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Chapter 3 - Mainland Tourism in Taiwan: Past and Present
Setting the stage
Mainland Chinese tourism in Taiwan did not begin until 2008, but in order to
understand why it began then, observers must appreciate the state of China-Taiwan relations.
In 1949, when the Republic of China (ROC) retreated from the Mainland to Taiwan, it cut off all official contacts with what became the PRC. Martial law continued until 1987, the same year that the ROC established the Straits Exchange Foundation (SEF) to conduct the ROC’s first semi-official contact with the PRC since 1949.
In 1986, China Airlines Flight 334 was hijacked by pilot Wang Xijue and landed in Guangzhou. The incident forced then-President Chiang Ching-kuo to reverse his “Three Noes” policy towards the PRC in order to negotiate the return of other crew members and the aircraft in question. The “Three Noes” were set by Chiang Ching-kuo in response to Deng Xiaoping’s 1979 overtures for a degree of rapprochement across the Taiwan Strait,
specifically calling for the opening of the “Three Links” (Lin & Robinson, 1994). The Three Links are trade, mail, and direct travel, to which Chiang responded with “no contact, no compromise, no negotiation” - his Three Noes. The ROC policy of no contact and collaboration stood until the China Airlines Flight 334 Incident. This event is seen as a
“catalyst” for the opening of China-Taiwan dialogue (ibid). Indeed, the very next year, the SEF and its Mainland counterpart - the Association for Relations Across the Taiwan Straits (ARATS) met and set the tone of subsequent Taipei-Beijing communication and
collaboration (World Heritage Encyclopedia).
Still, it was 21 years between the establishment of the SEF and ARATS and the opening of regular direct flights across the Strait. As is common in China-Taiwan exchange,
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both sides insisted on conditions that the other found unacceptable. Things were further complicated, at least from Beijing’s perspective, by both the Lee Teng-hui and Chen Shui-bian administrations. President Lee adopted a “two-state policy,” which Beijing deemed unacceptable and subsequently cancelled the “Koo-Wang Talks” a series of meetings
between officials from both sides of the Strait (Ling, 2011). President Chen’s DPP has never accepted the 1992 Consensus, and his own positions on the issue, while not always clear, were certainly never in favor of the consensus or a “one-China” ideology, and spoke openly of Taiwan and the Mainland drifting away from each other (Teon, 2016). Without
acknowledgement of the 1992 Consensus, Beijing was simply unwilling to engage very much on the Three Links, including regular direct flights.
The lack of flights and Mainland to Taiwan travel does not mean that neither side made an effort to change that pattern before 2008. During the Chen Shui-bian administration, Taipei and Beijing frequently discussed opening direct flights for the Lunar New Year, especially between 2003 and 2006 (Tung, 2005). However, and unsurprisingly, neither side was willing to budge on key issues. Beijing insisted that any discussion be predicated on Chen’s acceptance of the “One China” principle, which of course his administration vehemently resisted. Still, during these years some direct charter flights were approved so Taiwanese business people could return to Taiwan for the Lunar New Year holidays (China Post, 2005). A small step, yes, but an important one considering the otherwise rocky
relationship between the Chen administration and Beijing.
Another important cross-Strait success of the Chen administration was the
establishment of “Three Mini-links.” Under the Mini-links, Kinmen and Matzu, two ROC islands adjacent to Mainland China, were allowed to trade with, and facilitate direct travel to, nearby Mainland ports (Tung, 2005). Again, the numbers indicate this to be a relatively
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insignificant accomplishment, but from another perspective, it was also the first legal and regular direct contact between the ROC and PRC since 1949.
While the Chen administration attempted to facilitate some direct travel, the Three Links were not opened in earnest until the KMT returned to power in Taipei in 2008
alongside newly elected President Ma Ying-jeou. Ma and the adjacent KMT-led government accepted the 1992 Consensus (Adams, 2007), thus encouraging closer interaction with the Mainland than Beijing had been willing to entertain with the Chen administration. One of Ma’s arguments during his campaign had been the potential economic benefits of allowing Mainland visitors to travel to Taiwan (Gold, 2008). In April 2008 Ma’s Vice President, Vincent Siew met with Hu Jintao in a private meeting in Hainan, while Chen Yunlin, ARATS Chairman, traveled to Taiwan and signed four agreements that finally established the “Three Links” including direct flights.
To begin with, Taiwan allowed 3000 Mainland tourists to travel to Taiwan daily, but only as part of tour groups. In 2011 individual tourists were first allowed (ibid), and in 2014 daily limits were lifted on the number of individual tourists that could come (China Post, 2014). This trend corresponded with the growing number of Chinese visitors each year after the establishment of regular direct flights and open tourism to Taiwan.
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Table 1
Mainland Chinese Visitor Arrivals to Taiwan - 2007-2016
Year Number of Visitors
2007 0
2008 329,204
2009 972,123
2010 1,630,735
2011 1,784,185
2012 2,586,428
2013 2,874,702
2014 3,987,152
2015 4,184,102
2016 3,511,734
Source: Tourism Bureau, 2016 -
http://admin.taiwan.net.tw/statistics/release_en.aspx?no=7
As Table 1 shows, during the Ma administration, the number of tourists increased greatly each year, to the point that Mainland tourists were the most common by volume. The volume became so significant that concerns about a “crowding out” effect grew (Su, Lin, &
Liu, 2012), as well as increasing complaints about Mainland visitors on the part of Taiwanese people (Rowen, 2016). However, the number of Mainland tourists increased every year of the Ma administration - a trend that continued unabated until the KMT was roundly defeated in the 2016 presidential and legislative elections. In 2016 the number of Mainland visitors decreased relative to the previous year for the first time since Mainland Chinese were allowed to travel to Taiwan in 2008. While it may seem clear that the decrease in visitor numbers is a direct consequence of Taiwan electing the China-wary DPP, Beijing has resisted openly stating as much (Lin, 2016).
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When President Tsai and her DPP were swept into power in 2016, she avoided affirming the 1992 Consensus, the construct that allowed for such a high degree of rapprochement between Taipei and Beijing under Ma Ying-jeou (Wong, Wu, & Wang, 2016). Almost immediately after Tsai and the DPP were inaugurated, the number of Mainland visitors to Taiwan began to decline. Media reports spelling doom for Taiwan’s tourism industry proliferated, claiming Beijing’s dissatisfaction with Taipei’s new political regime has caused the CCP to begin decreasing the number of Chinese allowed to cross the Strait (Chow 2016, Smith 2016, Arlt 2017). Industry workers and business owners protested over the declining numbers (Cheng & Wu, 2016).
Certainly, the number of tourists visiting from did China fall. In 2015 over 4 million Mainland tourists traveled to Taiwan, but the next year - the first year of Tsai’s presidency - that number shrank by more than 600,000 to 3.5 million. That is not only lower than 2015, but also 2014 (Visitor Statistics by Year, Tourism Bureau 2016). Still, this only paints part of the picture. As mentioned, the “crowding out” effect of Mainland tourists had been a concern in Taipei Mainland visitors began traveling to Taiwan in 2008 (Su, Lin, & Liu, 2012), so in the eyes of at least some parties, the reduction in Mainland visitors is seen as a positive trend.
The question remains as to why exactly the reduction is occurring. There is broad consensus that the catalyst was the election of Tsai and her refusal to embrace the 1992 Consensus. However, that says nothing about who is dictating that policy on the Mainland.
Reports are mixed as to who is behind it - some sources claim officials have discretely communicated to travel agencies to de-prioritize and limit the number of Mainland travelers to Taiwan (Lin, 2016) and that provincial level officials have taken it upon themselves to reduce outbound tourist numbers (Chao, 2016). These reports, however, do not tell the full story either. There is some evidence that a degree of self-censorship is also to blame, with Mainland Chinese visitors and travel agencies de-prioritizing trips to Taiwan in favor of
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other, less politically sensitive destinations (Lee interview, 2017). Furthermore, industry insiders are also quick to point out that Taiwan may have lost its luster to Mainland Chinese visitors (Chen interview, 2017). Many Mainland Chinese see Taiwan as just another part of China, and the market has been open for nine years now (Rowen, 2016). Combined with at least implicit government directives and self-imposed prioritization, the natural attrition of the market seems to have magnified.
The issue of who is causing and enforcing a reduction in Mainland Chinese tourists is discussed in greater detail in subsequent sections, but suffice it to say that the issue is
controversial. Regardless of the actors behind the reduction, however, the fact remains that the amount visitors from Mainland China is decreasing precipitously, and the effects have yet to be determined.
Pros and Cons
Businesses in Taiwan have certainly felt the effects of the reduction in Mainland visitors. Sammy Carolus, the General Manager of the Grand Hyatt in Taipei saw an 11
percent decrease in earnings in the first three months of 2017 relative to the previous year, the cause of which is a decrease in Mainland Chinese guests (Carolus interview, 2017). Mr.
Carolus is relatively lucky, however, as hotels around Taiwan saw a gargantuan 40 percent decrease. The Hyatt, adjacent to the Taipei World Trade Center convention center and a short walk from Taipei 101, sees fewer tour groups made up of Mainland visitors. However, even upscale, business-oriented hotels like the Hyatt feel the pinch due to a decrease in conference and business-traveler revenue (ibid).
Perhaps the most significant controversy when discussing Mainland Chinese tourism in Taiwan is where the money ends up. On one hand, and as President Ma claimed during his campaign, the whole point of inviting Mainland tourists to Taiwan was for economic
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benefits. However, some sources claim that much of the money spent by tourists simply winds up back in China (Tsai, 2016). Mr. Carolus disagrees. Taiwan’s tourism industry was relatively mature before 2008, and the big players are certainly Taiwan-owned. Chinese investment in Taiwan is relatively new, and there are few Chinese owners of tour companies or businesses in Taiwan. This is not to say that Chinese investors have not contributed to Taiwan tourism businesses. Taiwan Travel Agency Association Director, Ringo Lee,
acknowledges that Chinese investors do play a role, but that does not mean that all Mainland tourist money winds up back in China. He notes that these businesses, even if entirely Chinese owned - and they usually are not - still have to pay local taxes. Furthermore, all employees working in Taiwan are Taiwanese, and if these companies shut down, local people lose jobs (Lee interview, 2017). Mr. Chen Jih-Chung, the Director General of the Taiwan Tour Bus Industry Association corroborates the reports of Mr. Carolus and Professor Lee.
While there are Mainland investors who obviously expect returns on investments, it is not really an issue like the media reports (Chen interview, 2017). Finally, Professor Huang Kwei-Bo, of National Chengchi University and a former official at the Ministry of Foreign Affairs, acknowledges that there is significant Chinese investment, but he corroborates the account of industry leaders that earnings by and large stay in and benefit Taiwan (Huang interview, 2017). Judging from the responses of experts, it is clear that most tourism sector profit stays in Taiwan, whether it be in the form of local taxes, employee wages, or earnings overall.
Tourism is a relatively minor sector of Taiwan’s economy, somewhere from 2.5 to 4 percent depending on the source (Carolus interview, Lee interview, 2017). Still, as will be addressed in the next chapter of this thesis, tourism can act as something of a bellwether for other economic sectors, and it certainly does not exist in a vacuum, distinct from other parts of the economy. For example, Mr. Lee highlighted one illustrating story about an off-site laundry company that worked largely with area hotels in cleaning linens. Due to the drop in
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the number Mainland tourists, this cleaning company, a few steps down the economic chain from actual tourism, had to cut two-thirds of its staff due to the drop in business. So, even if all of the hotels in and around Chiayi had been Chinese-owned (which they are not), there still are examples of economic consequences for Taiwan nationally and in its locales.
An interesting aspect of the conversation is how politicized it is. Tourism in most places is not a political concern, but in Taiwan it is very much an aspect of, and a mirror to, larger conversations about China-Taiwan relations. Media reports are wildly contradictory with some outlets and writers claiming the decrease in tourists will doom the industry and be a drag on the economy (Chow 2016, Smith 2016, Arlt 2017) while other sources assert that Mainland visitors were more trouble than they were worth, and that most of the money went back to Mainland China or Hong Kong anyway (Turton 2017, Horton 2017, Wu 2011).
However, these reports are often superficial and are written by foreign reporters with little grasp of the complicated nature of the issue, or they are written by individuals or outlets with a clear political bend. What’s a researcher to make of such highly subjective information?
The government does not seem to want to help either. I personally have asked to interview officials at the Tourism Bureau - once by emailing the Director General personally, and another time through their contact page on the site. The Director never responded, and I was turned down when I contacted through the Tourism Bureau’s website and told all necessary information can be found online. This behavior is not new either - in reports as far back as 2011, reporters from major outlets were denied interview requests, and that was with a different administration and government in power in Taipei (Wu, 2011).
Also significant is the degree to which the question is polarizing to Taiwanese people.
The media has made much of poor Mainland tourist behavior both in Taiwan and in other destinations (Hsu 2015, Nettikkara 2015, The Economist 2013). Furthermore, crowding out issues abound (Su, Lin, & Liu, 2012), and locals actively avoid visiting tourist sites that they
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know will be flooded with Mainlanders (Chen interview, 2017). Stereotypes abound, and the tourists are seen by many locals and other visitors in less than a positive light. This is true both in Taiwan and in other destinations that see large number of Chinese visitors (Volodzko, 2016).
However, the issue may be exasperated in Taiwan. Where Mainland visitors get a sense that they are still in “China” while traveling in Taiwan and thus feel a sense of
closeness to the place and its people, Taiwanese people have developed increasingly averse feelings about Mainland tourists, and by extension, the Mainland itself (Rowen, 2016). This phenomenon can be traced back to the political and social concerns every day Taiwanese are faced with when it comes to China. Taiwanese people are also highly informed - just like it is no secret to officials on both sides of the Strait that China hopes closer economic ties give Beijing leverage in Taipei, Taiwanese people see that tourism is meant to inculcate a sense of sameness, at least in the mind of those who visit, thus shoring up confidence in Beijing’s increasingly hostile stance towards Taiwan. Where Mainland Chinese tourism to Taiwan is causing Chinese people to feel that Taiwan is Chinese, Taiwanese people increasingly feel the opposite.
There are two core perspectives with which people observe Mainland Chinese tourism in Taiwan. On one hand, it is an economic boon to Taiwan’s tourism industry and economy at large, and a sign of smoother relations between Beijing and Taipei. On the other, however, is a sense of crowding out and negative views of Mainland Chinese visitors, coupled with trepidation on the part of locals that China is taking over. Both of these perspectives are important to the discussion, and both hold merit. They are also, again, a reflection of broader social, political, and economic issues between China and Taiwan. As such, the state of Mainland Chinese tourism truly is a bellwether China-Taiwan relations as a whole.
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Current StatusIn March 2017, there were 926,647 visitors to Taiwan (ROC) “down 108,083 or -10.45% from the 1,034,730 in March of last year” (Tourism Bureau, 2017). Interestingly, Southeast Asian visitors increased by a whopping 39 percent compared to last year -
obviously a reflection of the “New Southbound Policy,” and accounted for almost 22 percent of visitors. Mainland Chinese visitors were the second most common type of visitor, with 21.76 percent of all tourists. This, however, is a 45 percent drop compared to March 2016.
Japanese arrivals, the next highest figure, also fell, but only by .46 percent. They made up 21.35 percent of the total. Visitors from Hong Kong and Macao made up 13.4 percent of visitors, which is down almost 25 percent relative to last year. The number of visitors from South Korea also spiked, making up 9.4 percent of the total and an increase of 54 percent compared to March of last year.
The numbers for the first quarter of 2017 (January through March) are also
illuminating. In total, Chinese visitors were down by more than 40 percent. South Korea and Southeast Asia sent a higher number of visitors, up by 36 percent and 12 percent respectively.
Overall, Taiwan saw a 10 percent decrease in the number of visitors compared to 2016 (ibid).
In other words, Taiwan’s tourism industry is doing worse overall than compared to the same timeframe in 2016.
This almost certainly spells trouble for the tourism industry, at least in the short-term, especially if you examine the details. While Japanese tourists are the highest spenders, Chinese visitors spent only a penny per day (USD) less, and made up a much higher
percentage of visitors in 2015 (Tourism Bureau, 2016). Furthermore, according to Mr. Lee, Mainland Chinese visitors stay longer than other types of tourists, with 7.5 days being the normal duration of visit for Mainlanders, while Japanese and South Koreans stay, on average, only five days, and tend to stick around Taipei as opposed to traveling around the island (Lee
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interview, 2017). So, while Taiwan is making up for the drop in Mainland Chinese visitors with Southeast Asian and Korean tourists, there is still bound to be a loss in revenue, especially outside of Taipei.
While a hit to tourism industry revenue might not be a death knell for Taiwan’s economy, there are still important questions as to who is most affected by the change in situation. Obviously, industries involved in tourism will be impacted. These include airlines, hotels, travel agencies, tour services, tour bus companies, etc. And the individuals affected most will be the employees of these industries - all of whom are Taiwanese. Flight attendants, bus drivers, housekeepers and bellhops, travel agents, and tour guides will all feel a squeeze in the short term (Lee interview, 2017). Another problem with the decrease is that many tourism-oriented industries, like tour bus companies and hotels, invested heavily into their own growth in recent years. With a decrease in visitors overall, and especially Mainland visitors to whom their services were oriented, these investments will not see returns (Chen interview, 2017). For example, tour bus companies, many of which are small- to
While a hit to tourism industry revenue might not be a death knell for Taiwan’s economy, there are still important questions as to who is most affected by the change in situation. Obviously, industries involved in tourism will be impacted. These include airlines, hotels, travel agencies, tour services, tour bus companies, etc. And the individuals affected most will be the employees of these industries - all of whom are Taiwanese. Flight attendants, bus drivers, housekeepers and bellhops, travel agents, and tour guides will all feel a squeeze in the short term (Lee interview, 2017). Another problem with the decrease is that many tourism-oriented industries, like tour bus companies and hotels, invested heavily into their own growth in recent years. With a decrease in visitors overall, and especially Mainland visitors to whom their services were oriented, these investments will not see returns (Chen interview, 2017). For example, tour bus companies, many of which are small- to