“Silicon Valley? No, it´s the Chinese, who are setting the pace these days!”
The speed, dynamism and intensity with which China is driving forward digitalisation, particularly in its cities, is being significantly underestimated outside the country. Michael Buller, head of the German association for digital tourism VIR, doesn’t just find that regrettable. It’s also a mistake, he says, following a visit to ITB China in May.
As Europeans, we tend to look towards the west, to the USA. This is a mistake, as we realised when a delegation from VIR spent a few days at ITB China in Shanghai in May. In terms of innovation, Silicon Valley may play the leading role from a European viewpoint. When it comes to practical implementation, however, it is unquestionably the Chinese who are setting the pace today – that applies to all the relevant areas of daily life. One area where this trend is particularly striking is the travel industry. City dwellers in the world’s fourth-largest country have effectively skipped the era of desktop computers, with most of them now conducting all the main transactions relating to their day-to-day needs using digital and mobile technology: from purchasing tickets for public transport and obtaining up-to-date information about the payment process in the nearest supermarket to booking travel via mobile phones.
The potential of a market with 1.4 billion people
What is of particular interest to the global travel industry is that, although the earth’s most populous country overtook Germany as the world travel champion in 2016, only 5% to 10% of all Chinese people currently have a passport. So we don’t need a prophet or a fortune teller to be able to predict fairly reliably today the potential offered by a market of 1.4 billion people, in which more and more people from the middle classes are enjoying greater prosperity and becoming interested in travel.
Last year, 14 per cent of outbound journeys from China led to Europe, with 13.4 million arrivals. Travel to Europe is expected to grow by an average of 9.3 per cent up to 2021 – every year! Chinese travellers don’t just travel in groups, either – they are increasingly setting off individually, as “free independent travellers” (FIT).
Speed is of the essence
Fabian von Heimburg, who founded his start-up Hotnest in Shanghai, the “engine room for the country’s digital economy”, in 2014, knows about the peculiarities of the Chinese market. “Chinese people use social networks, are increasingly avoiding payment in cash and have made smartphones the linchpin of their lifes,” the entrepreneur says. “Rule number one is: speed at any cost!”
The market research institute Kairos Future backs up his comments. “When Westerners are building a ship, they plan the boat carefully down to the last detail before they launch it. In China, the ship is launched as quickly as possible and potential errors are rectified only afterwards,” says Andreas Reibring, Head of Research at the Swedish company, which is based in Shanghai.
This Chinese speed isn’t a digital phenomenon. Within thirty years, the Middle Kingdom has transformed itself from a predominantly agricultural nation to an industrial nation and now a service nation. HRS, which began operating in what is now the biggest market for business travel in 2002, has witnessed 15 years of this metamorphosis at first hand. Chinese business travellers are much younger and therefore often a lot more into digital technology than here, the HRS staff say. Speed thus goes hand in hand with convenience. “It’s very important to the Chinese for things to be ‘easy to use’,” one employee says. And as they have got very used to this, she explains, acceptance of things that are more complicated to operate is very low.
The way to a business deal is “through the stomach”
Nevertheless, something that was highly surprising to us Europeans was that people here don’t just rush into business. If you’re hoping to build good business relations in China, the team at HRS explained to us, you need to have dined with your contact at least once. The motto is: “Make friends first, business comes second.”
What we learned after three days in China
• Mobile first: PCs are practically no longer used in China, the focus is on mobile technology.
• One-stop shop is the main buzzword. Unlike in the west, where the one-stop shop principle is always thought of in relation to a specific segment – the complete travel booking process, for example – the Chinese understand much more by this. Their expectation of a one-stop shop is that a single application should be able to cover all their day-to-day requirements. As a result, many providers operate in different sectors (food delivery service, bicycle hire, hotel sales and so on) – usually within a single application.
• Technology: China is far from catching up with the west. China overtook it a long time ago.
• Data protection: This plays a much more important part than was assumed. No Chinese person would enter their personal details in social networks like We Chat – they use made-up names, images without faces and fake locations.
• Speed matters! You need to be quick to make things work, because there’ll always be someone who will copy your ideas.
Read more about the VIR delegation trip to Shanghai for ITB China: