Invisible Cities


Evolution in Tourism Industry in China



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2.2 Evolution in Tourism Industry in China


It is a truism that the transmission of leadership influences not only the development of tourism industry, but also the entire economy, thus the evolution tracks for both economy and politics are synchronous, also mutually interacted. When overviewing the development of tourism industry in China, the most impressive feature is the inevitable influence from the leadership on the change of tourism policy. Consequentially, the whole process of evolution can be divided into three phases, regarding to different policies implemented in different time periods.

2.2.1 First phase: a diplomatic channel to establish friendships (1949 – 1978)


Both tourism supply and demand in PR China in this period of time were scarcely explored, while the whole country initiated to recover from the ruin of the war. But the ideology of socialism expounded by the Chairman Mao and his absolute position in the leadership had essential effect on resulting in that circumstance.
Researchers have drawn their conclusion very clearly that both domestic and international tourism had been suppressed under Mao’s era of the leadership (Sofield & Li, 1998) (Gao & Zhang, 1983), and it was used as a diplomatic channel solitarily for connecting China to the foreign countries (Yan & Bramwell, Cultural Tourism, Ceremony and the State in China, 2008). The destinations opened to the tourism were strictly limited, which less than 12 cities or regions had permission of receiving foreign tourists until 1978 (Richter, 1989).
Furthermore, Uysal, Wei and Reid (1986) had confirmed that fact that under the central-planned economy system, all the tourism businesses were national owned and operated, and certainly served only for political purposes. They also further analyzed foreign tourism in details by marking off a more precise timeline, based on the changes in both internal and external political environment. The tourism industry from 1949 to 1956 was solely directed to be ready for the guests from USSR and Eastern Europe, who shared the same socialism ideology in their countries. But in the early 1960s, with a serious disagreement between the leaders, the collision against USSR almost utterly destroyed the foreign tourism in China, dropped more than 2/3 in the total number of tourists. Then an adjustment of diplomatic policy came out, aiming to connect China to the rest of the world, resulted in a radical increase of visitors from other western countries, where became the majority of the origins of inflow tourists in 1964 – 65. The real catastrophe had been brewed for the decade from 1966 to 1976 – the Great Cultural Revolution caused a massive chaos in China in every aspect, any development of tourism was vanished as well.

2.2.2 Second phase: a gate opened to the world (1979 – 2000)


As mentioned in the last chapter, the advent of a significant milestone of modern PR China was in 1978, the Third Plenary Session of 11th Central Committee, ensured the leadership position of Deng Xiaoping and revised the ideology of socialism economy, shifting the main task of China from political struggle to economic modernization (Airey & Chong, 2010), appeared an obvious division of the economic forms before and after 1978.
It should be noticed that Deng’s “Open Gate” policies did not changed the dominant position of Communist Party, but adjusted the control of government in the economy, to some extent, liberalized this market (Yan & Bramwell, Cultural tourism, ceremony and the state in China, 2008). Tourism, as the tertiary industry, relative to the first (agriculture) and second (manufacture) industry, became a contributor of GDP – the first and foremost indicator of measuring a industry’s economic contribution in China – at the first time.
However, all the industries were enlightened of market freedom thanks for the implementation of “Open Gate”. This phenomena has reflected that one of the political-economic feature of contradictory tourism development in China till now, which is, on one hand, authorities desire to arrange tourism as the first pillar in order to increase GDP, but on the other hand, the first and second industries are inclined to get more supportive policies while tourism is left aside (Feng, 2011).

Still, tourism attracted much more public attention with the deepening economic reform, 24 provinces made tourism industry one of their leading industries in their administrative areas (Zhang, Pine, & Zhang, 2000). As it has become an acceptable commercial activity under the socialist economic system, the policies of international tourism changed towards the aim that maximizes the foreign tourists in all possible ways (Choy, Guan, & Zhang, 1986). The restrictions for foreign tourists were largely relaxed, lead a boost of visiting in the following years, for various purposes of trip, covering business, recreational, and etc. China opened its gate gradually to their international guests, 200 destination allowed entrance of foreign tourism in 1984, and it became 888 in 1992 (Richter, 1989).


As a result, the benefits gained from foreign tourism were concerned to gravitate from political agreements to economic revenues, which mostly contributed by the remarkable increased foreign exchange income, but it does not mean that the political or cultural impact of tourism has disappeared, on the contrary, still contributed to strengthen the mutual understanding in every aspects (Tisdell & Wen, 1991).
The most convincing evidence of this growth comes from statistical numbers. The total international tourists arrived in 2000 was nearly 83.5 million, while it was only 1.8 million in 1978 (China Statistical Information and Consultancy Service Center, 2000). Furthermore, the foreign receipt increased with a growth rate closed to 20% per year from 1979 to 1989 (Tisdell & Wen, 1991). It generated more than US $16 billion of foreign exchange receipt in 2000, which were only 14.1 in 1978 (China Statistical Information and Consultancy Service Center, 2000). In 2000, 1.64% of GDP depended on international tourism. Though it was a relatively small number at that time, it initiated high added-value activities in the modern service industries (Oosterhaven & Fan, 2006).
Tourism–related industries have experienced a rapid expansion during this time period. For the accommodation, new equity joint ventures with foreign capitals were made for hotel businesses, contributed a real stock. The most famous example is the luxury “Great Wall Hotel” opened in June 1984; China provided land, labor and basic construction, while the American partner developed architectural planning and interior work, also bearing half of the financial cost (approx. U.S. $36 million) (Oudiette, 1990).
Regarding to the transport sector, new airports started to construct continuously in many cities. The number of travel agencies specialized international tourism also significantly increased, except for traditional commissioned travel products (transport, accommodation, sightseeing and catering) their services became more comprehensive and customized, e.g. interpret and translation (Uysal, Wei, & Reid, 1986).
In addition, the human resource of tourism industry has been improved. The quality of service came to be an issue, and the reputation began to play a role, while it was a non–existed topic in the last phase, Mao’s era (Uysal, Wei, & Reid, 1986). The first higher education institution of tourism studies, Shanghai Institute of Tourism, was founded in 1979. Since 1980, China National Tourism Administration started a study fund for several universities to help them set up tourism-related program. Till 2000, there were 251 programs was founded in higher education institutions with 73,586 students (Zhang & Fan, 2005).
The richness of Chinese culture had been recognized, and heritages already been commercialized as a tourism asset to promote more financial incomes of the localities, since the main attractiveness of international tourists were, and still are, those destinations (Sofield & Li, 1998). Some festivals related to these culture heritages attracted tourists as well, for example, the celebration of Xiaolan Chrysanthemum Festival in Southern China, attracted 140,000 tourists came from overseas (mostly Hong Kong and Macau) in 1979 (Siu, 1990). This festival continued in 1994, it even triggered real estate marketing in tourism, which was forbidden in the last decades (Sofield & Li, 1998), for example, the avenue of displaying chrysanthemum was sold by $20 million (Siu, 1990).
However, integrating the cultural heritages into the business exploration made the visits to those places inclined for the purpose of entertainment, while the educational meaning, which is another important function of heritage visiting besides of economic benefits, was lost (Sofield & Li, 1998) (Li, Wu, & Cai, 2008). At the same time, the historical and intrinsic value in the heritages had also been put in danger, since the legislation of heritage protection was not enough completed, or even been ignored, because the localities urged to increase income receiving by opening of heritages visiting (Hultsman, 1995). Furthermore, linking heritages to commercial world also has created a worrying situation for both cultural and natural heritages, since tourism has been criticized as a source of overexploitation (Saenz-de-Miera & Rossello, 2013). In China, the issue of sustainability of heritages tourism only caught public’s attention from 1996 (the year of first academic paper of this issue published), which was almost 20 years later than its first being explored (Li, Wu, & Cai, 2008).
Tourism demand is vulnerable to the instability of political situation. The political events, such as terrorist attacks, riots or international war, will significantly lead to an adverse effect on tourism demand, since it is very sensitive to the safety in the destination, and tourism is usually closely related to peace and enjoyment (Arana & Leon, 2008) (Breda & Costa, 2006). The fear of this kind of event is what tourist always trying to avoid, and moreover, tourists can also become easy targets, at least will perceive increased risk (Sonmez & Graefe, 1998; Lepp & Gibson, 2003). It does not matter of victims’ identity, or perpetrator’s motivation, if it would harm people’s body and life, the image of destination will defect and tourism demand will decline (Pizam, 1999). Furthermore, mass media is usually involved in reporting political turmoil or terrorism attacks, which disseminate immediately to a broader level of international attention (Sonmez & Graefe, 1998).
This was the case happened to China. The political conflict in Tiananmen Square (Beijing) in 1989, slumped hotel occupancy rate in Beijing to under 30 percent, while more than 300 groups cancelled their trips (Sonmez, 1998). In general, Chinese international tourism sustained a U.S. $420 million loss of foreign tourism receipts, 18.92% decrease comparing with 1988 (Tisdell & Wen, 1991). Later, a survey in U.S market shows that the interest of visiting China was significantly declined due to this event and its damage of attractiveness to tourists (Gartner & Shen, 1992).
However, the damage of terrorism is recoverable. The tourism inflow in 1990 rebounded, and kept growing for the following years, with a 20% increase per year (Lim & Pan, Inbound tourism developments and patterns in China, 2005). This might resulted from the remaining of “Open Gate” policy, in spite of that tragic political turbulence occurred.
Finally, comparing with the radical change in 1978, the end point of time for the second phase is rather obscure. China had experienced another general election of the Central Committee, but fortunately, there was no drama of completely changing the fate of this country again.

2.2.3 Third phase: a platform to show the image (2001 – present)


The year 2001 was chosen for several reasons. The most predominating reason is that China joint WTO in 2001 caused another flourish of policy adjustments of economy in the international level, promising that will eliminate restrictions on, such as discretion, foreign ownership, and entry barriers (Mattoo, 2003), thus the number of visiting for business purpose significantly higher than the past phases. Another reason is that Beijing won the bid of 2008 Summer Olympic Games in 2001, urged Chinese government to make substantial efforts on openness and modernization, including building up tourism infrastructure and improving service quality, in order to show a favorable image to all the visitors during the event (Longman, 2001). Furthermore, the flexibility of entry has grown by permitting individual visiting (Oudiette, 1990). In general, it has been a time period of accelerated development of tourism industry ever in the history.
There is also prosperity of academic researches, especially conducted by Chinese scientists. Comparing with the past decades, the numbers of studies in smaller geographical scales (i.e. Xuan, Lu, Zhang, & Yang, 2002) and for specific events (i.e. Wang, Lu, & Xia, 2012) have been increasing. This phase keeps a continuation of expansion of growing and opening for international tourism, and with more scientific articles published, more facts have been revealed.
Firstly, Ma et al., (2008) discovered the uneven spatial distribution of tourist visiting in the regional level. The causation of this difference between the regions can be categorized to two reasons; the first one is heritage resource (Oudiette, 1990), while another is inequality of economic development (Jackson, 2006).
The rich reservoir of heritages resources is the most important factor of initiating a favorable outlook for international visitors (Oudiette, 1990), thus the major tourism assets for Chinese tourism industry. Figure 1 depicted the heritages on the map of China. The tourist visits for the heritages in some destinations are always popular, for example, Xi’an in Yellow River Basin Group, Chengdu (Sichuan Province) and Kunming (Yungui Plateau) in Southwestern China Group.
Figure 1: World Heritages Sites in China

Source: (Li, Wu, & Cai, 2008)


The formulation of these heritages are linked to geography and historical causation. Taking the southwestern heritage group for an example of geographical reason, the special climate that has an average of 25-Celsius degree throughout the year and the ethnic diversity because of the concentrated residence of minorities in this region, composed its attractiveness (Oudiette, 1990). The historical reason of those attractive destinations is far more than obvious, since the ancient civilization has bequeathed numerous inheritances to China, e.g. Terra-Cotta Warriors in Xi’an, a miracle equivalent to pyramid in Egypt.
Figure 2: East-West division of wealth distribution

Source: (Jackson, 2006)


Regarding to business visits, the eastern China has been reached more. It can be explained by the amount of foreign direct investments. The white provinces on the map of Figure 2 absorbed 86% of FDI in 2002 (National Bureau of Statistics, 2003).
Albeit there is not data showing how many tourists visited eastern provinces for business reasons, the total numbers of visiting still give a comparable result. Again, the white regions received 80% of international tourists and 90% of foreign exchange earnings in 2002 (National Tourism Administration of the People's Republic of China, 2002).
Therefore, the geographical concentration exists. Ma et al., (2008) identified three hotspots for international tourists, which are the same as the economic centers (the center city is shown in the bracelet):
Circum–Bohai Sea Region (Beijing)

Yangtze River Delta (Shanghai)

Pearl River Delta (Guangzhou, including Guilin)
The prosperity of tourism in these three hotspots is resulted from the richness of all kinds of tourist products, e.g. histories, cultures, economics, social and natural resources. These tourist products are complementary to each other, and competitiveness, or attractiveness of these regions is strengthened since they are adjacent geographically, which is the most crucial reason of the formulation of these hotspots covering several cities (Zhang, Gu, Gu, & Zhang, 2011). Another finding is that these three hotspots fall in the eastern part, shows economic development has larger impact on international tourism in China, since Figure 2 depicted that the eastern China has more wealth distributed.
Furthermore, all the popular tourist destinations for both heritages and business have reflected three main categories of visiting purposes for international tourists. The first two purposes, can be classified as leisure (recreational) purposes, and the last is business purposes:

Cultural relic and heritages: Beijing, Xi’an

Spectacular natural scenery: Guilin, Kumming

Transferring knot: Shanghai, Guangzhou


In addition, with the flourish of the total tourist inflow, new routes of travelling start to absorb it as well, e.g. Tianjin, Hangzhou, Shenzhen (Ma, Zhang, Bai, Li, Cheng, & Liu, 2008).
Combining with the distribution of heritage attractions, tourists tend to explore in the eastern part than the western part of China, in line with the regional economic development level. The policy support of regional development is critical for this prosperity, and in this phase, policy makers came up with more integrated approach to promote international tourism. For example, provincial level of conferences, like ‘Regional Annual Conference of Economics Cooperation and Development’ in 2001, ‘Regional Periodical Political Conference’ in 2004, were organized in YRD region, aiming to strengthen the cooperation of tourism industry as the prominent activity across the cities in this region (Feng, 2011).
In the previous phase, leisure had dominated the purpose of visiting of the international tourists; however, it has fell below 40% of the total number of the visitors. Tourists come for business increase fast, was slightly less than 30% (Ma, Zhang, Bai, Li, Cheng, & Liu, 2008).
It is not surprising that leisure and business visitors are two big market segment of international tourism industry in China. But niche markets also worth to be investigated. For example, adventurers are dreaming to embrace the mountains in Tibet, or hike in the Gobi desert in Xinjiang; devout believers of Buddhism are looking forward to embarking on a pilgrimage to the Potala Palace. It is difficult to exhaust the demand of every niche market, because the diversity of tourism products that China offered cover a really wide range of tourist attractions, e.g. event, sport, industrial, medical and adventure (Feng, 2011).
However, there has been initiated a unique niche market appeared in this phase, without any precedents beforehand, because of being the host of mega events. The mega events of global range and worldwide significance are frequently associated to a boost on tourism and economic development (Fayos-Sola, 1998). Beijing was expected this increase brought by Olympic Games 2008, as well as Shanghai and its Expo 2010.
However, it does not show a favorable result of international tourism in this event. It was expected to receive half million of international tourists flock into Beijing for Olympics, but only 389,000 was achieved, decreased 7% comparing with August 2007 (Dyer, 2009). This is contradictory to the research result that mega sport event like summer Olympics would increase 8% of tourist arrivals in the same year (Fourie & Santana-Gallego, 2011).
Several reasons can explain this decline, for example, China tightened its visa application early in April, so the business visitors dropped significantly. Also the terrorist attack happened in Tibet in March, somehow pin a negative impression of risk on tourists (London Evening Standard, 2008).
Another Olympic-equivalent mega event, Shanghai Expo 2010, might have positive effect on international tourism. During this half-year event, about 4.2 million foreign visitors devoted themselves in the feast of interesting exhibitions and performances (Barboza, 2010). In general, inbound tourist arrivals in Shanghai grew significantly, with a 30% increase per month from May to October 2010, comparing with the same time period in 2009 (Shanghai Statistical Bureau, 2011).
These results of numbers may give us a brief that the mega event in Shanghai is slightly more successful than Beijing, which is also true in the practice. A tourist behavioral intention analysis has supporting evidences of the success of Shanghai Expo, by showing an increase of perceived value of Shanghai (Wang, Lu, & Xia, 2012). Feng (2010) summarized projects to improve the quality of tourism experience for Expo 2010. Firstly, Shanghai City Tour Card was issued, mainly used for public transport, and was accepted by more than 100 local stores, tourist attractions and etc. to give discounted prices for the cardholders at the same time. It is also integrated tourism in Shanghai into the whole YRD region, in another five cities (Suzhou, Hangzhou, Ningbo, Jiaxing, Shaoxing), cardholders still are able to get discounted prices in certain touristic places. Secondly, the municipality introduced the ‘High Quality Regional Tour Packages’ including 96 qualified regional tourist attractions officially, later 55 another tour packages in Zhejiang and Jiangsu Provinces also joined this package, created an integrated and holistic tourism image for the entire YRD region (Feng, 2011).

Several infrastructure construction projects were conducted to guarantee the satisfying experience for the visitors coming for the big events. Since air is always the main transport mode for international tourists, Terminal 3 of Beijing Capital International Airport was founded in 2000 and started to operate in February 2008, just before the Olympics. The same for Shanghai Expo, Terminal 2 of Hongqiao International Airport in March 2010, to meet the capacity requirement of large inflow of tourists for Expo (Travel China Guide, 2013). Moreover, some flagship projects turned to be new landmarks. The national stadium in Beijing and permanent architectures of Expo, already became a popular place of interest, implying a sustainable success of the mega events (Shanghai Municipal Tourism Adiministration, 2010).


Other facts of international tourism are also discovered. Briefly, regarding to accommodation, hotels with 5 and 4 -star qualification are still preferable. For catering, tourists are willing to taste local flavors, but the food service of their origins is also indispensable. In addition, souvenirs easy to take away are more favorable, e.g. special local handicrafts, silk clothing and accessories, and Chinese tea (Ma, Zhang, Bai, Li, Cheng, & Liu, 2008).
The available data shows total number of international arrivals increased from 89 million (2001), to 262 million (2013), which reached the peak of 271 million in 2012. Foreign exchange receipt increased from U.S. $1.7 billion (2001) to $4.7 billion (2013).
Finally, the State Council has taken a long-term vision of development for tourism industry. As an important composition of modernization, the reform of tourism industry is aiming to be more deeply implemented, and service optimization and sustainability will be the new issue of focus. By expectation, in 2020, tourism industry will contribute 5% of Chinese GDP (China National Tourism Administration, 2014).



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