites. still ‘occur from time to time in some are: With the enhancement of China's overall national strength, and the improvement of material life and the national cultural level, the entertainmen industry is developing, but slowly: Efforts have long been made to provide inter- national tourists with diversified commodities of ‘good quality; however. the result is not satis Generally, Chinese enterprises lack thorough, st tific and detailed market investigation and analysis, therefore, they cannot produce readily marketable commodities. In terms of shopping, as market getting brisk and commercial facilities are becoming, ‘modernized with abundant_commodity supplies stores which once specialized in service for 568 foreigners have become shopping arcas for all. For domestic travelers. the bustling commercial centers, jin big. cities such as Beijing. Shanghai und Guangzhou, have always heen places for sightseeing sand shopping, In. 1995, travel agencies conducting domestic business exeeeded 4000, but some of them are of small scale with a business volume of <50) domestic tourists annually. Presently, the majority of the domestic package “tours are organized and serviced by the few big and reputable travel agencies, Tn terms of the balance of supply and demand, to develop tourism, especially domestic tourism in China. tourism supply. both tangible and intangible should be increased, and quality should be improved atthe same time. In the carly 1990s, the Chinese government started to implement & nationwide holiday system stipulating that each employee would be granted a 7-15 day annual leave, with the period hased on length of service, In 1994, the S-day work week was gradually implemented throughout the country. These stipulations enabled the Chinese citizens 10 have more time for long distance travel and weekend outings. Statistics from a tourist. spot administration showed that the number of tourists visiting scenic sites in the first month following the implementation of the S-day work week increased by. some 22.6% over the previous month, with most of the outings being on a family basis. Features of domestic tourism A low consumption level and individual travel are the most outstanding features of domestic tourism, From Table 3. food and beverage, accommodation and transportation together 100k up. > 60% of the total expenditure of a tourist. Table 7 shows a tsing trend in general consumption, but very low absolute value. In 1993, the national per capita income on the Chinese mainland was 2009.75 RMB yuan (Table 4), ea US$ 250, while the average expenditure per Nistor in the same year was 210.73 RMB yuan (Table 1), ea USS 25. The 10% tourism consumption is agreeable 1 the citizen's income level and capacity to pay Table 5 shows that: ‘sightseeing and holiday’ is the major purpose of traveling for Chinese people: this, item and ‘visiting relatives’ together account for 68% of the total: and the proportion of classified tourists remains relatively stable. Generally domestic travel services now offer three types of package tours, namely: economy: standard- ized: and deluxe, the ceonomy tours taking up a large percentage. The expenditure of group tourists, is much higher than that of individual tourists (see Table 6). The difference is eaused by two factors:Table 3 The cements of average per capita tourist expenditure pr trip 19-1098 China deme tion W Zhan 1993 Proportion i998 Propet 1995 Tramportation lass m2 40 aS sz 2a6 Acumen ey im ost ns toe in Po and Reverage si wma vos bs. m9 et Counce an us ws ‘ou a Sant ain sn a 3 Emertsinment om eat ins a Shoring san wig 2s Wa Oi ut 7 230 a 1 Sure: Re Noes ity transport expense enc inthe tm 4 the difference between cost resulting from the different length of trips: ‘¢-2 large number of individual tourists staying with relatives and friends while traveling. ‘This is direct reason for the low expenses of indivi- ual tourisis. The attraction of package tours 10 Chinese citizens is hased first on their competitive price because of the preferences offered by hotels ‘and transport companies, which individual travelers cannot enjoy: secondly, the convenience of the arrangement of food, accommodation and transport, thirdly, compact arrangement of activities. Conclusion and forecast ‘The dramatic growth of China's domestic tourism (Chinese citizens traveling within China) has the following features: a low starting point; a great market potential; strong state macro control; the solid foundation of a fast growing economy’ and social stability; the favorable conditions and experi= fence gained in developing international tourism (reception of inbound tourists) “The rapid and sustainable development of the national economy is the most direct and important factor promoting the growth of domestic tourism: ‘The living standard of the Chinese people has improved markedly, although it is stil relatively tow compared 10 the advanced world countries. In the TOs, bicycles, sewing machines and watches were eanepetatioa in 1998 and 1994, sce of font sii approche considered big purchases by Chinese families. The hot commodities in the 1980s were color TV sets, refrigerators and washing machines, while in the 1990s demands are shifting to traveling for pleasure, houses, cars and personal computers Economie strength is_undoubtedly the factor enabling tourist growth, while cultural iraditions and, the status of the supply and demand of cultural life also influence tourism trends, The Chinese nation has an age-old tradition of tourism, which isan inseparable part of Chinese traditional culture. The Chinese tourism tradition emphasizes enlarging one’s knowledge, raising one’s, understanding of the world and society, enhancing selfcultivation, making friends and conducting cultural exchanges. An old Chinese saying is, “He who travels far knows much’. The modern tourism, ‘outlook contains these traditional concepts, which is, the psychological basis for the strong desire of the Chinese people to travel, although most of them are still not affluent enought do so. Today. constrained by their financial limitations, most domestic tourists have to be frugal in spending, The Chinese people “make do’ with an economical fand_ practical tourism consumption level, yet gain rich experiences and psychological rewards. This, ideology belongs to a rising nation, and the reason for the sustainable development of China's domestic tourism is thus easily explained. Another factor that promotes the development of domestic tourism is the lack of supply of a cultural life. Tourism is a “Thled The Chinese Mainland national ceonomy 11-1984 Yor 190 199 9 198 94 ‘change rte (USS: RMB yuu) "7 Nina por capita sneome( RMB sea) e475 uns Nitioal income hilion RMB sua} Lake nse? Papultion ton} nana M23 GNP (ion RMB yuan) id 22 aH Source: Res" wahina’ domesic wns: W Zhan Table Proportion of casi tours Year Siehtseeing and holy MI a Visting elation me Bs Health Sports and clara exchange Bosines 52 4o Conference mo ak other mc Soars Ret, igorous form of this and certainly this deficiency. Noticeably, in. 1996 the domestic tourist arrivals increased only 1.59% over the 1995 figure. It is really mild increase compared to the annual average increase of 17.62% in the first § years in the 1994s, The most direct reason for the decreased rate ‘of growth of domestic tourist arrivals is the increase in ‘transportation fares. (In March and October 1996, fares for train and coach went up twice. Rail fare alone increased 120 in October 1996.) However, China Central Television News reported that domestic arrivals in the first 2 months of 1997 far execeded the number of arrivals during the same period in the previous years According lo state statistics, ca 60 million people are still living in poverty because of the imbalance in China's economic development, and the number of citizens who have the basic necessities for life luding the well-offs) exceeds one billion However, much of the potential demand for tourism isan urban demand, Rural communities being more ‘conservative and traditional, and having less access to communication and. transport networks are currently. less motivated (© travel, even where income levels permit. Therefore, although the potential market for domestic tourism is great, the most optimistic estimates of the current market size would place the figures as being ca 300 million persons in both rural and urban areas, Nevertheless, If we take into consideration the high speed of the improvement of material and cultural lifestyles on the Chinese mainland, and the expanding rate of the domestic tourist market caused by it, the potential market can be estimated to exceed 400 million by the end of this century. If China succeeds in elimi- mpensates for ‘bles Average per cuits tourist expenditure per stip 198 1994 450 SMU soy a0 isp saa nating poverty by the end of this century as it has planned, the portion of the population able to afford tourism spending will be even greater. Therefore, there is a great potential market for domestic tourism. Based on the statistical figures from 1990-1995 in Table 1 and Table 4, an approximate calculation of linear function can be made. The proportional coetTicient of the linear function of tourist arrivals is, 0.7 that of national per capita income is 279.33: and that of GNP is 0465. Under the conditions of this coefficient group, whenever GNP increases. trillion RMB yuan, national per capita income will increase 429.74 RMB yuan, and tourist arrivals will inerease 107.6 million. Based on this development trend the interrelation of the increase of domes arrivals and the growth of China's GNP will remain steady in the coming years. The world economic trend shows that in the years before the next century. the economic ‘growth rate in Asia will still be higher than the World average, while China will maintain an 8% annual increase, According to this rate, if nothing tunexpected happens, the GNP of the Chinese mainland will exceed 8 trillion RMB yuan in the year 2000, Based on the linear similar result of domestic tourism discussed above, tourist arrivals will reach 1 billion, and tourist receipts will exceed 30) billion RMB yuan in the year 2000. Therefore, a ‘conservative estimate can be made that in 2010, the real _market of domestic tourism would he 800 accounting for 60% of the nation's popula- 1d annual domestic arrivals would reach 1.3 billion. There are some factors that would constrain the development of domestic tourism. In terms. of economic development, China is a special country. The difference between China and other developing countries is that its market economy is still at an immature stage: ‘Therefore, travel agencies catering to domestic tourists and damestic divisions of some comprehen sive travel services have corresponding weak-points: # promotion of their products (tourist areas and Trinoraries) is rigid, and the delivery channels are not diversified or wide-spread travel services are small in size and their eapital is limited: ‘¢ there are very few enterprises with a shareholding stem, and if any, their operation is not standardized. Since the 1980s, abundant hotels with the inter national 3-star standard and above have been built, in China, However, if China, as a developing country, wants to develop its domestic tourism, the present number of low and medium level hotels are Obviously inadequate. Investors have been attracted by the good economic performance of luxurioushotels and are not willing to invest in low and medium level hotels. The policy of giving priority to the development of international tourism at the beginning of the economic reform has been the direct cause for this situation, Although there is now an urgent need to increase the number of low and medium level hotels, rational and. long-term plans. should be made in’ accordance with the general layout of the tourist areas. Speculative constructions, should be reduced to a minimum, and at bes eliminated AL present, passenger transportation is the bottle: neck of development. If its growth rate cannot keep) up with the speed of the country’s economic and tourism development, it will be very difficult t reach the goal of I billion domestic tourist arrivals inthe year 2000, In developing tourism on a large scale, China should inerease investment, enhance the training of tourism personnel, enlarge the scale of tourism enterprises, and promote modernization of manage ‘ment. Tourism development is a comprehensive undertaking involving many sectors. Hence, a multi- hierarchical, all-inclusive and coordinated develop- ‘mental strategy ‘ial, These are the challenges industry should respond: The upgrading of a country’s domestic tourism is the natural consequence of nation’s economy reaching a certain level of development. Domest tourism creates needs which consequently vitalize the economy and cause adjustments in the Set-up of production, Development in China is no exception, The amount of currency in circulation as a result ie tourism accounts for ca $% of 1e domestic tourism industry has Chin's doo warm: W Zhang created millions of job opportunities, It is one of the industries that has registered the fastest growth, The Chinese government has consistently encouraged international cooperation in the tourism industry. from which both China's tourism industry and the investors can benefit, International cooperation is sure to have a prosperous. future in developing China’s domestic tourism, Acknowledgements 1 hereby wish to extend my great appreciation 10 Monica Riordan, who is working at the Beijing Second Foreign Language Institute as a foreign expert. 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