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Chapter 5 - Conclusion
With the election of President Tsai and Beijing’s unwillingness to work with her, the amount of Mainland Chinese tourists visiting Taiwan has fallen precipitously. This change is significant due to the back-and-forth nature of China-Taiwan relations; under the KMT-led Ma Administration Taiwan’s tourism sector saw tremendous growth due to an influx of money spent by Mainland Chinese tourists. The situation under Ma was unique, however. It was the first time, essentially ever, that Mainland Chinese civilians have been able to travel to Taiwan for leisure and tourism purposes. The rapid and massive decrease in these tourists mean important consequences for Taiwan. First, Taiwanese governments and businesses will have to rethink strategies for attracting tourists if they are to remain viable. Furthermore, the rapid shift in tourism numbers could be indicative of other shifts due to Chinese
dissatisfaction with the leadership in Taipei.
This thesis, then, has attempted to answer what the impact was of changing levels of tourists from China on Taiwan’s economy, and what does it mean for China-Taiwan
relations? It has further attempted to answer more minor questions, including how much Mainland Chinese tourism contributes to Taiwan’s economy, and at least an idea as to how much money spent by Mainland Chinese visitors stays in Taiwan versus ultimately ending up in the pockets of Chinese investors and businesspeople. I have also attempted to answer what the impacts of such a heavy decrease in Chinese visitors will be and whether or not the central government of the PRC is behind the reduction.
The literature review acknowledges China-Taiwan economic relations are the framework for the discussion of Mainland Chinese tourism in Taiwan, and thus provides analysis of the state of China-Taiwan relations - especially economic relations across the Strait. The literature regarding China-Taiwan economic relations shows a recent history of
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profound growth, but also with the intent, on the part of Beijing, to gain economic and thus political leverage over Taipei. China has attempted to use economic incentives to entice Taiwan to move closer to the economic orbit of the Mainland, but the landslide election of Tsai and the DPP in 2016 proves that these initiatives have been largely ineffective, at least during the Ma Administration. The literature also indicates that the health of the economic relationship is tied to the political relationship between Beijing and Taipei. In other words, should Beijing find itself frustrated in its efforts to court Taiwan with the promise of
economic growth, China may shift from policies of enticement to policies of coercion. Once that happens, the risk of miscalculation grows as indicators of intent - especially economic sanctions or policies meant to punish Taipei - have almost no frame of reference for which to compare the level of Chinese commitment to maintaining leverage over Taiwan.
With the literature establishing the nature of China and Taiwan’s economic relationship, the history of people-to-people exchanges, and ultimately tourism, deserve examination. China and Taiwan initially opened talks in 1986 after the China Airlines Flight 334 Incident. Beijing and Taipei established semi-official organs with which to communicate, namely ARATS and the SEF. It was during initial talks the 1992 Consensus was, disputedly, established. Subsequent to the opening of semi-official talks, direct trade and the “Three Linkages” were opened, with the exception of Mainland Chinese visitors being able to travel to Taiwan. Trade exploded as did Taiwanese business in China. However, Mainland Chinese were not allowed to travel to Taiwan for tourism until after the election of the KMT and Ma Yingjeou in 2008. As soon as Mainland Chinese tourists began traveling to Taiwan, numbers increased every year, with these visitors making up 47 percent of all tourists in Taiwan in 2015. With the election of Tsai and the DPP, largely a repudiation of closer China-Taiwan ties, the stage was set for a massive decrease in Mainland Chinese visitor numbers.
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The decrease in Chinese tourist numbers presented a number of “pros and cons” for Taiwan. In terms of negative outcomes, the tourism sector saw contraction in areas catering to Mainland Chinese visitors, with experts warning of even greater losses as time went on.
Furthermore, there is a sense that Taiwan and China are facing a chill in relations, and a decrease in tourism is an indication of this. However, there are certainly positive aspects to the decrease. The tourism industry was entirely too focused on Chinese visitors and in order to retain the same kind of tourist numbers, Tsai would have had to accept the 1992 Consensus on Beijing’s terms. Also, Chinese tourists have been a source of frustration for many
Taiwanese. Finally, the decrease in Chinese tourist numbers will force Taiwan’s tourism industry to adjust and attempt to attract a more diverse set of visitors. And while the media and experts reported some difficulties for Taiwan’s tourism sector, the decrease does not mean tourism in Taiwan will be decimated; it is very possible for Taiwanese businesses and government to make up for losses in Chinese visitors with those from other places, especially other East Asian and Southeast Asian nations. So, while Mainland Chinese visitors are becoming less common - and this is having a negative effect on the economy and tourism sector, at least in the short term - there is hope.
Still, just because Taiwan’s tourism industry is capable of surviving, there is very little discussion of it thriving with such a massive decrease in Mainland Chinese visitors.
Tourism also appears to be an indicator of the larger China-Taiwan economic relationship. As trade exploded across the Strait, so did tourism. Furthermore, tourism reflects greater trade issues insofar as they are both very much hot button issues. How a Taiwanese person feels about Mainland Chinese tourists is likely to mirror how they feel about increased trade with China, which in turn will mirror how that person might feel about closer political relations with Beijing. Lastly, the whole point of opening Taiwan to Mainland Chinese tourists was to win leverage in Taiwan with the influx of Chinese money, again mirroring trade, as a stated
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purpose of economic interaction with Taiwan is to gain leverage. As such, what happens with tourism could very well happen with trade and overall economic relations.
Because China-to-Taiwan tourism and China-Taiwan trade are so interrelated, it stands to reason that what is happening tourism, namely a decrease on the part of China, could happen in the larger trade relationship. Should this happen, the economic effects would be profound, although perhaps not terrible. Still, once the currently active trade relationship between China and Taiwan cools, the room for miscalculation rises and economic and political disputes are likely to become more common, possibly snowballing into ever greater disputes. Should Beijing impose economic sanctions or other punitive measures in Taiwan, that would be an indication that China is quickly losing its patience with Taipei. Obviously, this is not a foregone conclusion, but the future seems to be one of frigid economic and social relations between China and Taiwan at the very least, if not necessarily escalating tensions.
Policy suggestion: Diversification
Given the choice between embracing the 1992 Consensus on Beijing’s terms or not doing so, what is Taiwan to do? The option of embracing closer ties and eventual
rapprochement with China would mean Taiwan does not have to do much. Taiwan’s tourism industry is largely optimized towards Mainland Chinese tourists, and it has the capacity to service them. This would mean a halt and reversal to the reduction in visitor numbers,
numbers that spell trouble for Taiwan’s tourism industry in the short term. However, in order for this to happen, President Tsai would need to accept the 1992 Consensus as the framework for China-Taiwan relations. That is not going to happen, nor is it necessarily right for Taiwan.
It is hardly reasonable to ask a polity as dynamic and protective of its blossoming democratic traditions as Taiwan to risk these features for economic benefits - economic benefits that have not been evenly distributed.
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That leaves the second choice - accept that the days of 4 million plus Chinese visitors annually are over, and that in order to make up the difference and continue to support
Taiwan’s tourism sector, Taiwan needs to attract other visitors to make up the difference.
This is complicated project, one that demands consideration of various world regions and strategies. In other words, Taiwan has to either be satisfied with adjusting its marketing, expectations, and attractions to a more global market, or it needs to be satisfied with
accepting the 1992 Consensus. Taiwan cannot remain as stuck in its habits if it hopes to keep its tourism sector afloat.
First, Taiwan needs to leverage greater numbers from South Korea and Japan.
According to the Tourism Bureau, it already has (Tourism Bureau, 2016). Japan has seen a negligible uptick in the number of visitors to Taiwan, but South Korea has sent 36 percent more tourists in the first quarter of 2017 relative to the previous year, indicating room to grow in the Korean market (Tourism Bureau, 2017). Furthermore, while Japanese numbers might be stagnant, possibly reflecting the stagnation of Japan’s economy, with ever greater numbers of Japanese retiring each year, there may be a growing market for elderly visitors with more money and free time.
Southeast Asia has also been a target for tourism growth, as well as greater economic growth in general with the New Southbound Policy. As mentioned in previous sections, the numbers of Southeast Asian visitors are already on the rise, and growth in the Southeast Asian market is likely what propped up Taiwan’s tourism industry in 2016 (Chen, 2017).
This is hugely encouraging considering that Southeast Asia’s economy is largely on the rise and sustained growth is projected for the foreseeable future, meaning greater numbers of tourists coming out of the region.
A little discussed target for Taiwan’s tourism industry is attracting Western travelers, meaning tourists from North America, Europe, and Australia and New Zealand. Westerners
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are among the wealthiest tourists and tend to be repeat visitors should they positively engage with a location (Schriver, 2016). Furthermore, they are younger and tend to travel
individually or in small groups, meaning flexibility in terms of activities is possible. Most importantly, however, is that Taiwan’s tourism industry has barely begun to explore Western markets, with most attention given to China, Japan, South Korea, and more recently
Southeast Asia. This could indicate tremendous opportunity should Taiwan develop its tourism sector to attract this demographic of visitor. A short case study in attracting western tourists is presented in the next section.
Another possible area for tourist expansion in the face of decreasing volume in Mainland Chinese tourists is, counterintuitively individual Mainland Chinese tourists.
Considering that the bulk of Mainland tourism is group tours and most Chinese tourists prefer to stay in these groups, this is, like Westerners, a relatively untapped market and one that is likely to grow. As Mainland Chinese continue to make money, become more educated, and ultimately more sophisticated and confident travellers, Taiwan could again become a prime destination for all the reasons it was until recently - familiarity of culture, proximity, and ease of navigation.
There are, however, serious difficulties with each regional or national focus. While a greying Japanese population might mean more retirees, it also is suffering from a tepid
economy (Soble, 2017) and is already fairly well represented in terms of number of visitors to Taiwan, meaning there may not be many more Japanese left to entice to visit. While South Korean visitors are increasing significantly, their daily spending is significantly smaller than that of Japanese and Chinese tourists, they stay for a shorter period of time, and usually limit themselves to Taipei and the surrounding area - problems true of most demographics (Lee interview, 2017). The New Southbound Policy has some great potential, especially for tourism, but Taiwan has been really slow in relaxing travel restrictions and Southeast Asian
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tourists simply have less money than their East Asian counterparts - a situation that means this strategy alone will not be enough to make up for the loss in Chinese visitors. Western tourists in Taiwan are stingy with money relative to Asian tourists (Tourism Bureau, 2016), these nations are very far away, and most Westerners are not familiar with Taiwan, much less have a deep desire to travel here. And individual Chinese tourists will be tricky to attract in a time when China wants fewer of its citizens to travel and spend money across the Strait - whether it’s government imposed or self-censoring, if the PRC is adamant about closing the tourist spigot, individual travelers may refrain from traveling to Taiwan as much as group tourists have begun to do.
As such, just one target or strategy for tourism is not enough; just like climate change issues cannot be solved simply by either solar energy or wind power, Taiwan’s tourism industry, and its economy at large, needs a diverse and dynamic answer to the question of making up for a decrease in Mainland Chinese tourists. The Taiwanese government and tourism sector businesses need to try and address as many of the pulls and obstacles to getting different kinds of people to Taiwan as possible. To help Southeast Asians, Taiwan needs to allow visa-free visits at southern airports (Lee interview, 2017). To get more Japanese and Koreans to visit other parts of Taiwan, companies should advertise more than just Taipei - Taiwan has wonderful hiking, temples, and historical sites that would be of interest to many Japanese and Koreans. To attract more Westerners, the government should encourage the opening of hostels and backpacking culture (Shriver, 2016), as well as address the lack of quality English language information and tour guides - a problem that could be solved by engaging Taiwan’s large expatriate community. Also, working with regional partners to develop tour packages - say a Taiwan-Philippines shopping / beach resort package - would help increase the numbers of visitors (Carolus interview, 2017). The solutions will need to be
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manifold and dynamic, but Taiwan cannot hope things will just work out if they try to shift all focus from one target group to another.
Western tourists as an example
One market segment that Taiwan and businesses could focus on attracting is Western tourists. In 2015 934,966 visitors traveled to Taiwan from the US, Canada, Europe, and Oceania (Tourism Bureau, 2016). This is compared to the over 4 million visitors from China, 1.6 million from Japan, and 1.4 million from Southeast Asia. Furthermore, many of visitors from the West are not coming for tourism purposes - many are coming for business or family connections. Clearly, there is room for growth in this market segment, and one that may be ripe for the picking.
Expatriate business leaders and academic researchers alike acknowledge the potential Taiwan has for attracting Western visitors. One aspect to examine is Taiwan’s appeal to different kinds of travelers, or travelers who want to engage in a range of activities. Western visitors report loving the food, convenience, and typical tourist spots, including Taipei 101, the National Palace Museum, night markets, and shopping - features that appeal to all tourists from all over the world (Ek interview, 2017). Furthermore, there is much potential for other, more rugged types of travel. In Taiwan there are businesses that teach surfing and scuba diving, as well as even more extreme activities like hang gliding. For nature lovers Taiwan has dozens of climbable mountains with many companies organizing short and long hikes, and the national parks, especially Taroko Gorge, are a huge potential pull. Because Taiwan is relatively small and highly navigable, if visitors want to hike in the morning, visit temples in the afternoon, go to the night market for dinner, enjoy some nightlife later in the evening, and end their day at a 5-star hotel, that is very much within the realm of possibility. It is also an itinerary unavailable in most destinations in Asia or elsewhere (ibid).
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Another reason why Western visitors are a good target is that so many of them are youth travelers, especially backpackers. Younger Western tourists in Taiwan actually spend more than older visitors, spending 2600USD per trip compared to average spending of 950USD (Schriver, 2016). These visitors are also likely to return to Taiwan later in life, as well as spread positive reviews of their trip to other potential tourists in their same
demographic. Furthermore, Taiwan is well positioned in the eyes of younger Western tourists - concerns like safety, food, cost/quality, and nature top the list of what this group cares about, and Taiwan scores very highly on these metrics (ibid).
Most significantly, however, is that Western tourists are the most common type of traveler globally, and they spend huge amounts of money. For example, Germany, in 2014, spent $1309USD per capita (calculating for the entire population). The United Kingdom spent $1237 per capita. Japan, however, spent only $225 per citizen (World Bank 2014, HowMuch.net 2016). Japanese visitors are the highest spenders in Taiwan, but spend small amounts compared to Europeans globally. Obviously, there is room for improvement in how Taiwan courts Western tourists.
While the benefits of attracting more Western tourists is clear, the question of how to do so still stands. First, Taiwan needs to leverage its significant expatriate community (Ek interview, 2017). The majority of young Western travelers who visit did so because they knew someone else who had worked, studied, or traveled to Taiwan (Scriver, 2016).
Expatriates are already familiar with Taiwanese culture and geography, and their shared language and cultural understanding of potential visitors makes them an excellent bridge and resource for increasing the Western segment of Taiwan’s tourism market. Another important step is for Taiwan businesses and infrastructure to update their operations. For example, the online ticketing system for Taiwan’s High Speed Rail has a useful and intuitive English interface. The Taiwan Rail Authority ticketing system is very much the opposite. Both
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Taiwan tourism researcher Mark Schriver, and longtime expatriate and business owner Elias Ek cite poor systems like the TRA’s, and apathy for improving them, as a serious drag on attracting visitors, especially in encouraging them to get out of Taipei and to other Taiwan locations. Language skills are another issue frequently cited; many Taiwanese in the tourism industry, while earnest and patient, simply do not possess the English skills, or that of any other European language, to host Western visitors and chaperone them when they patronize businesses or tourist sites (Ek interview 2017, Schriver 2016).
Another area to focus on, and not just for Western tourists, is branding and marketing.
Simply put, Taiwan’s tourism marketing has been directed mostly at China (Carolus
interview, 2017). Furthermore, Taiwan uses the exact same promotional materials around the
interview, 2017). Furthermore, Taiwan uses the exact same promotional materials around the