China’s travel industry is growing exponentially on the web, which is the preferred channel for affluent Chinese outbound tourists to find information on foreign destinations. But what is the point of view of traditional brick and mortar Chinese travel agencies? We have the pleasure to publish an interview with Mr Shi Laishun, Vice-President of China Travel Service (CTS), the biggest Chinese, State owned, travel agency.
The CNNIC China Internet Network Information Center www.cnnic.net.cn has just released the lastest figures about the uses of the internet in China. Between the end of 2009 to July 2010 the number of Internet users in China increased by 360 million to 420 million, surpassing the 400 million mark. At the same time the Internet popularity rate increased 2.9 percentage points to 31.8%.
The number of broadband users was 363 million, accounting for 98.1% of the country’s total Internet users. The number rural residents using the Internet hit 115 million, accounting for 27.4% of the total, 7.7% more than that at the end of last year. The number of users above the age of 30 rose to 41%, compared to the 38.6% at the end of 2009.
The CNNIC report showed that the Chinese people are increasingly using the Internet for commercial, entertainment, and communication purposes. In the first half of 2010, more people in China used the Internet and the user base of online applications continued to expand. Commercial applications have been in a spotlight. The number of users of online payment, online shopping and online banks is reported to have increased by about 30%, far more than any other purposes. Social net-working websites, Internet literature and online search services have also become more and more popular. The mobile phone network application developed smoothly, with users focusing more on information and communication.
These figures suggest that the purpose of Internet in China has shifted from information to commerce at an increasing pace. Online marketing has become an essential tool for modern businesses.
As for the travel industry, the Internet has been widely used both by travel agencies and newly-emerging travel websites, and this enables users to receive information, do product and price comparisons and complete transactions online. But for traditional travel agencies, how widely can online marketing be used and is there any room for advancement? How to use online-marketing on targeted clients and increase user retention so as to meet the goal of promoting themed products?
In an interview with China Hospitality News www.chinahospitalitynews.com, Shi Laishun, the vice president of China Travel Service Head Office, said that online marketing is a new media channel for traditional travel agencies and the modern service sector, as well as the whole of modern society. From the point of view of modern dynamic management processes, travel agencies, no matter whether traditional, old or new, big or small, all can take advantage of the method. Shi believes that it would more flexible for small-sized travel agencies to establish an online system. However, such companies will not establish their own websites but will choose to take advantage of the whole Internet. Large-scale travel agencies, on the other hand, will set up their own websites as well as their own online marketing platforms: e.g. Mangocity.com www.mangocity.com, which is owned by China National Travel Service (HK) Group Corporation. Shi also said that these travel information search engines and portals were designed based on different markets. These are open information platforms, where users can get any information they are looking for and release their own products and exchange values.
Online marketing is very convenient. But should travel companies cooperate with each other or establish new platforms? Shi said there are two sides as not every firm will pour money into this. A series of activities, including the establishment of Internet systems, employee recruitment, program development and maintenance and market operation such as operating models, are commercial activities and have profitable precedents. As to whether to invest or not, or how to invest, this is similar to the question that concerned many Chinese decades ago. That is, should China develop on its own, or should it cooperate with the outside world to connect its economy with the rest of the world? So, should travel firms take advantage of the whole Internet or establish their own platforms? Different firms have made different choices, according to Shi. China’s largest travel agency, CTS, and Mangocity.com both are independent corporations and both are subsidiaries of two separate enterprises. Tian Di Lian Wang, which was co-established by CTS and Mangocity.com, comprises the two firms’ products, services, and information. The cooperation between the two results in strong support off line and offers a comprehensive sales network for travel agencies.
Take China’s current tourism sector for example, the companies which do not control resources, have found it more difficult to gain a market share via different of resources. One has to become the controller if it wants to increase its competitive edge. In the meantime, it has to be the creator of market added value, Shi said that CTS aims to become the resource supporter and service provider. Mangocity.com serves as a professional platform offering travel information. Modern technology plays an essential role in connecting new products and new markets.
Shi also said that the effects on B2B brought by online market are all about the strong and weak in market. B2B is more about win-win or about drawing on the strengths of others to offset one’s own weakness. At the initial stage, B2B is about co-existence, later it is about the balance between profits and benefits. If the balance is realized, common development could be possible; if not, the resource controller may back off to explore new sales channels; or the resource controller may ask for more money for Internet support or quite from online marketing.
As a large-sized travel agency, what does CTS think of online marketing and bricks and mortar stores? Shi said that one can not substitute for the other. According to the application papers, most clients prefer to going to stores due to the friendly manner and sense of trust which matter to most young people as well as those who are above average age. On one hand, the Internet doesn’t have these advantages which stores have, on the other hand, stores certainly can not be a substitute for the Internet. Different customers have different preferences, leading to different consumer choices. Shi explained that stores can better represent a firm while communicating person in person with customers. The Internet is a platform which offers around-the-clock trading and all kinds of information. The two will have different results based on different targets but they are both very important for travel agencies. To be specific, the online marketing appeals more to young people. The online comments and online payment suit semi-self-guided tours and individual tourist groups better. According to official figures, the age of the Internet user base spans from 28 to 35 while users aged between 17 and 35 view websites most. They start by searching for destinations, features and prices, and then they will decide which agency to cooperate with. All those steps they take determine that they would prefer online trading. As a result, romantic and adventure tours are usually put online.
Online marketing has its disadvantages while bringing conveniences to consumers. Shi said the biggest problem is trust. First of all, there should be a trust system. Management staff need to create a clean environment on the Internet and related markets. Secondly, those pragmatic issues should be addressed. Besides trust, a large amount of bad information exists, affecting the whole Internet. To solve this problem is a long-term task. According to Shi, online marketing, which is an important method in modern society, will bring revolution to modern media. Revenues and influence will greatly exceed those of traditional media. However, the combination of the two marketing strategies will coexist for a long time.