Ladies and Gentlemen，
Good morning! It is a great honor to be invited to attend the 2018 European Rural Tourism Congress. I am Liu Zhaohui, founder and CEO of China Travel Media. You may call me Leo. The topic of my speech is Three Changes Should be Taken into Consideration for the Sino-EU Rural Tourism Communication. The importance of tourism has become self-evident, cultural exhibition, environmental protection, peace and security, jobs, economic growth, development. The development of the world's tourism industry has solved 1/10 of the employment, 7% of the world's exports, 30% of the service sector's exports, as high as $1.6 trillion in exports, contributing 10% of the world's GDP.
For China, one of the major events in the tourism industry this year is the merger of the Ministry of Culture and the National Tourism Administration as the Ministry of Culture and Tourism. We strongly believe that culture and tourism are inseparable, tourism is an integral part of lifestyle, and that an ideal life with both poem and travelling will eventually be achieved. Tourism is a carrier of culture, whereas culture provides content for and enhances the quality of tourism. Lifestyle is simply an effective means to experience culture in our everyday life via tourism so as to help us lead a more colorful and meaningful life.
Chinese Tourism Has Been Escalating Since the Reform and Opening up for Forty Years
This year marks the 40th anniversary of China’s reform and opening up policy. Tremendous achievements have been made over the past 40 years. National Gross Product has soared from 364.6 billion RMB to 82.7 trillion RMB, an increase of 226 times; and its share in the global economy has grown to roughly 15 percent, up from less than 2% in 1978, steadily holding the second place in the world. Currently, China is, in every sense, an influential global economy, and has entered the best period during which the goal of national rejuvenation will be achieved.
Chinese people have benefited a great deal from reform and opening up and began leading a better life with more diversified spending options. Since their criteria of living a better life has shifted from quantity to quality, pursuing high quality life has become their new goal. In general, aspiring to a better life has become a consensus in the society.
Meanwhile, China’s tourism industry has also experienced rapid growth during this period. As early as 1978, Deng Xiaoping proposed that “Since the tourism affairs have great potential, we should place it on a higher priority and speed up its development”. In 1979, he climbed to the top of Huangshan Mountain at the age of 75, which was seen as a milestone event in the development of China’s tourism industry. From the founding of People’s Republic of China to 1978, the tourism industry in China served only as extension and supplement of China’s diplomatic affairs and mainly functioned as role of people’s diplomacy, without any trace of industry features by modern standards. From 1949 to 1977, the total number of inbound visitors was less than 700000. By comparison, the global tourism industry has been growing rapidly for 30 years, and the international tourism income increased by nearly 33 times during this period. As far as starting point of the modern tourism industry is concerned, China has lagged behind western countries for nearly a century.
自改革开放后旅游业才迅速成为中国经济的一大支柱。1999年黄金周正式启动, 中国旅游业近二十年生机盎然。国民人均旅游频次从1989的0.2次增长到2017年的3.7次。国内游从1984年均2亿人次扩大到2017年50亿人次, 而2017年旅游总收入达到5.4万亿，旅游投资高达1.5万亿。当然，我们也不能忘记虽然2017年中国旅游总人次已经排名世界第一，中国出境花费继续领跑世界，但收入却仅为美国的2/3。
Only after reform and opening up policy was implemented did the tourism industry has become one of pillar industries for China’s economy. Since the official launch of Golden Week Festival in 1999, the tourism industry in China has been prosperous for almost 20 years. The average number of tourist visits has risen from 0.2 in 1989 to 3.7 of 2017. The total number of domestic visitors has expanded from 200 million in 1984 to 5 billion of 2017. In 2017, the total tourism income reached 5.4 trillion RMB and tourism investments stood at 1.5 trillion RMB. While the total number of Chinese domestic and outbound visitors has secured the first position in the world, and China continues to lead global outbound travel in terms of expenditure. we should bear in mind that its total tourism income is only two thirds of that in America.
In fact, China's achievements in reform and opening up are only a prominent sample over the course of the rapid development of global economy in the past 250 years. According to a study by J. Bradford Delong, an economist at University of California, Berkeley, in human history of the 2.5 million years from the Old Stone Age to 2000, it takes 99.4 % of the time to accumulate 3 % of the total wealth, while the rest of the wealth built by human being has been created in the past 250 years, which only accounts for 0.01 % of the total time.
There are underlying causes for the changes. 250 years ago, as the market-oriented economy mechanism driven by classic works like Adam Smith’s Wealth of Nations, came into being, the productive forces have improved significantly. Thanks to three industrial revolutions, new energies and technologies have been widely used, transportation has been facilitated, thus accelerating the process of global transactions. With the wide spread of Internet–based information revolution and digitalization, global trades has grown wider and deeper. 250 years ago, only several hundreds of commodities are available for human being, while the number of commodity categories today has reached hundred million.
A number of other factors also contributed a lot. For example, large-scale wars have been effectively contained. Thanks to the wide spread of trade globalization and urbanization, and the adoption of technologies like Internet, artificial intelligence, block chain, Internet of Things, the global economy has entered a period with the best growth opportunities. A natural outcome of consumers’ spending power to a new level followed.
The Demographic shifts of the consumption preferences of young Chinese tourist
Consumption upgrade has become a buzz word as well as a business trend. From national perspective, consumption upgrade is actually happening across the country. As far as total consumer spending is concerned, the proportion of consumer spending to gross national product has increased remarkably. With regards to consumption structure, the proportion of people’s spending on clothes and food has further declined, while the proportion of service-based spending has continuously increased.
According to the grouping method and statistics of China Statistical Yearbook, the average per capita disposable income of high income demographic, which accounts for 20% of the national population, reached 59259 RMB in 2016. What does 20% mean? It means that China has a large demographic whose purchasing power as strong as that of Americans. This is the reason why the trend of spending more becomes so obvious in China, for these people are not only frequent customers of first class cabins at airplanes and high-speed trains, luxury stores, or five-star hotels, but also go on a shopping spree across every corner of the world.
The social wealth and consumption demand accumulated over the past 40 years after reform and opening up has shown the barrier lake effect, which means the wealth amassed by the previous generation needs to be consumed in a faster pace by the younger generation. That is to say, Chinese people need, in a short period of 40 years, to catch up with, even surpass westerners who have built their lifestyle and living standards for about one hundred years. Although the Chinese luxury consumers are generally at least 10 years younger than their European and American counterparts, they use the same brand bags, drive better cars, and go on a vacation that focuses more on mobile bookings, good experience and personalization. This presents a great challenge to the supply-side reform of cultural tourism. Instead of cultivating consumer habit in a gradual way, Chinese consumers are experiencing structural changes. As a result, the more affluent consumers seem to have made a break with their past lifestyle in a very short period time and entered a stage in which their purchasing power is as strong as, even stronger than their counterparts in European and American countries.
Our study found a unique set of shared Gen Z values, expressed and amplified by those digital technology platforms. Although Millennials still remember a world prior to personal technology and digital platforms, Gen Z are true digital natives, with the oldest born in the same year Google was established. Gen Z are more private than Millennial in sharing content, preferring small, closed communities or direct messaging, such as Snapchat, whereas Millennials share more broadly on social media. Likewise, Gen Z are members of the first post-race, post-gender generation, living in an age of marriage equality and gender-neutral bathrooms. This tolerance means that compared to Millennials, who followed major trends of “cool,” the Gen Z motto is “Unique is the new cool.” Furthermore, Gen Z consumers use products as tools to express that cool—to express their individuality and unique sense of identity.
European Rural Tourism Needs More Innovative Development Mode to Promote Sino-EU Communication
A Powerhouse for Upgrading China’s Modern Service Industry
When we talk about the changes of consumer spending power, we should also think about the new missions of cultural tourism mega consumption industry in China. In the next 20 years of China’s economic growth, a quite large proportion of the addressable market will be from the service industry, which will account for 60-70% of China’s economy, as opposed to the current 50%. In a way, the scale and quality of the service industry in China largely depends on how Integration and upgrade of the cultural tourism mega consumption industry evolve. In fact, the cultural tourism we are talking about now has undergone great changes. Integrating tourism with such areas as education, sports, culture and entertainment, real estate, healthcare, agriculture will become a trend, new thoughts, new practices, new models, new forms of business will spring up, and integration and consolidation deals will happen more frequently in this industry. Therefore, there will be more integration among different industries. It is estimated that the cultural tourism megaconsumption industry makes up more than 10% of GDP in China, it will serve as a powerhouse in the process of upgrading China’s modern service industry.
A Major Force for the Rural Revitalization Strategy
In 1978, with the rural population responsible for 80% of the total population, China is a typical agricultural nation. At that time, the average daily spend of rural residential families was merely 116 RMB, shy of 20 dollars, with Engel coefficient as high as 67.7%. In 2017, per capita spend increased by 94 times to 10955 RMB, Engel coefficient dropped to 31.2%, and a total of 700 million people were lifted out of poverty. As of 2017, China’s per capita GDP topped 8836 US dollars, almost reaching the threshold set for so-called middle income trap countries.
The reform and opening up policy was first experimented at Xiaogang Village, Fengyang county of Anhui Province. Since then, putting market economy into practice served as a shot in the arm for the economic development of the rural areas in China. 40 years later, we shift our focus back on the rural areas, on alternative home clusterings, pastoral complex and featured towns. The Chinese central government holds high hopes for the rural revitalization strategy, seeing it an important solution to national economic restructuring and urban-rural structural problem. There is no doubt that the cultural tourism megaconsumption industry will play a key role in implementing the rural revitalization strategy, especially in poverty alleviation through tourism.
“China highly values ecological and environmental protection. Guided by the conviction that lucid waters and lush mountains are invaluable assets（by President XI Jinping), the country advocates harmonious coexistence between humans and nature, and sticks to the path of green and sustainable development.”
When we think about the potential market, models and merchandises brought by the cultural tourism mega consumption industry, we should also think further over the cultural missions carried with this industry. Cultural elements can be found in every landscape of attractions, even in a ceremony or a traditional practice. When we visit tourist destinations or exchange ideas with other people, we can feel the beauty of cultural exchanges. Cultural tourism is the most flexible, easiest, and best way to build a community of shared future for human. Being sensible, touchable, and consumable is not only what the cultural tourism industry needs, but also an effective means to develop the booming tourism market.
We have suffered from many losses in the process of urbanization in modern society. It seems that we are living cities where all the space is virtual and fabricated, which gives unreal state. In a hustling and material-focused society, we should find our souls a comfortable place and avoid the tragedy depicted in the book Death and Life of Great American Cities.
As we become richer and more self-sufficient and the machines get smarter, the pursuit of happiness goes beyond consumptionism. This is the reason why Aristotle’s Theory on Happiness returned.
150 years ago, in his book Garden Cities of To-Morrow , British sociologist Sir Ebenezer Howard wrote: “all the advantages of the most energetic and active town life, with all the beauty and delight of the country, may be secured in perfect combination; and the certainty of being able to live this life will be the magnet which will produce the effect for which we are all striving — the spontaneous movement of the people from our crowded cities to the bosom of our kindly mother earth, at once the source of life, of happiness, of wealth, and of power... out of this joyous union will spring a new hope, a new life, a new civilization.”
I think this is the attraction of European rural tourism to China, from the development model to cultural interaction, but also a better perspective for Sino-European tourism exchanges. It is not only as simple as sending tourists to each other between the two major tourist destinations in China and Europe. We need more open, innovative, deeper and wider exchanges, both official and industrial. I sincerely hope that the countryside of China will one day be as beautiful and industrialized as the countryside of Europe, so that we can share in a higher level the outstanding achievements of the two civilizations and experience each other's beautiful way of life. Thank you!