The Major Reasons Why the Chinese Are More Inclined towards Holidaying in Foreign Countries - Research Proposal Example

LITERARY REVIEW This paper reveals the important and necessary reasons for the Chinese tourists who have been showing recent interest in traveling to overseas places with a view to spending their holidays with family and friends. The paper also shows the methods, which different corporations undertook to examine the views and requirements of the prospective Chinese customers. The early part of the paper tells the reader the wealth that the Chinese possess. Due to this reason too, they prefer going abroad for recreation purposes. It is due to the reason that they have now higher consumption powers. As a result, they intend to develop strong lavish life style. This attracts them to countries overseas, which provide them with what they see in an ideal holiday destination. Besides, the surveys hence conducted, benefit the companies in knowing on what planes it needs to improve and fortify its image. Also, these surveys helped the companies to know what exactly the Chinese tourists love and expect from their hosts. What the customer likes and dislikes, what he/she needs to feel at home in the destination, etc are some of the questions that have been chosen to be included in the questionnaires. The general perspective of the research can be framed as to find out the reason why the Chinese find it compelling to spend their holidays overseas. The essential objects in this research are the tourism corporations, the Chinese customers and their purchasing power. The relationship between the tourism corporations and the Chinese tourists is of great importance in this context. They have also moved forward and have broken their traditional ties. The facts and figures given in the paper are also authentic and have relevant sources associated with them. Various book sources and also magazine excerpts have been used to explain further the idea behind Chinese burst towards overseas holidays. Moreover, those who have been more than once to abroad for holidaying, also provide the first time consumers with a review of their chosen holiday destination. Some of the reports were also seen which showed the previous trends regarding Chinese tourism. The report also presented facts and figures regarding different classes of people in China with varied consumption capabilities. Finally, it can be seen that the trend is picking up fast and it has been seen that China's outbound tourism has been back to a double-digit growth since October this year despite the negative impact of the global financial crisis. Also, the number of tourists who have been following the trend has been increasing manifolds. This study ultimately proves that Chinese are no longer behind the herd of those traveling abroad for holidays and recreation. INTRODUCTION Consumers form the pillar for any company's profit. Any company's main motive is consumer satisfaction. Satisfaction will affect the consumer's belief about the brand (Bitta, Loudon, 2002). But how does an organization know which consumer to target, what to produce or what do the consumers like to buy for themselves How does it decide which kind of marketing strategy to follow What cultures do the customers follow Culture is composed of public meaning and practices, and associated mental processes and responses (de Mooji, 2004). And most importantly, how does a company know which consumers it needs to target The study of consumers helps firms and organizations improve their marketing strategies by understanding issues explained above (Perner, 1999). Organizations study the needs and requirements of their customers and then target them to increase its overall profits. The most important thing is to understand the psychology of the customer. How consumer motivation and decision strategies differ between products that differ in their level of importance or interest that they entail for the consumer (Perner, 1999). Companies do this, and much more which makes them understand the exact marketing strategy they need to follow to bait customers. There are many applications of consumption or consumer behavior. Marketing strategy is one of them. A company makes it a point to highlight those products, those services, which attract a high percentage of customers towards it. This calls for a proper knowledge and idea about the target customer's demands and likes. Besides this, a customer's likes and dislikes, where he wants to spend and where not, what service gives him satisfaction and which doesn't; all has to be in the books of the company. Once it knows who its targets are, it can work towards accomplishing its goals and attracting more and more customers in the future. For marketers, the major reason for understanding how consumers learn is to teach them that their brand is best and to develop brand loyalty (Kanuk, Schiffman, 2004). There have been earlier studies related to the same topic. Also, they have provided a lot of information as to what brings Chinese tourists to foreign land for spending holidays. Surveys have been undertaken thereby revealing what source is responsible for the same. For example, the work done by writers Beverley Sparks and Grace Wen Pan highlights the study done with respect to the Chinese behavior towards foreign land. The only drawback of their work is that, they have given importance only to Shanghai. Whatever survey they conducted was done on the people who lived in shanghai. The other Chinese cities were not considered and hence, an exact result cannot be formed. Only a part of the whole outcome can be guessed based upon their study. Hence, it becomes important to take a majority of Chinese cities into consideration. Even in times of economic crisis and growing competition, Chinese inbound, domestic and outbound tourism continues strong growth (COTRI, 2009). The number of outbound travelers from the Chinese mainland reached 34.52 million in 2006, up 11.27 percent over the previous year, China's Ministry of Public Security said (Goldkorn, 2007). Thai officials predict that the number of visitors from China will top 1 million next year, up from only 21,000 in 1987 (Montlake, 2005). China's outbound tourism has been back to a double-digit growth since October this year despite the negative impact of the global financial crisis and the outbreak of A/H1N1 flu, according to a recent report from the China Tourism Academy (China Knowledge, 2009). In this paper, a particular set of customers is highlighted due to various reasons explained in the following paragraphs. China, in the early times, was never inclined towards recreations such as holidaying abroad. Only recently has its citizens started showing interest in going out of country with their families, to spend time and spend holidays. The reason that China is being given importance in this paper is due to the reason that, having a staggering population of 1.3 billion, Chinese tourists has created immense excitement among the foreign countries, especially European countries. In the first half of 2007 the outbound travel market has increased by 14.04% (Schaefer, 2007). Also, it has been seen that the purchasing power of the Chinese people has increased significantly. This is another reason why they have begun to move out for holidaying purposes. This paper hence, probes the behavior of the Chinese consumers to overseas holidays. OBJECTIVES The main objective of this research paper is to determine the major reasons as to why the Chinese are more and more inclined towards holidaying in foreign countries. The basic reasons that make this study important, the keywords that will be used throughout the research paper are contained in this part of the study. Marketing strategy is the strategy followed by companies, which they use to bait customers and earn huge profits. Similarly, there are countries, which maintain their hotels and places of interest for visitors and tourists. They too follow various marketing strategies to attract as man customers as possible. It finds out what are the things that tourists and visitors like and what are the schemes in which they are ready to invest in. For example, hotels launch schemes wherein they offer various discounts to their customers, especially foreign tourists. Tourists, on the other hand, prefer places, which offer them the best deals and where they can spend their entire holidays with family and friends. The rapid growth of outbound tourism indicates the further opening of the country, and its tourism development has begun to follow the normal track, and the industry has become more mature (Guangrui, 2006). Perner (1999) defines Consumer Behavior as- "The study of individuals, groups, or organizations and the processes they use to select, secure, use, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society." From the surveys that have been conducted, it was found that among the many countries, the people in China were wealthier. They avoid risk when traveling abroad (Reisinger, 2009). They do not like to be left on their own and require constant care and attention from their hosts (Liu, 2006). They also started showing interest in foreign lands for holidaying purposes. According to a report by the Hurun Research Institute, various cities of China were surveyed wherein the consumption capabilities of the people was found out. It was inferred that Beijing came in first place, followed by Shanghai and Shenzhen. According to that report, if you want to be considered a member of the nouveau riche in Beijing, a basic consumption standard of at least 87 million Yuan each year (approximately 12.73 million USD), is required. About 51,000 people in China have such consumption capability (Medeiros, 2009). Such surveys are carried out to determine the purchasing power of the citizens. Hence, a rough data can be tabulated and it can be observed what class of people is expected to show interest in investing overseas. Tourism corporations and other related organizations then target such high spenders. They understand the mentality and behavior of the wealthy customers and then make strategies to attract them to their countries. For example, they provide them with reasonable stay great facilities, where the customers can relax and make the most of the high life style. The most important thing that these organizations or corporations take into consideration is that they target only those set of consumers who are able to spend heavy amounts for their recreation and are willing to do so too. The tourism corporations make use of the television advertisements, pamphlets, hoardings and other means of communications where they can reach their prospective customers and at least get them thinking. Those who are willing to go for the offer then contact the respective personnel. According to the report presented by the Hurun Research Institute, the numbers of people who fall in the category of those who have 10 million Yuan are around 143,000. But, they prefer to rest with nature. They are not inclined towards going out of country for holidaying. Also, a rich family from Shanghai affords three vacations a year. Their list includes the Spring Festival family trip and holiday travel to other countries like Italy and France. The family's child is around 14 years old, having been sent to study an elite boarding school in the United States and plans to attend university there (Medeiros, 2009). Similarly, the report also presented facts and figures regarding different classes of people in China with varied consumption capabilities. Using these numbers, countries take charge and work towards improving their services and facilities, thereby attracting more and more Chinese customers. CONCEPTUAL MODEL Conceptual models are broader and more fundamental than scientific theories in that they set the preconditions of theory formulation. In fact, they provide the conceptual and methodological tools for formulating hypotheses and theories (Jarvelin, Wilson, 2003). Engelbart (1962) says that defining a conceptual model would in turn mean defining the following parameters- Essential objects or components of the system to be studied. The relationships of the objects that are recognized. What kinds of changes in the objects or their relationships affect the functioning of the system and in what ways. Promising or fruitful goals and methods of research. The essential objects in this research are the tourism corporations, the Chinese customers and their purchasing power. The relationship between the tourism corporations and the Chinese tourists is of great importance in this context. The surveys are conducted which gather information regarding the increasing venture of the Chinese spenders to foreign lands. The tourism people who are concerned with managing the foreign tourists' visits then utilize this information. The surveys that are conducted emphasize upon several traits and behaviors of the consumers. For example, a few of them are as follows- What sources of information do the customers have What is their purchasing power What age group do their prospective customers fall into What facilities, scenic beauty attracts them What are their family customs and traditions What kind of advertisement attracts them What places they would like to visit regularly with their family What are the things that they don't get in their country, or what are the same things that attract them overseas These, and some more are the primary concerns of the persons who build the survey. Another theory that crops up is the concept of Mall shopping. There, the customers go not only to shop, but also to socialize with friends and even strangers, attend concerts and functions. Besides, the mere location of the shopping complex is enough to attract hundreds of customers. There are various hypotheses that are formed- Hypothesis 1- It is assumed that most of the Chinese cities have a purchasing capacity more than 10-15 million Yuan. As has been seen in the report presented by the Hurun Research Institute, people in Beijing have 87 million Yuan per year to spend. Some 116,000 residents in Shanghai have a purchasing power of around 10 million Yuan. This proves that the overall consuming capacity of the Chinese is huge and hence they are expected to spend it lavishly. Hypothesis 2- Many Chinese citizens have broken free from traditional ties, thereby showing interest in foreign land. Initially, they were not so keen in moving overseas for recreation. They preferred to stay in their country, close to nature. Even now there are some Chinese who still want to stay close to nature. For many of them, keeping their money and assets in bank gives them a sense of security, while for some, keeping low-key and leading a comfortable life is the mantra. Hypothesis 3- Among most Chinese, those in Shanghai are more inclined towards overseas holidays. Shanghai nouveau riche's household consumption has two houses: a villa in suburbs and a luxurious apartment in downtown. In their house, there are not only collections of luxury porcelain, jade and other antiquities, but also the works of famous painters (Medeiros, 2009). Also, according to the report, the citizens of Shanghai prefer to spend their holidays in foreign countries almost three times a year. Moreover, they tend to shop from other countries like Europe, Kenya and Tokyo. Females prefer to buy cosmetic products from abroad. Some of them also send their children for further studies in foreign lands. Hypotheses 4- Chinese tourists prefer to shop from malls and watch a movie there, meet friends or simply stroll the place, hedonism. A conceptual model is shown above depicting the Mall Activities and the consumption of the services provided by the Mall. Visitors and tourists meet with friends and spend time with their family. Also, they may purchase expensive products like cosmetics, clothes and the like. They may also make use of the ATM machines. The latter comes under the consumption of services. There are also hedonic activities that the Chinese tourists go through. For example, having fun, making the most of their holidays, going for adventure, shopping and also enjoying the services provided by the hotels, other shopping complexes and malls. Here, "foreign countries" can also replace mall activities. The above model shows the flow of information gathered from the Chinese respondents. The data provided by them is then analyzed and the results obtained. Sometimes due to political instability, tourisms corporations have to face troubles. The results of the study demonstrate the existence of significant differences on the way that travel agents perceive the impact of the various types of political instability on the tourism industry (Seddighi, Nuttall, Theocharous., 2000). In other cases, where the surveys are conducted peacefully, relevant information is squeezed from the responses of the respondents. Then, based on the responses, the hotels and other recreation organizations decide how to attract prospective customers and also, how to maintain those who have been coming for some time. Rich people in Shanghai usually don't follow the crowd since they are rational and clear-headed with their expenditures. But they know it really well how to celebrate life. They have plenty of long vacations and go abroad frequently (Medeiros, 2009). Unlike other people in other cities of China like Shenzhen, Shenyang, Chengdu, Hangzhou, Zhejiang and the like are not much inclined towards spending time and money abroad. Some of the people are so traditional that they prefer to stay in their hometown while the rest of them want to spend time with nature. Those hotels, shopping malls and other recreational places, after experiencing the reaction of the visitors and guests, analyses whether there is any scope for improvement in their services. Also, they make sure that they keep their regular customers intact. METHODOLOGY The methodology section of this paper would contain the specific data collection methods and the data analysis methods. The general perspective of the research can be framed as to find out the reason why the Chinese find it compelling to spend their holidays overseas. The earlier paragraphs have already given the reader an idea about the purchasing power of the various sets of people in China and its cities. People who have very high consumption power are bound to go out for recreation. They automatically develop a taste for expensive things and have a tendency to spend lavishly. Moreover, the Chinese have also begun to let go of their old traditions and have started looking upon foreign lands for their fun quotient. Not that they don't have such facilities in their own country, but, since they have a tendency to spend a lot and also, foreign lands provide them with facilities that they get immensely attracted to, all make up for their sudden love for other countries, especially Europe. Now, hotels, malls, and other recreational places need to get information regarding the customer's likes and dislikes and preferences. To do this, they conduct surveys where they hand out questionnaires to the people and ask them to answer the questions. Based on the responses that they get, they try to incorporate those facilities and services in their system, which would help in attracting wealthy customers. The next issue is how to conduct the survey. Now, Chinese have various sources of communication from where they can be contacted. According to some surveyors, mailing is a good option since; almost all the high-class Chinese citizens have an access to the Internet. Especially the youngsters are more active in this respect. The surveyors usually mail the prospective customers a questionnaire where they are questioned about their likes and dislikes, preferences and things that they feel attract them towards a particular country. The evidence obtained suggests that television programs are an important source of information used by Chinese people to learn about target destinations. The role of the Internet as an information source was also shown to be substantial and stands to have a stronger impact over time (Sparks, Pan., 2008). Data collection and data administration may affect the validity of cross-cultural research (Chebat, Michon, 2004). But since we are talking only of Chinese tourists, there is not much scope for biased responses. The validity will remain intact since here one has to only know the requirements of one set of people. Since, it is also known from a study that Chinese use television as the mode of information the most, hence, most overseas countries put advertisements on the television to attract these customers. There are also Focus groups, containing a number of people who go to various places and talk to the prospective customers. They don't let them know that they intend to know their views on a particular topic. They just talk normally to them. They ask the people the following questions- What places do they usually like to visit with their families and friends Which is their favorite place to stay when they are holidaying overseas What kind of response do they get from the people of other countries Do they think that they might not visit a particular place next time, and if so, what are the plausible reasons What do they like about the place that they visit frequently What activities do they do at their holiday destination Do they think they are satisfied with the kind of services the place provides them These and many more questions are posed to the people to know their views. Also, views from those who frequently visit a place are compared with those of the visitors who may be visiting a particular place for the first time. The reviews greatly help in forming a positive opinion about the holiday destinations in question. A study was conducted where such past trip experiences were shared with those traveling for the first time. This study indicates that past trip experience significantly influenced travelers' use of information sources (Chen, Gursoy, 2000). Once the data is collected, it has to be analyzed properly so that proper inferences can be obtained. It should be found out in which age group do these respondents fall into. This should be the first step towards data analysis. Next, these groups should be separated from each other and their respective views should be analyzed. Their activities abroad must be taken into consideration, i.e. it should be known what they like to do when they come abroad. They should be further categorized in those who like shopping, dining, visiting scenic places, museums, visiting malls for various hedonic activities. Those who belong to the "nouveau riche" must be given attention since they are the ones who invest heavily in these countries. Also, their shopping and recreational attributes must be realized. This data is based on the responses obtained from the respondents. Based on their responses, it is important for the tourism corporations abroad to keep an eye on the services provided to the customers, especially Chinese visitors, since they are the ones in question. It should be known how they react to the services and facilities provided by hotels etc. the data must be analyzed in such a way that all the relevant likes and dislikes of the Chinese tourists could be inferred. The authenticity of the data must be checked at all levels. It should be made sure that the data that is being taken for analysis is genuine and has not been tampered with. The focus groups that have been talked about in the earlier part of the paper may face such a problem. The best way to obtain data is to do it through questionnaires or face-to-face meetings. These methods may take a lot of time, but unbiased and genuine data is guaranteed. Then when the data will be analyzed, a true and reasonable result can be obtained. CONCLUSION From the paper it can be observed that many Chinese tourists have started choosing foreign lands as their holiday destinations. It is due to the reason that they have now higher consumption powers. As a result, they intend to develop strong lavish life style. This attracts them to countries overseas, which provide them with what they see in an ideal holiday destination. Earlier, they did not follow this trend, but now due to their changed mindsets and a purchasing power in millions, they are expected to show more and more interest in investing in foreign lands. It is seen that some of the big money earners in Beijing have two to three estates in foreign countries. They also prefer to do their shopping from other countries. Some also send their children for higher studies abroad. It can be concluded that the purchasing power of the Chinese has increased manifolds, from some 5 million Yuan to 10 and even 100 million Yuan. Their consumption behavior has also changed. They shop and dine at expensive places and also like to spend holidays abroad. REFERENCES Bitta, A.J.D., Loudon, D.L. (2002). Consumer Behavior. Pg.25. Tata McGraw-Hill Publishing Company Limited. Chen, J.S., Gursoy, D. (2000). Cross-Cultural Comparison of the Information sources used by first time and repeat travelers and its marketing implications. International Journal of Hospitality Management. Vol. 19. Elsevier Science Ltd. China Knowledge. (2009). China Sees Outbound Tourism Boom in 2009. China Knowledge Online. COTRI and Dragon Trail. (2009). Press Release: November 23, 2009. China Outbound Tourism Research Institute. De Mooji, M. (2004). Consumer Behavior and Culture: Consequences for Global Marketing and Advertising. Pg.28. Sage Publications, Inc. Engelbart, D.C. (1962). 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