Rising Yuan Benefits Outbound Tourism says ACFA

More Chinese tourists are traveling to overseas destinations than ever before due to the rising purchasing power of the Yuan and rising wages as more people enter the burgeoning middle class due to China’s industrialisation.

Wages have risen over 20% in China and as the cities struggle to attract more workers, wages are set to continue rising. In fact many factories are now opening in country areas to be more attractive to local workers who will not have to relocate to a big city to find a high paying job.

But although the Yuan breached the psychological mark of 7 Yuan to the US dollar in late 2008 and has slowly continued to appreciate reaching 6.64150 to the US dollar this week it is not likely to cause an avalanche of tourism to the States at this stage or make US businesses more competitive.

Hong Kong Experiences Chinese Tourist Boom

The same cannot be said for Honk Kong though which is benefiting from a significant rise in shopping tourism akin to that which it experienced from western tourists before 1997.

“More people have called to inquire about our Hong Kong tour packages than usual,” said Guo Guang, manager with ctrip.com, an online travel service.

So far, the number of customers who purchased Hong Kong tour products from ctrip.com has increased by 70 percent year-on-year, he said.

At present, 85.7 Yuan will exchange for HK$100 down from nearly 100 Yuan two years ago. It is almost as good for Chinese to go to Hong Kong as it is for Australians to go to New Zealand where our dollar buys 30% more says Australia China Foundation Chairman, Joseph de Varda..

“It is a bargain to shop in Hong Kong now, not to mention that many things in Hong Kong, such as imported cosmetics and luxury watches, are already much cheaper than on the mainland,” said Zhang Liangyu, 28, a Beijing resident who was planning to visit Hong Kong during the coming holiday period.

Chart showing the rise of the HK dollar against the Chinese Yuan

The rising value of the Yuan is a boon for the new middle class in China who are taking to International travel with a new vigor.

Click on image to enlarge

As for the inbound market, experts have suggested that industry operators need to work harder on their product design and promotion. Li Xinjian, associate professor with the school of tourism management at Beijing International Studies University, said that while many foreign tourists have prepared themselves for the appreciation of the Yuan against the US dollar, some foreign tourists from US dollar countries might drop their plans to visit China if the Yuan rises too much .

“Domestic travel services must design better routes and strengthen the promotion of their products to maintain growth in the inbound market, in order to offset the negative influence of the appreciation on the inbound tourism market,” he said.

Australian Tourism to China Set to Explode says ACFA Chairman

ACFA Chairman, Joseph de Varda says “Australian tourists and business executives are benefiting very nicely from the rise in the value of the Australian dollar against the Yuan”. “It has never been cheaper to travel to China and as more tourist resorts open or are better marketed to the west, we can expect to see many more tourists heading to China for their holidays” he said.

Chart showing the rise of the Australian dollar against the Yuan.

With China's holiday resorts beckoning and the AUD rising in value there has never been a better time for Australians to travel to China

One example Mr. de Varda pointed to was the fact that China has many beautiful Ski Resorts in Heilongjiang Province that could give the more expensive US and European centers a run for their money especially for Australians but China needs to increase the number of Chinese workers at these resorts who not only speak English but understand our culture.

1 comment for “Rising Yuan Benefits Outbound Tourism says ACFA

  1. November 13, 2010 at 5:48 pm

    Couldnt agree more with that, very attractive article

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